Though VAS in India is only 10% of total operator’s revenue as compared to 30% in Europe and Japan, it is likely to go up with the penetration of 3G services in India. Arun Gupta, CEO and Founder of MoMagic, speaks to TelecomTiger on issues related to VAS industry, 3G penetration and expectations from the government. Excerpts:  

Q. What is the status of mobile VAS market in India?

A. Total VAS industry in India stands at around Rs12,000 Cr -15,000Cr. Telecom service providers retain bulk of revenue (approx. 70%) and VAS contributes 10%-15% of operator’s revenue. In India there has been a lack of regulation and disagreement on issues like revenue share that is hampering the growth of new companies and hence the VAS industry.

At present the on deck model allows users to access VAS services that are allowed by operators and for which billing is done by operators. This should change to off deck model that allows VAS companies to offer services directly to consumers by using a short code assigned to them. We also see a rise in need of services for rural areas as penetration is rural areas is on the rise. In fact, MoMagic has already developed applications like Mandi Bhav that not only provides info on cash crops but also provides advice and weather info to farmers as a first step to provide solutions to the rural segment.

Q. How do you compare Indian market with countries in Europe and with Japan?

A. Europe and Japan VAS industry has 2 major differences than the Indian VAS industry. Firstly, penetration of 3G in these countries is much higher than India. They are approximately around 45% to 50%. Secondly, VAS in India is only 10% of total operator’s revenue and in Europe and Japan it is approximately 30%. Also as compared to global counterparts, revenue share model in India favors operators. 

Q. Do you think mobile VAS market will expand once 3G penetration takes place in India?

A. 3G has opened up new avenues for VAS industry. 3G will allow providing more services like video and image based content since greater bandwidth is available. Greater focus will be in areas like Live Video Streaming, Mobile TV, High Speed access to internet, video downloads, LBS and online mobile gaming. Content Provider’s will also focus more on interactive content and areas like local language based rural content, medical services for  rural market as it is a growing segment. MoMagic had already anticipated the rise of apps due to 3G and has developed an App Store that has a wide variety of applications, tools and games for users.

Q. Are you satisfied with the existing policies (or no regulation) in the mobile VAS segment?

A. Bringing in of more regulation will give a structure to the MVAS domain in India. There is a lack of recognition of VAS as an industry. There has been lack of government initiatives and guidelines. We also hope to see the share of revenue to tilt towards content providers and app developers more than what it is now. On the infrastructure front there has been lack of security and micro payment infrastructure. Now it seems that in 2012 TRAI has put forth suggestions for creating and promoting an ecosystem for the VAS industry.

Q. What is your wish list? What should the telecom regulatory authority of India (TRAI) do to promote mobile VAS in India?

A. MVAS needs to recognize as an industry. This will open multiple doors for the growth of MVAS in India. Government needs to provide input to the basic needs of the common people and help in development of applications for the common people.

Operators and VAS service providers should work more closely not only with respect to a unbiased revenue share model, but together they can provide better VAS services and open up a new source of revenue and increase the contribution of VAS in overall Operator’s revenue like what happens globally.

TRAI needs to spread awareness and also create an ecosystem for growth of entrepreneurs and provide them some kind of incentives or rebates for development of certain type of applications that cater to the larger masses.