1. Mobile VAS Summit
23-24th Sept 2009, New Delhi
VAS: Redefining Mobile Phone Services
in India
Deepak Halan
IMRB International

2. Who Are We?

3. About IMRB International
• We are a part of Kantar Group, the insight &
consulting division of WPP Group Plc.,
• 37 years of expertise with 28 offices in 11
countries
• Within IMRB, we have several sector specialist
groups
– Retail
– Automobile
– eTech (Telecom, Internet, etc) …………………….

4. Some VAS Studies Successfully Completed by us..…
Mobile Banking
Mapping of mobile banking technologies
Mobile VAS report
with IAMAI- 2007 edition and 2008 edition
A supply side report on Mobile VAS in India
Mobile Advertising
Concept test of various options of
Mobile Advertising among end consumers
Mobile VAS
Usage behavior of Mobile
VAS among end consumers
Mobile Remittance
Concept test of remittance through mobile-
both Domestic and International

5. …for a Number of Clients…

6. Mobile VAS: A Global Perspective

7. ARPU & Share of Data: Cross Country Analysis
• India and brazil
are low ARPU
countries and
share of data
is small
• In most
countries
share of data
increases with
ARPU

8. Comparison of Most Popular Mobile Phone Activities in
GCC and Europe
Percentages indicate penetration i.e. proportion of respondents who use the service at least once per month
GCC Europe
1. Voice (99%) 1. SMS (90%)
2. SMS (98%) 2. Voice (84%)
3. Take photos (87%) 3. Take photos (59%)
4. Record videos (78%) 4. Collect voicemail (36%)
5. Listen to music (77%) 5. MMS (35%)
6. Play games (59%) 6. Play games (31%)
7. MMS (56%) 7. Listen to music* (23%)
8. Ring-tone download (55%) 8. Listen to streamed music (14%)
9. Music download (51%) 9. Mobile web browsing (14%)
10. Phone balance transfer (50%) 10. Email (12%)
Source: Yankee Group and AMRB, 2008 *Downloaded or side-loaded
• It is evident that proportion of data service users is higher in Europe vis-à-vis GCC.
• Voice calling and SMS dominate in both regions, though the order is reversed. As we
look down the top-ten list we see broad similarities. e.g., music, games and multimedia
services like MMS feature strongly on both

9. The Indian VAS Mobile Market

10. Rising Mobile Subscriber base but… Decreasing ARPU
• We have crossed 450 million wireless subscriber mark now
and have the second largest subscriber base in the world
• Over 100 mn new subscribers added in 08.
• The growth of mobile market can be clearly attributed to the
favorable and improved regulatory structure, declining
handset prices and innovative pre paid tariff structure.
• With increasing competition and need for increasing the
subscriber base in rural markets, the call rates and hence
the ARPU are declining.

11. Rising Mobile Subscriber base but… Decreasing ARPU

12. Defining the Scope of VAS

13. Defining the Scope of VAS…
“Mobile Value Added Services are those
services that are not part of the basic
voice offer and are availed separately by
the end user. They are used as a tool for
differentiation and allow mobile operators
to develop another stream of revenue”

14. We see VAS standing on 4 pillars
Access
Technology
Devices
Technology platform such as The use of VAS is largely
SMS, GPRS, IVR & USSD are dependent on the features available
Infrastructure
used to deliver VAS services to in the mobile handset.
the consumer
Content
Growth of VAS market is dependent on
relevant content available to the consumers.
USSD=Unstructured Supplementary Service Data

15. Revenue distribution in VAS market
Content owner
-
gets 5 - 10%
revenue
Content Aggregator
gets 10 - 15% of the
revenue
Technology enabler
gets 10 - 20% of the
-
revenue
Mobile operator
keeps 60 - 80% of
-
the revenue
End user pays for
content/service/voting

16. Media & Telecom: Towards Win-Win
• Markets such as China, Japan and Europe have an organized business
model where the telecom operator keeps 20-30% of the revenue
• In these countries the VAS market is much more evolved than India and
the content market is not over-supplied and fragmented – so carriage
does not rule over content.
• Low revenue packages for VAS providers stunts innovation and quality
control of content.
• The operators could help VAS providers by providing them venture
capital, promoting their services and providing intellectual property
safeguard.
• An ideal revenue sharing arrangement - operators charge for access to
their pipes and a fee for billing and collection and pass the rest to VAS
providers and content owners.

17. Importance of VAS

18. VAS : Growing Market Size (Million USD)
3442
2033
1565
1204
950
Dec 2007 Jun 2008 Dec 2008 Jun 2009E Jun 2010E
• The VAS market is expected to grow steadily at a rate of almost 70% for the
next one year.
• VAS currently contributes around 10% to the operator’s revenue. It is
expected to increase to 12% by June 2010.

