Mobile VAS in India

3G bids are on. 500 million mobile subscribers are added and still counting. Telecom sector in Indian is booming. ARPU figures are all time low. Amidst all this, price wars are on. Operators are looking at large VAS market to generate additional revenue stream. Is VAS going to be a big revenue churner for involved stakeholders? Do India has support infrastructure in place? Are all stakeholders are seriously working to organize VAS market? Is regulator ready to shell out all required benefits and support this nascent industry?

No doubt VAS is a big opportunity waiting to be explored. Let’s try to understand the VAS market and industry in nutshell and discuss issues and challenges at hand. Low ARPU numbers have already forced Indian telecom operators to explore alternative revenue streams. Indian retail industry has failed to encash e-commerce boom and looking for a more ubiquitous alternative. M-commerce looks much more promising given the wide reach base and popularity in the hinterland. Mobile channel adds 3^rd dimension to multi-channel retailing. Indian banks have been very fast in adopting IT and cutting down huge costs over past few years. Mobile channel is again something that is luring many bankers. Mobile payments and mobile banking are sought after applications. Additional data bandwidth and popularity of mobile commerce are key enablers to spread these applications. Advertisers see mobile channel as a goldmine to reach their target customers. Mobile has a distinctive advantage of a personalized and localized device opening up huge opportunity for target marketing. Games, applications, multimedia content, songs, movies and lot of creative content is piling up on internet and many data servers looking for additional revenue. Mobile VAS throws up a huge opportunity to sell this content to a wider set of audience. So, a large number of people are set to ride on VAS wave.

Now look at the roadblocks. Our VAS industry is highly fragmented and unregulated to a great extent. Content providers, telecom operators and other parties involved do not have well crafted revenue sharing model. Also there is lack of standardization in the content and service provider’s interface. 3G technology and data bandwidth is still out of reach of most of Indians. Our masses just have basic phones and limited by their usage and communication skills.Credit card penetration is still very low for mobile payment to see any market in India. Mobile security is a big concern in India due to large number of frauds and thefts. Mobile advertising is getting bit intrusive due to improper regulation. There seem to be a lack of synergy amongst bankers, retailers, application providers and telecom operators. There is a strong need to understand consumer’s psyche and needs, lack of which has resulted in lot of undesired applications.

So where are we heading? In my mind, all stakeholders need to come together to understand real consumer needs and devise their strategies accordingly. 3G might not be an immediate remedy for the challenges at hand. Government should provide adequate incentives and tax holidays for this cause. Instead of fighting for revenue with existing VAS market pie, all efforts should be taken to increase the pie many folds.

In my opinion Interactive Voice response (IVR) is a way ahead for India as we people are good at vocal communication. Microfinance applications, rural VAS and basic payment services could just be the right mix of VAS for India at this hour.