The long awaited event in the Indian Telecom Industry ”The Grand 3G auction” has been 26th day over with PAN India Spectrum price set at Rs. 13,474 crore, though the auction eventually happened after more than a year from the initial proposed date. Delhi and Mumbai circles grabbed top positions taking an extensive lead from others with prices closing at Rs 2,372.97 & Rs 2,433.88 respectively.
By the time our Indian Telecom industry prepares itself for 3rd Generation let’s talk about existing Value Added Services governing Indian telecom.
Brief definition of VAS : Any service except peer to peer calling comes under of Value Added Service in Telecom. Thus SMS & DATA services are also covered under the Umbrella of VAS.
The prime question here arises, “WHY VAS?”. Present day operators are facing the biggest hick of declining ARPU(Average Revenue Per user) and increasing churn so how can Value added services HELP ???
A sharp decline in average revenue per user is being witnessed due to tumbling tariff rates. Entry of new operators has aggravated this and tariff rates have hit rock bottom levels. Thus, telecom operators are seeking ways to increase their per-user revenue and VAS has become one of the key focal point. To make this more attractive vendors and operators have started focusing on innovative solutions and local content to increase consumer stickiness along with improving the adoption rate of these services.
If we look at the figures from Airtel revenue last quarter ending 31 march 2010
Average Revenue Per User (ARPU) for the company was at Rs. 220, down Rs. 10 from Rs. 230 last quarter. But the percentage of “Non Voice Revenue” for the company grew 9.3 percent quarter on quarter to 11.8 percent of mobile revenues. SMS revenues as a percentage of mobile revenues declined to 5.7 percent of total mobile revenues. The exponential increase in Non-Voice revenue during the time of falling ARPU shows the sturdiness of Value added services
Now the question is that if VAS is a key consent in Indian Telecom why its potential still seems undermined, the answer to this is quite simple “Lack of VAS education” amongst the mob though recently we have seen operators like Vodafone & Aircel making ad campaigns for awareness of Value Added service still VAS is a matter partially aloof to a common Indian subscriber and also an area of his ‘lack of interest’.
Ok now let’s have a look at conditions that stain’s it, VAS has tremendous potential in class B and C circles. If sold with the right pricing and segmentation techniques it can win huge revenue returns. There are few researches done among customers from leading operators showed clearly that customers in the low and average pre-paid balance segment were fully aware of features, products and tariffs.
Many leading operators have the highest usage and penetration in class B and C cities as compared to the metros. One major factor for this is customer demand for rich regional content which gives scope for operators to promote niche products to different segments.
First vas services were push based to the customer through auto dialers and SMS, things have changed to a larger extend now, consumer has become MORE AWARE of what he wants and what he doesn’t want .TRAI regulations have also become quite strict to follow the interest of the consumer to a larger extend
Now content partners and Platform partner are aware of the need to support operators to enable multi-level charging or micro charging, pull modes and retention offers. Although revenue share percentages would remain the same even in a multi-level charging scenario, partners have overcome the fear of lower rental ARPU in the pursuit of increasing VAS penetration and enjoying a long term benefit along with the operators.
How this can be managed : few set of examples can be :-
Giving add-on-Service-based offers: Operators are getting into constant data mining to make offers at the most probable exit point to retain customers. The usage components of Subscription VAS-song changes, voice browsing minutes and text alert content are offered free or provided at discount.
Segmented initiatives to increase Usage-A major reason for Customer initiated de-activation in VAS is low usage. Tracking past usage trends of each customer in terms of usage duration, content and language preference is absolutely critical for planning promotions to induce usage. Studying this helps in knowing the consumer behavior and hence giving them the benefits to stay on service.
Win-Back Offers for churned customers: At least 35% customers churning out due to low balance are prone to coming back if re-targeted with a correct combination of pricing, content and campaign style. Like Try & Buy offer or call back & get exciting prices .The typical campaign which works as a win-back is a one month rental waiver pitched in a customized out-call with an offer feel.
Our next take will cover the insight and most user procured Services amongst the array of VAS
Starpco July 4, 2010 at 11:48 pm
I wanted to know that which company is higher revenu through vas service (all india basis)
Starpco July 4, 2010 at 7:33 pm
yes you are right.
Emad July 4, 2010 at 7:23 pm
zabardasti loota gaya maal
Emad July 4, 2010 at 7:22 pm
how much stake here for accedently activated VAS?
