VAS: An Introduction, its importance and its growth

Value added services, we all know it and call it VAS!

In layman’s term, VAS basically comprises of all the services that a telecom operator has to offer apart from basic voice services. In short, VAS are all non voice services. Egs: SMS services (P2P), SMS Subscription services (P2A services), IVR, all the WAP related services etc.

Lets constraint ourselves with Indian Market  for this article. I believe that the face of the Indian telecom industry is changing very rapidly and with this change, the competition is increasing. Telecom industry today is very different from the one which used to be 5 years back and it is going to change further in the next 5 years. The reason for this change is probably the increasing competition between the operators and also the entrance of many new ones in the market.

Guess, the biggest change has appeared on the way voice calls are being charged! The price for the calls has been decreasing tremendously. The reason being that the new entrants have launched very competitive plans and packs where the voice calls are either free or are charged at a very minimal price due to which even the large players in the market are forced to bring down their voice call prices to match the competition and decrease churn.

This one thing has played a very major role in the decrement of all operators’ rev. And so the operators now look forward to the other revenue channels and VAS is one of the most important channel amongst these. Infact, its been said that 2 yrs down the line, operators will be bound to make all the voice calls completely free for all the customers and  data/ GPRS will be the only source of rev then. This in itself is enough to explain the importance of VAS in telecom industry today. I would say that the priorities and preferences of the industry are going to get shifted completely in coming 2-3 years.

Regarding the VAS, I feel that there is going to be a big change there as well! Guess, the rev from the conventional VAS is definitely going to go down in the next few years and it shouldn’t be a shock if these services gets eliminated completely. With conventional VAS, I mean to say the downloadable content (wallpapers, animations etc), CRBT, few P2A subscription services like Love tips, health tips etc.

So what is it then that will keep VAS in the important list in future. I believe they are going to be utility services, volume based data services (traditionally called as browsing), applications, m-commerce services, cloud based mobile applications, mobile social media. These are the future of VAS industry. It can be said in a way that the focus would be changed from entertainment to utility services

Few of the reasons that are responsible for the change in the telecom and VAS industries are: 1. the changing guidelines of TRAI, 2. increasing maturity in the customers, 3. Easy Internet accessibility, 4. Increasing no of smart phones, 4. introduction of 3G and 4G networks etc

Lets have a look at few figures:

Indian Telecom mobile subscribers: 919 Mn
Mobile Internet/ Data/ GPRS users: 48 mn (till Mar’12)
ARPU: GSM: Rs 96, CDMA: Rs 73
VAS Market: 26,000 crores
Growth over 2011: 32%
Traditional VAS: 63% (CRBT and SMS)
New or emerging VAS: 37% (Apps, games etc)
VAS Arpu: Rs 24

Growth of VAS industry (in crores):

2009: 9,300
2010: 14,500
2011: 19500
2012: 26,000
2013: 33,000
2015: 55,000

Above nos very clearly shows the importance and increasing share of VAS in Telecom Industry…

Keep learning:)

Creation Of Non Vas Products

So, after networking, signaling etc, I really want to get into some stuff from my zone i.e. Marketing! The primary job of this team is to create competitive products! So, lets discuss how these products are created. By product, I mean to say all the products sans VAS ones: Voice, GPRS and SMS… The way VAS products are designed is completely different from the mentioned ones. Because VAS products are majorly created on what people want while other products are majorly created on competition (there are other factors as well)…
Ok, so lets begin…
Voice or GPRS or SMS products are majorly created based on few important things:
1.    Competition products:

a.      A whole lot of research is done on all the competitive products of all the operators: what are the MRPs, what is the PF, what is the response of retailers regarding each product, how the same is doing in market, which is the best product amongst all. So, after doing this detailed research, marketing team discuss the possibilities of products that can be created and which can be a competition for the best product in the market…
b.    On time to time basis, marketing team checks and keep an update on the products of all the operators and then, do an analysis if they are missing on any of the products I,e, if they do not have a product competitive enough to match the competition’s products. I will give you an eg by creating a sample report in an excel sheetJ

If you look at the above image of an excel sheet, the products have distributed on the basis of MRP range because it makes the comparison easy and simple.
·         You just have to check in what range your product doesn’t exist, how many operators doesn’t have products in the same range, how are the products of the existing operators are working in the market etc… Now, there can be many scenarios, 1. If they are doing well, then you need to check out possibilities in which you can create a competitive product with the resources available to you.

