Indian VAS Industry Value to Hit Almost $5Bn by 2015

Details: James Barton; Category: Trends & Forecasts; 04 November 2010; 10681 views

A new report that profiles major VAS providers in India also provides an in-depth look at the country’s VAS market. ‘Novonous VAS Tracker 2010’ has covered 77 companies, with a detailed SWOT analysis for each of the participating companies...

Although voice VAS continues to command a large revenue share, other value-added services are playing an increasing role in differentiating operators in the face of falling ARPUs.

The VAS ecosystem involves multiple players such as the content owner, aggregator, content/application developer, technology enabler and telecom operator. In India the operators retain the majority of the revenue (around 60% - 80%) while the remainder is divided between the aggregator, application developer, technology enabler and content owner.

The report claims that the next five years will see the value of India’s VAS industry increase to $5 billion. Many companies are correspondingly looking to outsource management of their VAS offerings, mimicking current outsourcing models for IT and network infrastructure, in order to reduce costs while maintaining a high quality of service.

According to the sector regulatory body TRAI (Telecom Regulatory Authority of India), there has been an increase of 8.76% in the total wireless subscriber base as of June 30th 2010, over the previous quarter. The urban subscriber base of India as of June 30th 2010 is 425.87 million (67.0%), while rural subscribers number 209.63 million (33.0%). Internet subscriptions, however, do not match the high amounts of mobile phone users. Mobile internet is therefore a key growth market, particularly now that 3G services are being launched across the country. Meanwhile, regulators are reporting that subscriptions in rural India are on the rise, reaching 209.63 million in June 2010.

The report covers the various changes that are enabling private players to venture into the rural markets on their own. Some VAS players are striving to differentiate themselves, providing superior quality services/products to negotiate a better revenue share with operators. Services like advertising on mobile and multimedia gaming can be alternate sources of revenues for VAS companies in India.

The next wave of SMS is expected to offer users an enhanced messaging experience with customization options. User Generated content (UGC) and other Social Networking Communities (SNC) are becoming popular with the mobile internet amongst the Indian youth. The cost of data services is falling, as operators and VAS players try to enhance the user experience.

The 3G mobile spectrum auctions concluded in May after a long delay, with licences covering 22 ‘circles’ issued to seven operators. 3G spectrum will account for considerable revenues for the telecom operators in the future, who are already facing a huge crunch with the decreasing ARPU revenues in India.

VAS is projected to become increasingly important as higher bandwidth becomes available to customers through 3G. The demand for advanced VAS is expected to rise, with music downloads, video streaming and video SMS facilitated by improved bandwidth.

Ultimately, the future is looking bright for VAS in India. The install base is being driven by flexible pricing, increased ease of use and higher awareness, and the industry looks set to grow over the coming years.