The report, Evolution of mobile VAS in India, was developed after detailed discussions with more than 50 key players across the telecoms industry in India, including the leading operators, technology platform providers, original equipment manufacturers (OEMs) and VAS players.
India’s Minister of State Communications and IT, Shri Sachin Pilot, released the key findings of the new report at an event hosted by Analysys Mason and the IAMAI in New Delhi.
The report states that the Indian mobile VAS industry will start to grow rapidly in the next two years. This process has already been set in motion as multiple structural elements fall into place, such as increases to data access speeds, smartphone and feature phone penetration, and the maturity of the content ecosystem.
Carriers are increasingly focusing on non-voice services to drive revenue growth as voice services become commoditized. During the next five years, VAS ARPU will increase by 48%, which will compensate for the 14% decline in voice ARPU. As a result, overall ARPU will stabilize and decline by only 4.5% between 2011 and 2015.
Mobile data will emerge as the next ‘killer application’, accounting for 32% of total incremental wireless revenue – primarily driven by the latent demand for connectivity, which wireline broadband has been unable to address because of availability issues.
Mobile commerce will represent an INR20 billion revenue opportunity by 2015.
Utility services that can provide a scalable, technology-enabled solution to issues around access to information, opportunity and infrastructure (for example, healthcare, education and agricultural/husbandry advice) can add significant value and, as a result, enhance the value proposition for users – particularly those in rural areas.
Mobile video has been promoted as the key differentiator on 3G networks, but the limited amount of allocated spectrum (5MHz) and associated capacity constraints will limit video-based services in specific segments and geographies.
Commenting on the report, the Minister said: “The mobile VAS market is miniscule at present in comparison with its potential, and the government will make appropriate efforts to put the industry on an equitable and sustainable growth path.”
In his speech at the launch event, the Minster suggested that service providers should provide locally relevant services in local languages to ensure success.
Kunal Bajaj, Head of Analysys Mason’s India office and lead author of the report, stated: “Carriers are under tremendous pressure from competition and declining ARPUs, which have stunted revenue growth. Recent trends in the sector indicate that now is the right time for them to increase their focus on the VAS space to find new opportunities for differentiation and earnings.”