Amritha June 16, 2010 at 11:44 pm
Hello!
I want to basically understand the difference between the voice revenue and non voice revenue? Can someone explain
abhishek May 27, 2010 at 4:52 pm
awesome insight,with falling ARPUs also operators can gain in VAS.only thing required is focus and some innovative ideas as u have suggested
Punit Badal May 26, 2010 at 5:32 pm
Hi Tushar,
Good article,if we see very few people really know about VAS and fewest has got expertise in VAS like you.In Ericsson our whole team use to visit TT and we found ur article very informative and liked ur out of the box thinking.Want see more gud articles from Telecom Talk like this.
Best Regards,
Team Ericsson
Prac May 26, 2010 at 5:14 pm
yes language plays a big role as many of the subsricbers are from small cities or towns.But it can do magic if operator reduce the price
Ashok May 26, 2010 at 4:49 pm
good insight on indian value added market , I think tht 3G will increase the scope for VAS more and operators will rely on it more
Ankush Thakur May 26, 2010 at 3:54 pm
Really a nice artical…. there is still lot more scope left in VAS specially in International market which is yet to be explored.
saket May 13, 2010 at 4:03 pm
People are using mobile service for convience, not for entertainment,
And handset for enternainment and other usage.
I don’t find any way to earn profit by VAS compnay, except dumping their service on custmoers, which he is going to get rid off within few days/month.
The only way operator can help is Bundle some FREE VAS usage on each RCV or STV, instead of just luring custmers by lower tariff
Akshat May 12, 2010 at 5:44 pm
there is not much scope left for more innovative ideas to bring Voice revenue up,but possiblities in VAS are yet to be explored.If we see rite now,major part of the market is having class 3 or above mobile handsets,which are having many multimedia features,operators just have to explore and exploit.
Sanjay Bafna May 12, 2010 at 11:50 am
3G having a great impact in the VAS market at least in the top 100 cities in the nex 3 to 4 years. Social networking, enterprise centric applications, remote CCTV monitoring, mobile banking, location based services, email & broadband surfing on-the-move, multimedia downloads, video calling especially in urban centers with large migrant populations are some of the applications to be marketed early. Some operators may be able to borrow existing applications from their international parents or partners to introduce them quickly and capture the early adopters of technology.”
Prasath J May 11, 2010 at 10:40 pm
Yes, but still operators should come with NON-GREEDY offers like Rs6/min for listening RADIO, etc…
GAURAV JHA May 11, 2010 at 7:05 pm
If u are using reliance gprs [cost=10p/10kb] COST OF 1 MB = AROUND 10 RUPEES,, COST OF 1 GB= 10 X 1024 = ROUND ABOUT 10,000 RUPEES AND IF U R USING BROADBAND ITS 250/1 GB
K BALAJI PRASATH May 11, 2010 at 5:48 pm
I agree with your second example, class B & C circles are not comfortable in english. Language can play a good role in increasing VAS revenues.
Pranav Kumar May 11, 2010 at 5:30 pm
VAS can be very helpful forthe operator to increase their Revenue with falling ARPUs.Also I like the examples they can be helpful.Good article
Kirill May 11, 2010 at 4:34 pm
I agree with Utsav…in VAS there is still a lot of work to be done.
Utsav May 11, 2010 at 3:57 pm
Hi Tushar
Quite a different perspective on current maket scenerio. Best thing about VAS is, it doesn’t add any aditional cost to existing network setup of operators & QOS for VAS is not so stringent as compared to VOICE. So operator can make big profit by converting VAS into CASH by putting some more inovation
Kirill May 11, 2010 at 3:01 pm
its interseting that after fall in ARPU ,still there is increase in VAS revenues.It means Indian market is having a lot of potential which operators have to find out.good article…want to see more
Nilesh Patel May 11, 2010 at 2:54 pm
Are you sure the auction is over, coz nowhere did i find it saying its over, itr has crossed 13K crore mark,but is it over and if it is who has won in the aution
Hardeep May 11, 2010 at 12:38 pm
i agree that fall in ARPU is primarily because of lower tariffs….. but there are other factors also involved which can really help companies….. like if 1 operator provides everything to his customers, wont he get a good ARPU? then there wont b a need for two or three or more sims….. there are soo many points like this, which need the attention of operators, which will help only them.