BANGALORE, INDIA: Broadening of VAS market due to 3G technology, increasing tele-density, growth of the rural market, etc, is a defining period for the Indian telecommunication industry Until recently, the telecommunications industry was revolutionized by the rapid penetration of 'Mobile', and the next level of growth-cum-revolution is undoubtedly marked by the value-added services (VAS) market.

According to a report released by PricewaterhouseCoopers (PwC) in April 2011, the total revenue from VAS is expected to cross `200 bn ($4.49 bn) by 2015. There are a lot of factors that are instrumental in the growth of VAS; let us take a look at the growth drivers that have boosted this highly potential market in the communications world. The growth drivers of VAS industry from the supply-side include dwindling average revenue per user (ARPUs), increasing mobile tele-density, and the introduction of third-generation (3G) applications. From the demand perspective, VAS drivers include rising consumer demand for VAS applications, growing medium for advertising, and a growing rural market.

Declining ARPU in Voice Market

Voice market has shrinked considerably. Though some operators, including airtel, Reliance, Tata Teleservices, have recently hiked tariffs, yet regaining the dwindling ARPUs is not an easy task. India has the lowest tariff rates in the world. Therefore, the entire telecommunications eco-system comprising of operators, mobile application developers, vendors, aggregators, technology enabler are betting big on non-voice market, ie, VAS market. This non-voice market has brought in tremendous transition in consumer's behavior, operators' offerings, and more importantly in the facilitation of generating newer revenue streams.

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