VAS: Is re­vival in sight?

Voice-over-LTE would throw in new op­por­tu­ni­ties while fur­ther growth could come from ar­eas such as lo­ca­tion-based ser­vices, home au­to­ma­tion and the mo­bile pay­ments play.

Voice&Data - - FRONT PAGE - —Suresh Khosla VP Sales Asia Pa­cific, Mahin­dra Com­viva —Atul Prasad VP – Sales, Al­tru­ist Tech­nolo­gies

While the ris­ing up­take of mo­bile broad­band has brought growth back to the tele­com ser­vice providers in In­dia, it has also led to a can­ni­bal­iza­tion of the value added ser­vice (VAS). From a stage where it used to form 12-13 per­cent of tel­cos’ rev­enues, the rev­enue share of VAS to­day is down to a mere six to seven per­cent. As is com­mon knowl­edge, the mo­bile broad­ways are prompt­ing users to give VAS buses the miss and ride the apps band­wag­ons in­stead.

As far as the tra­di­tional VAS of ABC — astrol­ogy, Bol­ly­wood, cricket—is con- cerned, its days can at best be con­sid­ered as counted. That rev­enue stream is dry­ing up faster than one would have liked it to. The greater con­cern for the in­dus­try, how­ever, is that the short­fall is not be­ing made up by any other VAS streams.

Tel­cos, for most of the part, have lit­er­ally sat on the side­lines and watched the

app waves wash away their walled VAS gar­dens. A ques­tion that in­dus­try on­look­ers have asked them­selves is: should the tele­com in­dus­try in­deed have acted as hap­lessly as it has or could it have re­sponded with at least some de­gree of in­no­va­tion?

In­hibitors for VAS in­no­va­tion

His­tor­i­cally, tele­com in­dus­try in In­dia has de­pended on third­party plat­form providers for cre­ation and de­liv­ery of VAS rather than fo­cus­ing much on in-house de­vel­op­ment. Also, there was a very

heavy de­pen­dence on a hand­ful of VAS streams like ring­back tones and caller ring-back tones, the suc­cess of which partly thwarted the de­vel­op­ment of other streams. A greater rea­son for the re­cent slide in VAS rev­enues, how­ever, may be at­trib­uted to an ear­lier com­pla­cency in the VAS com­pa­nies and their lack of readi­ness in tack­ling the dis­rup­tion caused by a rapid on­slaught of the apps.

Also, the VAS ac­ti­va­tion pro­cesses were re­port­edly fraught with bugs and am­bi­gu­i­ties and the stake­hold­ers were able to do lit­tle to rid the of­fer­ings of the gaps and make them foolproof. So, when a Tele­com Reg­u­la­tory Author­ity of In­dia (TRAI) reg­u­la­tion spec­i­fied clear con­di­tions for the ac­ti­va­tion of VAS sub­scrip­tions, com­pli­ance be­came dif­fi­cult to achieve and the VAS rev­enues of tel­cos got neg­a­tively im­pacted.

Lessons from apps

As op­posed to VAS, which typ­i­cally re­lied on SMS-based steps for ac­ti­va­tion and ac­cess of ser­vices and hence had its ad­dress­able mar­ket lim­ited to a se­lect seg­ment of rea­son­ably ed­u­cated sub­scribers, apps tend to have in­tu­itive in­ter­faces and are there­fore able to ap­peal to a po­ten­tially larger cus­tomer base.

So, as the smart­phone adop­tion grows, apps are placed at a nat­u­ral ad­van­tage over VAS. More­over, since a vast num­ber of apps on the app stores are free, that be­comes a fur­ther in­cen­tive for users who would need to pay up for

On VAS growth and evo­lu­tion:

The def­i­ni­tion and scope of VAS have gone through com­plete change, war­ranted by the changes in busi­ness mod­els and fo­cus of tel­cos in the last couple of years.

