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Despite challenges VAS market will continue to grow in India

Rajesh Razdan
Co-founder & Director, mCarbon
  TT Correspondent |  | 25/05/2012

Despite certain challenges, VAS will continue to grow in India due to factors like increase in awareness of VAS, increased subscriber base, introduction of 3G services and increased focus on m-Commerce. Rajesh Razdan, Co-founder & Director, mCarbon, spoke to TelecomTiger to present his views on these challenges. Excerpts:


Q. How do you look at the growth of VAS market in India?

A. Mobile value added services (MVAS) market in India has immense potential. Diverse demography, lifestyle and consumer preferences amongst urban, sub-urban and rural consumers across the country are destined to generate high returns for MVAS in India.

Factors like rise in disposable income has revolutionized consumer’s buying and spending trend towards PC, mobile devices, communication equipments and services. It has catalyzed the trend of smartphone and featurephone which enhance the scope for MVAS with mobile apps and rich mobile content. Also rise of usage of social networking sites amongst youth on the move will trigger growth of this sector. Lower 3 G tariffs offered by telcos will definitely boost usage and growth of MVAS in India.


Q. Currently companies working in VAS segment are facing challenges like high cost of VAS, limited availability of content in local language(s) and non-availability of enough high-end mobile phones. Will these challenges hamper the growth of VAS market in India?

A. VAS segment currently is plagued by challenges like local language content, user awareness etc. Also VAS as of today is primarily used as an entertainment medium though sectors like health, education, infrastructure, banking, commerce, hygiene, sanitation, law and agriculture offer immense opportunities. Providers also have to deal with regulatory challenges and interventions, lack of infrastructure and availability of funds.

However with growing consumer awareness and rise of a generation that is extremely net savvy the sector is likely to grow at a healthy pace in India in the long run.


Q. Some of your customers like Airtel and Idea are facing tough time in the wake of uncertain regulatory environments. Will that affect the company adversely?

A. An uncertain regulatory or political environment makes the eco system a bit more cautionary besides dampening the investor confidence, FDI and overall valuation. As far as our company is concerned, we are never too dependent on these factors when they were rather untouched and even now the adverse has also not affected us in the similar tone. I would go further and comment that operators in the wake of all this are looking up to players like us to bring differentiation in the market place and come out with innovative offerings that  plug not only the falling ARPU problem but also paves way for them to re-connect with their consumers. The story in the past few years has been volume driven rather than value or quality driven. Today’s customer has become very aware and her loyalty towards a telco player has further reduced by having sufficient choices in the space to move around and make a switch.


Q. Talking about TRAI proposals, does it make sense to govern a nascent and evolving sector like VAS?

A. TRAI’s recommendation to license VAS is driven by declared aim of allowing and encouraging new and innovative ideas to flower in the VAS business and smaller entrepreneurs to flourish. However the long list of security and other compulsory compliances that are pre-conditions of the license and the cost of such compliance would be a disincentive to innovators and start-ups. I would urge policy makers to frame policy that promote growth and enable service providers to provide high quality content and service at a lower price.


Q. Indian VAS market which is currently pegged at around INR 16,000 crore (US $2,937 million) does not have a standalone association or industry body to present a unified voice to the government, service providers and other stakeholders. Your comments. 

A. There are some representations from the industry in IAMAI though yes a standardised body doesn’t really exist. While the numbers quoted above talk about the overall industry it necessarily doesn’t talk about who controls the lion’s share of this pie. Unless there is a standard demarcation one draws (as in the internet zone) and allows different players to play their roles, it is difficult to suggest a common formula for success and benchmark it. Today, the service being offered defines its own strength viz. its IP value, competition and hence the first mover advantage. If you take the share of the revenue of above piece and make a distinction between operator (white labelling it) and solution provider, it’s all lopsided currently. Revenue share parity between the two important entity needs to be established before one can make this sector more harmonius.


Q. Currently, most of the applications are not able to provide optimum user experience because of the bandwidth issues. How do you look at this?

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