Study on value added services on mobile platform : Market estimation and need-gap analysis

Abstract

As per TRAI reports, there are 851.70 millioni wireless subscribers in India as of 30 June 2011. Urbanwireless subscribership stands at 562.12 million while rural wireless subscribership stands at 289.57million. The teledensity in urban area is 155.96 while in rural area it is 34.58. The share of urbansubscribership is 66% whereas the share of rural subscribership is 34%. Based on these facts it is clearthat the urban areas have reached a high level of penetration, semi-urban areas as well as rural areasseem to be the next wave for the telecom companies. Due to this irregularity in subscriber base,telecom operators and other stakeholders have to provide advanced as well as innovative services tothe existing matured user base. Telecom operators should also need to consider the financiallychallenged base in semi-urban and rural areas to provide mobile services at affordable costs.Consequently, Mobile Value Added Services (MVAS) which comprise of advanced services as well asbasic services will need to be provided to the divergent mobile subscribers.In order to keep up with the competition, the telecom operators fought a long and successful price warwhich turned in favor of mobile user where in the call rates have been dropped significantly resultinginto very low overall Average Revenue Per User (ARPU). This has drastically affected the profit marginsof the telecom operators. Telecom operators now have to look for newer avenues to increase theirprofit margins and boost their revenues. Mobile VAS is one such opportunity for telecom operators toride on to increase their margins. Now with the advent of 3G services, the speeds are bound to risewhich help in improved service delivery. This is one of the major positive aspects for mobile value addedservices.India has a very large young population whose latest muse is the mobile phone. It is particularly clearthat youth spends most of their time on mobile phone. Today's younger generation are also spendingmore. Mobile VAS has to be created around these users. To achieve high growth, the content andservices provided through mobile VAS has to be user-centric. However, the problem is identifying needsof specific segments. These segments could be among the urban or non-urban users.In this report, we attempt to highlight the challenges facing the mobile VAS in India and map futurepreferences for the mobile VAS. This report also looks the current state of VAS value chain and how itwill evolve as the VAS sector matures. This report evaluates the challenges faced by differentstakeholders in VAS ecosystem and how each of them should react to be able to succeed in this newenvironment.