19. Other Reasons for increasing importance of VAS
• Decrease in ARPU despite increase in MOU:
With declining ARPU, the challenge is to develop alternative revenue
streams and retain customers by creating a basis for differentiation.
• Greater need for differentiation among the service
providers
– Greater competition
– Saturation in Metros and Urban cities
– Number Portability expected shortly in India.
• 3G VAS:
With added utility to mobile phone through 3G, both subscriber base
and ARPU are expected to observe phenomenal increase in the
coming years

20. Drivers and barriers to growth of VAS
in India

21. Key drivers for growth of VAS
Supply side drivers
Marketing Efforts by Operators
Price Decline of VAS services Demand side drivers
New Technology Adoption by Operators
Low priced feature rich handsets
Impact of 3G
Need for Entertainment &
mCommerce & Transaction based Services
Need for Local Content

22. Challenges to growth of Mobile VAS
VAS Challenges
VAS Challenges
Supply Perspective
Supply Perspective Demand Perspective
Demand Perspective
Lack of transparency in Limited awareness of
Revenue sharing VAS
arrangements & in billing
system High cost of content
Limited availability of Exit barriers for VAS
local content consumers are high

23. VAS - Access Modes

24. Comparative evaluation of Mobile VAS access modes
Parameter SMS Voice GPRS USSD
Costly as user
Cost to end Cheaper than is required to Cheaper than
Costly
consumer voice invest at each SMS
stage
IVR Need to
infrastructure invest in
Infrastructure in costly technology Infrastructure
Cost to provider
place especially infrastructure. in place
speech E.g. from
recognition 2.5G to 3G
Low
penetration
Handset Handset Handset
Reach of GPRS
agnostic agnostic agnostic
enabled
handsets

25. Comparative evaluation of Mobile VAS access modes
Parameter SMS Voice GPRS USSD
- Limited by - More
literacy and Convenient
language factor than SMS
Steep learning
Ease of usage Easiest to use
curve
- Difficult to
remember short
code and keywords
With
Enjoys low
expansion to
The biggest cost and
rural and Depends on
contributor and convenience
Potential likely to remain
semi- rural uptake of 3G
of usage
areas, has services
so in near future
huge
potential

26. Share of VAS Revenue by Access Modes
USSD
GPRS
3%
8%
SMS
Voice 49%
40%
• SMS contributes around 49% to the overall VAS
revenues. This consists of P2P, A2P and P2A services.

27. VAS Categories

28. Need based categorization of Mobile VAS
VAS categories
VAS categories
Entertainment
Entertainment Information
Information mCommerce
mCommerce
User interest Allow the user to conduct a
Designed for comes in from transaction using the mobile
mass appeal and relevance of the phone.
extensive usage. content
Currently in a nascent
E.g. News stage in India
E.g. Jokes, alerts, travel
Bollywood information, E.g. payment platform from
ringtones, ticket Paymate etc.
games, etc. information, etc.

29. Comparative Analysis of various categories of VAS
Entertainment VAS Information VAS mCommerce
Identifying the best
access mode to provide
Marketing it since needs mCommerce
differ across different
To drive the usage of segments Handset penetration
Challenges content/services other and usage of the key
than music e.g. games. Credibility of the source access mode (GPRS) of
since there are alternate mCommerce is low in
channels available India
Security concerns
Has potential to emerge
Expected to remain the Is going to be key to
Future as a key VAS component
VAS driver for the next address the needs of rural
status once security concerns
few years market
are addressed

30. Rural VAS market

31. The Great Rural India opportunity
Subscription
Population
Contribution
Contribution
30% 70%
Urban India
30%
70%
Rural India
• Telecom operators are seeing an immense growth potential in the
rural sector both in terms of new connections & VAS.
• As per market expectations, it is believed that of the next 250 million
expected to go mobile; at least 100 million will come from rural areas.

32. Future of VAS

33. Innovative Uses of VAS
• AdRBT (Ad Ring Backtone) wherein each time a person calls
he/she hears an ad jingle instead of a ring tone.
• Healthcare chains tying up with operators to alert patients via
SMSs about their appointment date with a particular doctor or
when their next dose of medicine is due.
• GlucoPhone: A Cellphone for Diabetics that measures blood sugar
levels, records and sends results to self and others and even
manages meal plans
• Speech recognition applications
• LBS Apps: SMS sent by a tourist enables the taxi to locate him
• Data: Traffic policeman can retrieve entire data about an offender
by simply sending an SMS

34. Future of VAS
• Till now the emphasis has mostly been on Voice & SMS based VAS
• With the advent of 3G in India the VAS market is likely to grow to a
larger extent in the near future both in terms of usage as well as new
application development.
• Some new VAS likely to boom in the coming years are :
– mCommerce (including travel, shopping, movie tickets etc.) & Mobile
marketing (like Ads on mobile, including product videos)
– Location Based Services
– Multimedia Broadcast Services :Mobile TV
– Video calls/ conferencing
– VOD (Video on Demand) or Live streaming video content
• Some of these applications are available on the existing 2 or 2.5G
network as well, but few suppliers and slow access speed has resulted
in low usage
• Mobile VAS in India has a long way to go

35. Thank You!
Deepak Halan
deepak.halan@imrbint.com
IMRB International
8, Balaji Estate,
Guru Ravidass Marg, Kalkaji,
New Delhi – 110019
+91 11 42697800 (O)
+91 11 42697906 (D)
http://www.imrbint.com