Mahin­dra Com­viva tra­di­tion­ally started offering ba­sic VAS ser­vices like CRBT and mes­sag­ing so­lu­tions to tel­cos in In­dia and in the global mar­ket. Keep­ing pace with the mar­ket and based on the de­mand, we have in­vested in four key ver­ti­cals of Commerce, Con­tent, Data and An­a­lyt­ics. As part of Commerce, we work with tel­cos and banks and of­fer them so­lu­tions in mo­bile money and pay­ments, dig­i­tal wal­let and mo­bile POS. In Con­tent, we work with tel­cos and of­fer them tra­di­tional VAS, call com­ple­tion suite, dig­i­tal con­tent and some niche rev­enue gen­er­at­ing point so­lu­tions. Given the up­take of ‘data’ due to so­cial me­dia ap­pli­ca­tions, we’re help­ing them to of­fer data packs in an ap­pro­pri­ate man­ner and main­tain­ing QoS for their end users. There is also an ef­fort by tel­cos to go af­ter their sub­scribers and push them con­tex­tual of­fers. We have some unique plat­forms that work with ex­ist­ing in­fra­struc­ture of tel­cos and let them go in a tar­geted man­ner and gen­er­ate ad­di­tional rev­enues.

On ar­eas of in­no­va­tion:

Commerce, Con­tent, Data and An­a­lyt­ics are the pil­lars and driv­ers for our in­no­va­tion. We will evolve around th­ese four ar­eas and con­tinue to en­gage with tel­cos and come up with point so­lu­tions for growth.

We’re help­ing some of key play­ers in In­dia and glob­ally to roll out their dig­i­tal wal­let and mo­bile money so­lu­tions. A ma­jor­ity of tier 1 tel­cos de­pend on Mahin­dra Com­viva to en­able their recharge plat­forms across Asia and globe. On data side, we have en­abled mo­bile data plat­form for tel­cos and are help­ing them mon­e­tize their data plans and of­fer flex­i­ble bun­dled of­fers. Con­tent is a ma­ture offering for us and we have a large foot­print of VAS plat­forms, com­pre­hen­sive repos­i­tory of dig­i­tal con­tent, both lo­cal and in­ter­na­tional. We also have call com­ple­tion so­lu­tions de­ployed at tel­cos that help them gen­er­ate quick up­take and rev­enue. The grow­ing de­mand of rel­e­vant and fo­cused of­fers by tel­cos is lead­ing to de­ploy­ment of An­a­lyt­ics so­lu­tions.

Ad­di­tion­ally, we’re also in­cu­bat­ing few other point so­lu­tions around the above ar­eas, which are in the oven at this point of time. sub­scrib­ing to a com­pa­ra­ble VAS ser­vice.

The app stores have suc­cess­fully fol­lowed the mas­si­fi­ca­tion ap­proach ver­sus VAS plat­forms which con­tinue to be stick­ing to the pre­mi­u­miza­tion mod­els. It is due to this mas­si­fi­ca­tion that de­spite shar­ing 70 per­cent or more rev­enues with the app de­vel­op­ers in case of paid apps, the app store model has been sus­tain­able. At the same time, a fa­vor­able rev­enue share at­tracts app and con­tent de­vel­op­ers more to the stores as op­posed to the VAS plat­forms, which have his­tor­i­cally shared as less as 10 to 15 per­cent of the rev­enue with the cre­ators and de­vel­op­ers.

Ar­eas of po­ten­tial op­por­tu­ni­ties

Lo­ca­tion Based Ser­vice:

By virtue of the sub­scriber pres­ence in­for­ma­tion that tel­cos have due to the sheer ex­clu­siv­ity to SIMs in the mo­bile de­vices, it is pos­si­ble for them to of­fer lo­ca­tion-based ser­vices (LBS) in highly dif­fer­en­ti­ated ways and thus po­ten­tially steal an edge over apps in th­ese ser­vice seg­ments.

