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VAS can increase telcos revenue: Experts

Written by: Staff

New Delhi, Jan 6: With continuously decreasing average revenue per user (ARPU), the country's telecom service providers need to look at the advanced value-added services (VAS) for an additional revenue stream, industry experts said.

The experts were of the view that the country's telecom services providers can increase their revenue by adopting advanced state-of-the-art technologies for launching innovative VAS applications. ''As the average revenue per user decreases from voice drops, and voice becomes commoditised, telcos are increasingly looking at data as an additional revenue stream,'' said Mr Ajay Jain, Director, Telecom and Mobility Practice, Perot Systems.

He said the telecom services providers should upgrade their technologies in order to increase their income. There are multiple stakeholders in the VAS value chain -- the telecom operator, content copyright owners, customised content creators, content aggregators -- but mobile operators retain the largest chunk of revenues across the chain, he said.

''As the market will start maturing, the revenue sharing among the telecom services providers and content providers will be balanced (content provider will be able to get their due),'' Mr Jain said.

Last but not least, culture and bandwidth availability, the most crucial factors, will drive the VAS applications in the market.

Canaan Partners MD (India) Alok Mittal said the country is now among the top three markets for mobile and internet VAS along with the US and China. With 185 million mobile subscribers, the country lags behind just US and China, with its subscriber base projected to grow to a staggering 500 million by 2011.

According to a recent report of the Boston Analytics, the revenues from VAS (excluding person-to-person SMS) are expected to be about 348.8 million dollars (about Rs 1,395 crore) by 2009.

It highlighted that the mobile value-added services market is expected to have a compound annual growth rate (CAGR) of 50 per cent. Data from telecom and software consulting firm Ovum, shows that in India, VAS accounted for 13 per cent of total operator revenues of 13 billion dollars in 2006, grew to 13 per cent of 19 billion dollars in 2007 and is projected to hit 14 per cent of total projected mobile operator revenues of 33 billion dollars in 2010.

VAS applications include entertainment, messaging and collaboration and lastly, location and presence. Entertainment encompasses movies, sports, astrology, ring-back tones, music, video, TV, chat and content.


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