Mobility

May 17, 2006
Mobile Content: Need For a Viable Business Model

Ajay Adiseshann

NEW DELHI -- The wireless world is moving beyond just voice communication. Recently, the need for value-added services (VAS) on mobiles has been so tremendous that, voice functions on mobile phones seem to be given a back seat. With the mobile subscriber base crossing 75 million in India (Jan. 2006, TRAI), service providers, developers and manufacturers can surely relax and enjoy the cash register ringing. Or so we hope.

India is certainly poised for tremendous growth in the mobile content market. The market for VAS currently stands at about Rs. 4 billion, and is expected to grow to approximately Rs. 40 billion by 2010. Globally, mobile VAS will account for 25 to 30 percent of the total value of what operators generate.

As the need for VAS is evident and driving the consumer toward greater spending, service providers and content developers have their share of concerns. The ARPU's in India are amongst the lowest in the world, and the only hope for an increase in these numbers would be to provide the consumer a wide range of VAS i.e, ringtones, wallpapers, m-comics, mooks (mobile books), games, movies, videos, etc.

VAS usage greater in urban markets

Today, VAS usage and consumption is greater in the urban markets, but with subscription levels approaching their saturation point, rural and semi-urban markets will potentially offer tremendous growth for the VAS industry. An increase in VAS spending would serve to arrest the rapidly declining ARPU being currently faced.

With an increasing demand for VAS from consumers, service providers are turning to content developers for products. The question is can India handle this growing demand? Developers are ready to build content such as mobile games, mooks, m-comics etc. However, the structuring of the existing business models would be something, which would need to be revisited.

Revenue realisation is a problem faced by developers today. Lack of standarised and robust billing systems is one of the primary challenges faced by the entire supply chain. While developers are providing operators a wide array of mobile content, extended periods to get compensated put a dampener on their efforts.

Need for billing systems for VAS

Service providers have worked hard to define a robust platform for voice and SMS revenue models. The infrastructure for this has been developed over time and years of struggle and is now well defined. Could the mobile content space face the same starting problem? If so, this could decelerate the growth of this burgeoning industry.

Platforms and billing systems for VAS need to be brought up to these standards in order to steer the growth of the mobile content industry. On the whole, this is an exciting time for the mobile content and value added services market. However a concerted effort is needed to standardize platforms and billing and also re-structure the current business models. This is commensurate with the efforts of each player in the VAS ecosystem and is critical to maintaining the heady growth rates being experienced.

(The author is managing director, Coruscant Tec)