Two broad busi­ness mod­els are pos­si­ble here. One, sub­scribers could pay for LBS-based in­for­ma­tion, say, when vis­it­ing a new city or even within their own city a lo­ca­tion that they have lit­tle knowl­edge of. A mash-up of SIMbased pres­ence in­for­ma­tion and map data could en­able tel­cos to de­liver hy­per-lo­cal­ized in­for­ma­tion needs of users, even bet­ter if sup­ported in lo­cal lan­guages.

The app stores have fol­lowed the mas­si­fi­ca­tion ap­proach ver­sus VAS plat­forms which are stick­ing to the pre­mi­u­miza­tion mod­els.

On VAS growth and evo­lu­tion:

Al­tru­ist has worked with sev­eral brands for which it has de­vel­oped qual­ity apps. It has also ac­quired the erst­while Bub­ble Mo­tion, now called Bub­bly which is one of the widely used Voice Blog­ging tool on An­droid and iOS.

The com­pany has taken the in­or­ganic route to grow. In terms of mo­bile VAS, the com­pany works on IVR/ USSD/SMS and WAP. The flag­ship VAS prod­uct of the com­pany is Friendz Chat and Bub­bly. Whereas Friendz chat was de­vel­oped in­dige­nously, Bub­bly, the voice blog­ging plat­form was ac­quired last year. Bub­bly and Friendz Chat to­gether are live with more than 30 tel­cos across the world (in­clud­ing 12 in Africa). It ac­quired an­other com­pany ICon­nec­tiva in 2014, which is one of the fore­most com­pa­nies in the field of rev­enue as­sur­ance and fraud man­age­ment. Air­tel, both in In­dia and Africa, uses the plat­form along with more than 35 other tel­cos across the world. Bri­tish Tele­com uses the mes­sag­ing plat­form of Al­tru­ist’s sub­sidiary Teli­gent which was ac­quired by Al­tru­ist in 2012.

Al­tru­ist has also en­tered into a pre­lim­i­nary agree­ment with Italy’s Aco­tel Group for the pur­chase of In­fo2­cell. com from Aco­tel Group. The sale con- sider­a­tion, amount­ing to $5.5 mil­lion, will be fully paid at the sign­ing of the act of trans­fer of own­er­ship, ex­pected in Septem­ber, sub­ject to clear­ance from the rel­e­vant au­thor­i­ties in Dubai, where the sub­sidiary be­ing sold is reg­is­tered.

On the OTT threat to tel­cos:

Al­tru­ist has been work­ing very closely with lead­ing tel­cos to pro­vide them with a way to counter the OTT threat and has co-de­vel­oped so­lu­tions with them. The so­lu­tion as per Al­tru­ist lies in get­ting the op­er­a­tors to of­fer so­lu­tions that have mass ap­peal and have a sim­ple GUI which can be used by any­one who can use a mo­bile phone with the same mo­bile num­ber.

On the trans­for­ma­tion of VAS:

VAS is be­ing plagued more by per­cep­tion and the fact that it has been a source for cus­tomer com­plaints and cus­tomer dis­sat­is­fac­tion in the past. Now the VAS in­dus­try is fo­cus­ing on get­ting more prod­ucts that can ride on the chang­ing taste of the cus­tomer, i.e., ei­ther a com­bi­na­tion of voice and data or pure data play.

It’s a dif­fi­cult trans­for­ma­tion be­cause the rules of the games have changed. For the VAS providers, the big­gest source of strength was the op­er­a­tor pro­mo­tion, on which they used to ride for rev­enues and growth. With op­er­a­tors not be­ing de­pen­dent on VAS for ad­di­tional growth, which is now be­ing fu­elled by growth in data rev­enues, and there­fore deny­ing the VAS providers any pro­mo­tions, the VAS play­ers are be­ing forced to look at dig­i­tal mar­ket­ing for their prod­ucts. In June 2015, Al­tru­ist ac­quired SoftProdigy, which was a lead­ing player in the field of mo­bile and dig­i­tal mar­ket­ing to bol­ster its dig­i­tal mar­ket­ing ca­pa­bil­i­ties.

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