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BANGALORE, INDIA: Mobile value-added services (VAS) have matured globally and form a considerable proportion of the revenues. In India, although in terms of revenue it might not be that big, the thrust area is the same. People are focusing on mobile entertainment, m-commerce, location-based services and the fourth area that is also picking up is efficiency-based services, which is linked to the enterprises.

Advisory firm BDA estimates the Indian VAS market will grow from $1.5 billion in 2008 to $7.8 billion by 2013. But over half of that are SMS revenues. BDA figures that of the remaining, over 55 per cent, is made up by just one product - the ubiquitous caller tune, the music you hear when you call someone.

3G effect

The 3G services will allow cell phone users high-speed access to the Internet so that they can download data-heavy files such as music and videos faster than in the present networks as well as use their cell phones for applications such as video conferencing.

Further, 3G services are expected to bring more applications that can make the user experience much richer.

Bangalore-based On-Mobile has already developed a technology that will help subscribers to shoot video or an audio and upload these on a social networking site with a voice over. All this can be done in seconds. Similarly, there is a lot of talk about personalized video advertisements too.

As 3G rolls out in India, a huge shift is expected in television viewing with mobile phones are set to take over as new platform.  To make things faster in this direction, Erricsson India is providing the network infrastructure for BSNL to launch mobile TV.

Issues and challenges

Although VAS forms around 14 per cent of the operator's revenue as of now, it is bound to grow two-three times in the future. Currently, the operators are busy in collecting the numbers and once they are through, the focus will entirely turn to VAS.

Growth of value-added services in India is bound to be phenomenal. Presently, the major driver is person-to-person (P2P) messaging, but overall the ratio of P2P as a percentage of VAS is coming down gradually. Mobile entertainment is picking up in a big way along with the efficiency services. The third aspect is location-based services and m-commerce. Although such services are still picking up in India, they are bound to become big in future.

However, revenue sharing is still a major issue with the cellular operators and VAS companies. . Under the present revenue-sharing model, cellular operators take a 60 to 80 per cent cut of the revenues earned by VAS in return for hosting their products. This is much higher than the 20-30 per cent share an operator gets in Japan or Korea , according to analysts. How will the 3G make an impact on this model of revenue sharing is to seen.

Another challenge at the customer level is to educate the customer that there are things beyond entertainment. It is a challenge to show them the value beyond mobile entertainment.

The most popular is through the operator portal because the end user accesses that only. But for the enterprises services, VAS companies have various channels, and the operator is just a partner. On the other hand, to sell value-added services to the end user, there is no alternative other than the operator portal, so the operator has a fair control.

Today, the most popular delivery channel is SMS, but WAP and GPRS are also picking up. SMS has its limitation, especially because of the 160 characters limit, and is somewhat cumbersome, whereas if you use GPRS, it's a complete online experience and can be made user friendly. Once people have compatible handsets and operators provide GPRS connection free, it can pick up. MMS is an area which has not been explored properly, and it could be a profitable channel if used properly.

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