Getting healthy support from Mobile Internet, the Indian Telecom sector is growing especially in the Mobile Value Added Services (MVAS) segment. According to a recently concluded study by Management consulting firm, Zinnov, the market capitalization of this field is expected to cross US$ 6 Billion by next year. Corroborating numerous cues over the span of this year, VAS continues to attract service oriented companies & the report titled “Indian Telecom Market Overview 2012” covers overall industry growth, key technology trends, and government regulations which have jointly influenced the appreciation of this sector. It is presently pegged at roughly US$ 5 Billion.
Why should telecom companies focus on MVAS?
India as a country enjoys one of the highest tele-density, marked by a huge subscriber base. However, telecom companies are still struggling to break even. The Average Revenue Per User (ARPU) is still dismally low. Due to such a skewed scenario, many are coping with losses, while others are desperately seeking to salvage some revenue. Additionally, these companies have had to go through some very tough times of getting their licenses cancelled, 3G adoption still at its nascent stage & 4G nowhere in the mainstream yet.
However, one aspect that still shows healthy growth is the MVAS market. Multiple studies have proven that Mobile as a device for communication & leisure is gaining prominence among the youth & Indian population in general. Apart from Caller Tunes & Songs, many ancillary companies are coming up with interesting products which can be readily consumed on mobile phones. M-Money, M-Health, M-Banking, Navigation, etc. are just some of the services that are moving in the right direction
What are the hurdles? Owing to huge investments in deploying network access devices across India & paying exorbitant licenses fees, companies are forced to keep mobile internet tariffs high & quality is still questionable. This in turn lowers adoption rate of high speed mobile broadband. Additionally, there are 14 large mobile telecom service providers, each jostling for market share. This keeps competition fierce & call tariffs low. Both of these imbalances means companies don’t get earn much out if their setups in India.
If Governments can lower the license fees & offer incentives like it does for its own state-run BSNL, we could see companies offering cheaper Internet & this should propel the growth of MVAS. What do you think?
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