MVAS evolution continues…

The MVAS market in India is set to grow to $9.5 billion in 2015 from an estimated $4.9 bn in 2012

The number of mobile phone subscribers in India, just fewer than one billion, is more than three times of what it was in 2008, but its ARPU is still less than the ARPU in China, and 24 times less than the ARPU in the US. While much of this has to do with low call prices due to intense competition between MNOs (India has 13 different telecom operators), a major factor in the low ARPU is declining user spend on voice. The PWC Report states that despite being the second largest nation in the world, both in terms of people and mobile telecom subscribers, India has nearly the lowest average revenue per user (ARPU) in the world.

As the telecom industry sees a rapid decline in voice tariffs, players are looking at services beyond standard voice calls to propel it to the next level of growth. Indian mobile value-added services (MVAS) market has been witnessing phenomenal growth since the last few years and has by far outpaced other markets around the world. According to an IAMAI report, the MVAS market in India is set to grow to US $9.5 billion in 2015 from an estimated US $4.9 bn in 2012. Telecom operators in India derive their revenue primarily from services such as SMS, caller back ringtone, music downloads, multimedia games, etc. These are also known as the traditional or the Peer-to-Peer MVAS offerings. These will continue to remain important and major contributors to the overall share of the MVAS revenue.

urthermore, the availability of affordable devices which has led to the deeper penetration of mobile services in rural areas and the telecos’ focus on providing regional content for such markets is set to contribute towards the growth of MVAS.

As data takes centre stage, the telecom industry is transforming itself to become a provider of utility services such as making bill payments besides offering banking, education, entertainment and healthcare services at the touch of a button on mobile phones. Hence, it does not come as a surprise that telecom operators are busy forging tie-ups and creating platforms for data-based mobile value-added services (MVAS) beyond ringtones and wallpapers to open new revenue streams for themselves. For telecom providers, the focus is going to be on exploiting the mobile VAS (value added services) market to the maximum so that their customers get the maximum benefits, out of air-time, high-speed internet, texting and video call facilities, among other services.

On the other hand, the smartphone manufacturers will focus on providing a plethora of apps on an easy-to-use interface which makes juggling various applications simultaneously, an easy task. According to research firm Gartner, ‘mobile applications along with money transfer via short message service’ lead the list of top 10 most used mobile applications, followed by ‘mobile search’, ‘mobile browsing’, ‘mobile advertising’ and ‘mobile music’. Going by the current usage trends, the phones will become an extension of the consumers’ lives and will be used to access all services of their needs.

According to a report published by Deloitte Consulting, the demand for MVAS is being driven by the following services:

• Information based services such as news updates, health-related information, stock details and more.
• Application-based services that need the user to play an active role such as checking the status of payments, GPS.
  
  Enablement services which are a substitute to those provided by physical infrastructure such as a bank or a school. For example, person-to-person payments, travel reservations etc.

Services such as m-commerce, social networking, video streaming, enterprise VAS, are some of the game changers for the industry in the coming times. The market mainly consists of caller tunes, subscription-based alerts such as sports updates, and SMS-based contests. However, with the launch of 3G services and reduced smartphone prices, consumers are now increasingly demanding newer and more advanced forms of m-entertainment services.

Mobility has the potential to profoundly improve healthcare access and affordability in India. Healthcare infrastructure is heavily skewed toward urban areas. According to a report by the University College of London on Healthcare in India, close to 75% of healthcare infrastructure, medical manpower, and other health resources are located in urban areas that account for only 27 percent of the total population. In addition, healthcare affordability is a major challenge. Today, about 75% of Indians are without health insurance. While most m-health services available are based on information dissemination —with consultative services slowly gaining steam—there is a much larger role for m-health in India given the nature and scale of healthcare challenges facing the country.

M-finance services in India began with SMS-based alerts but have graduated to mobile banking services supporting a range of transactions. Consumers have rapidly adopted mobile banking services based on the convenience they offer. Mobile phones can also play a key role in extending financial services to 40% of India’s population who are unbanked as per the IAMAI report.

MVAS segment currently is plagued by challenges like regulatory challenges and interventions, lack of infrastructure and availability of funds. However with growing consumer awareness and rise of a generation that is extremely net savvy, the sector is likely to grow at a healthy pace in India. TRAI’s recommendation to license VAS is driven by the intention of allowing and encouraging new and innovative ideas for the various stakeholders in the industry.

It is amply clear now that MVAS is going to be centre piece of the mobility revolution for the telecom players. The MVAS space is set to witness a high growth trajectory as the industry goes through a lot of structural changes and is poised to grow and contribute greater revenues to the telecom industry. India, no doubt has immense potential to take the lead when it comes to innovations in MVAS.