Value Added Services
It doesn't matter whether we like it or not, but the cost advantage (for those who entered the market earlier) for the Indian Telecom companies has vanished in thin air. The Telecom business has become more modernized than ever, largely due to the discovery of digital switching, cellular radio and optical fibre. The worrying part, however, is that the value in traditional services is diminishing continuously and they are not sure anymore whether (constantly evolving) technology is their friend or foe?
Competition is Heating Up
New competitors just keep coming up relentlessly, thus driving the margins further down. More than the conventional services, it is the unique capabilities of the telecom companies, in other words the value added services, which are expected to provide them with the much needed competitive edge in the market – especially in fixed lines, broadband and mobile networks. At the same time, the importance of customer relationships, and understanding cannot be underestimated.
VAS Generated Revenue is Growing
Even for the bigger mobile service providers, the revenue generated by data traffic or VAS services is close to 30-40%, though largely it has been dominated by ringtones and SMS. Slowly but surely, other services such as email and mobile broadband are also joining the fray. The astonishing success of App Store from Apple is a clear pointer towards the way where the telecom VAS markets are headed today. In fact, within the first year of operation, users downloaded 1.5 billion applications. The lesson for the telecom companies was clear, if the experience was right, people were willing to look for new ways to add to their mobile experience (main point: they are willing to pay for it too).
SMS Remains the Most Successful
While we are yet to see any application which may go on to succeed like SMS did, the networks and devices are experiencing continuous development, thus enabling the growth of new offerings for the customers – right from productivity tools to games and other fun activities.
VAS services drive the revenues directly, and enhance performance in myriad other ways. The result is – a stronger relationship with the customer, which in turn leads to better customer databases (and more customized products) thus ensuring consistent profits.
You are in the Right Market
In terms of VAS telecom markets, India is probably the best country to be in. This is the second largest mobile market, with about 450 million subscribers and still counting (should we say growing?). The number of minutes used per user by Indian subscribers is also one of the highest in the world, therefore the potential for growth remains unmatched.
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