Mobile VAS is an INR 48,000 crore Business Opportunity!

Bharat Sanchar Nigam Limited (BSNL) will be launching video on demand for its mobile phone subscribers in a month’s time. The announcement was made by Chairman & Managing Director Shri Rakesh K Upadhyay, BSNL while inaugurating VAS ASIA 2012, 12^th International Conference & Exhibition at New Delhi, organized by Bharat Exhibitions.

The emergence of the mobile phone as the single device for a host of services has changed the paradigm in the communication and entertainment industries with several discreet devices being displaced in favour of a single device, said Mr. Rajan S. Mathews, Director-General of Cellular Operators Association of India (COAI). He drew attention to some emerging problems in the telecommunication area where customer charges needed to be as low as possible for the mass communication device to be affordable to the last man. “The “exploding cost of regulation” is a critical issue. The increasing introduction of regulatory issues into what is actually market driven service is affecting the growth of this sector," said Mr. Mathews.

“Mobile internet users are expected to surpass the desktop Internet users 2014. The disparity in the time spent on mobile (10 per cent) and the advertisement spend (1per cent) would also rebalance soon, thereby boosting revenue from the mobile VAS for the operators. With advertising revenue rising by at least three times in two years from now this sector will also bridge the social media and location based marketing with personalization that was not possible till now," said Mr. Alex Moukas, CEO Velti, while delivering the keynote address at the VAS Asia 2012. He further added that explosive mobile Internet adoption will surpass the desk top users.

“India’s Internet users penetration will rise to 35 per cent by 2015 and more than three quarters will choose mobile phone access,” said Mr. Sukesh Jain, head VAS & Content, Bharti Airtel.

• The total Internet access capability by 2015 is expected to rise from 100 million to 450 million
• Of thia 41 percent will be using mobile only and another 38 per cent both cell phone and PC.
• Data service on the mobile is expected to broaden and deepen customer experience with the cell phone with the consequent improvement in the operator revenues.
• Revenue contribution from current VAS services is expected to come down as revenues from data increase as a percentage of total revenue.

What was holding back the prospect of huge revenues from mobile VAS was the fact that smart phone base was growing slowly till recently. In the first quarter of this year out of 50 million new devices sold, smart phones constituted only 2.7 million and the total smart phone base in the country is around 27 million, while the total subscribers base have crossed 950 million. The population that needs to be addressed is the regional language speakers who are the large majority compared to only 7 per cent knowing English speaking population.

“Mobile VAS has huge revenue potentials, the global average share of MVAS revenue is leading user countries is pegged at approximately 23 per cent ,” said Mr. Chandan Ghosh, Head -Global Wholesale & Carrier Business , Aircel Limited. The drive to increase average revenue per user and gain customer loyalty in a highly competitive market has led operators to liven up their mobile portfolios. Operators are looking at various means to use MVAS as a growth driver and key differentiator. According to him the industry falling prices of handsets and increasing competition was forcing manufacturers to shift focus to services. For operators falling voice revenues, increasing competition and heavy investments in 3G have made them to turn to VAS to secure their business.

New opportunities were emerging for banks, educational institutions and health care providers to use value added services over their mobile. This could be the game that operators would have to address to improve their revenues. The broad categories for successful monetization of MVAS were in M-education, M-commerce, M-Health and M-Infotainment. “The end game is not about generating new revenues. It’s about delivering compelling customer experience in order to extract new value from existing customers”, said Mr. Ghosh.

For more about MVAS, read an interview with Vishwanathan Alluri, founder of IMI Mobile. More stats here