VAS players need to get together

Telecom service providers in India have matched each other on prices, technology, customer services and service offerings over the last few years. The question that now arises is how they will they differentiate from each other and arrest their falling ARPUs.
Each telco has, at various forums, said that mobile value added servises (VAS) will provide huge opportunity to telecom operators to improve their ARPUs and offer innovative services to subscribers.
Problem with VAS industryAll services offered by telcos, other than voice calling, come under VAS. VAS can be categorised as entertainment, info and m commerce.
Among these, entertainment VAS services such as ring tones, music and games are very popular and have contributed significantly to the growth of this industry in India.
Also, VAS will become even more important as higher bandwidth becomes available to customers through 3G. With 3G network, the demand for advanced VAS will pick up, which will lead to innovation in technology, devices and content.
The mobile VAS industry in India has been witnessing rapid growth, and a study by the Internet and Mobile Association of India (IAMAI) says that it has grown from Rs 2,850 crore to Rs 11,860 crore in less than five years.
The VAS ecosystem involves multiple players such as the content owner, aggregator and technology enabler. In India, operators retain around 60-80 per cent of VAS revenue and the remaining is shared between the aggregator and content owner. In markets such as Japan, the operator gets only 10-20 percent and the rest of the revenue goes to the aggregators and content owners.
At present, there are about 160 VAS companies in India. But despite the huge size of the industry, it lacks a stand alone association that presents its unified voice to the government, service providers, investors, consumers and other stakeholders.
Kartikeya Watts, chief operating officer, Planet41 Mobi-Venture, says, "There's a need for a standalone VAS association in India to look into the problems the VAS providers face with telcos in terms of revenue generation and revenue sharing models."
Need for VAS associationMost other verticals in the telecom industry have bodies which enhance their roles. There are the Cellular Operators' Association of India (COAI) and Association of Unified Service Providers (AUSPI) for telecom operators; Telecom Equipment Manufacturers' Association (TEMA) for equipment vendors and the Indian Cellular Association (ICA) for handset manufacturers.
Nitish Mittersain, chief executive officer, Nazara Technologies, is of the view, "I think an association focused on VAS is important as it is a new industry. It will help bring a lot of companies together so that they can work in collaboration. It will enable joint discussions and will help in resolving issues that have been plaguing the industry for long."
The need for a VAS association becomes all the more important due to the structure of the industry. VAS providers are still a small part of the ecosystem and mobile operators remain the key influencers for most services, as well as applications offered to a mobile user.
Prabha Aithal, chief technical officer, CanvasM, says, "It will definitely be a good thing to have an association, just like we have in other countries. VAS is growing in India and there is a demand for content."
As a result of 3G, applications such as gaming, video conferencing, social networking, mobile TV, mobile IPTV and convergent communications etc. will show increased consumption, and there will be a lot of innovation in the area. Apart from that, VAS applications will also see an increase in uptake as enterprises become increasingly aware of the mobility advantage to their organisation in terms of increasing productivity and decreasing operational cost.
"An association will also enable a more open platform for all VAS companies to approach operators with new innovative ideas, which have been encouraging for telcos in terms of revenue," says Kartikeya Watts.
Aithal adds, "We have the technology and everything ready, and VAS players want to offer innovative apps. But operators are holding major revenue share and they control the entire value chain. An association will help in laying down guidelines and expanding the VAS industry."
"The association will also reduce undercutting in the industry as it will offer a common platform to all companies. However, no one seems to be taking any steps to start such an association," Nitish.
In the near future, there might be a huge growth in m commerce as it has tremendous growth opportunity in India. Services which will provide a boost to m commerce in India are mobile marketing, banking, advertising and payment.
A major step has been taken by the RBI, as it has allowed mobile wallets and had earlier classified these prepaid payment instruments under semi closed, closed and open types.
Sunil Kulkarni, group president, Oxigen bill payment services, has a different perspective as he feels that IAMAI and MPFI are already the forums in this space. He says, "The sole customer for VAS is the telecom service provider. If a VAS provider starts offering services to consumer, it gets into m commerce and e commerce space."
He adds, "Except IAMAI, who has done some work, we have not seen any specific action by the industry."
Watts highlights, "Though IAMAI has been making efforts to raise the issues at there level, we need a more aggressive approach to have a clear dialogue with the operators, who have been giving a raw deal to VAS companies in terms of delayed payments, and very less revenue sharing, and have been encouraging new VAS players to design new innovative solutions."
With the phenomenal growth that VAS is seeing in India, there is the need to formulate and promote common standards and guidelines to help build a healthy and thriving VAS industry.
This undoubtedly requires collaborative efforts from the industry in terms of endorsement and implementation, and to achieve what can be better than an association which is formed by the industry, for the industry.