·         2nd thing to be done is check the validity and benefits of all the products of all the operators in all the ranges and then, decide if you have the best product or not. Its something which again depends on many thing, one being the resources of your operator and so, based on all this you can make few changes in the existing products as well…
·         While creating a product, you will have to check if there is a profit for you after taking out all the costs like: IUC, termination costs, taxes, network cost etc… amount/MB (or whatever the cost is) paid in case of GPRS products

2.    Usage Pattern:

2nd thing which is taken into account while creating a product is the Usage Pattern of your own base, your own customers. For e.g. in SMS, you need to check how many customers exists in each usage range:
0-100 SMS’s: how many cust exist
101-200 SMS’s: how many cust exist
200-500 SMS’s: how many cust exist
500-800 SMS’s: how many cust exist
> 800 SMS’s: how many cust exist

Then you need to check which is the most important range for you and weather you have product in the same or not (and it certainly doesn’t mean that you will not check for products in other range!)

3.    Revenue factor:

This is the most important thing for any product. There is a small study of revenue pattern is to be done before creating products to decide on the benefits, validity etc. Lets take an eg of a SMS product:

After making the above sheet, you need to check the scenario which is the largest contributor in your total SMS Revenue and then, while creating the benefits of a product you need to keep that scenario on top.

Important things:
·         As I have mentioned about as well, while creating a product, you definitely have to take the cost into account, minus the same from MRP and that is what your earnings will be. Needless to say, they have to be positive.
·         Validity plays a very important role while creating a product. If you give a large validity for a small price, you will definitely be in loss and in case of vice versa, the same would result in customer dissatisfaction.
So, the above are few things which are done while creating a product. Hope I was clear. Plz comment in case I missed out any of the pointsJ Would be glad…
Keep smiling and keep learning! VAS coming next:) I am happy because thats my zone:)))


As I said in my previous posts, here is a brief description of MTC and IUC:

MTC or Mobile termination charges are the charges which one to operator charges to another for terminating calls on its network.
The 3 models of charging this charge are: calling party pays (CPP), bill and keep (BAK, peering, zero charge), receiving party pays (RPP)
For eg., a customer of Operator A (OA) calls another customer of Operator B (OB).  OA will charge the customer a fee per minute (the retail charge) for this call. OB will charge OA a fee for terminating the call on its network or for using its network. This termination rate therefore forms part of OA’s cost of providing the call to its customer.
Termination rates may be commercially negotiated or may be regulated.

IUC or Inter usage charges is one of the most important payouts for any operator. MTC is a part of it. IUC are the charges paid by one operator to another for using its network in any form. It can involve a linking up of one telecom operator to the infrastructure facilities of another. Interconnections can be considered in terms of network interconnection and access interconnection. The former takes place between operators possessing networks, and the latter between an operator with a network and another without one.
Interconnection is crucial for communicating across networks, and makes it possible for the subscribers of two different operators to communicate with each other. It is essential for extending the scope and efficiency of the telecom network, and is especially important for new operators entering the market who normally use the existing facilities of another operator for providing their services.
There are basically two methods for charging for interconnection. One is through sharing of revenues among the interconnected operators of telecom services. The second, which is more commonly used, is to establish interconnection charges on the basis of costs...

Hope above was clear:) Plz make sure to comment if you think there is anything to be changed:)

Keep Smiling and keep learning...

Few Important Marketing Terms

So, after networking, signaling etc, I really want to get into some stuff from my zone i.e. marketing! First I would like to put down few marketing terms here, which can really be tough to find on net and which are more or less same all across the operators:

·         TOMA: Top of the mind awareness. This term is used while doing surveys, you just Customers which is the best operator and TOMA is the answer that comes first. Businesses that are at the top of consumers' minds have a high market share.

·         ICR: Intra circle Roaming: If an operator (Operator A) does not have adequate coverage in any circle, then it may tie-up with some other operator (Operator B) within that circle which would allow the allow the customers of  Operator A to use its network in the areas of low coverage. Thus a subscriber of operator A would be latched onto the network of operator B within the same circle.
You must have surely heard this concept in 3G infrastructure to allow 3G services to its customers (for the operators which do not have 3G spectrum in a particular circle)

·         ITP: Intent to purchase

·         GRP: Gross rating points. It is basically measure the size of an audience reached by a specific media vehicle or schedule.

·         REC: Revenue earning Customers: There is always a chunk of Customers that are regular payers and always have a balance above a set value. They are considered as REC base.

·         On net: Communication done between the customers of the same operator is said to be On net. For eg. A Customers of Operator A send an SMS (or calls) to another Customers of Operator A

·         Off net: As it sounds, that’s the opposite of On net. Communication done between the customers different operators is said to be Off net. For eg. A Customers of Operator A send an SMS (or calls) to another Customers of Operator B

·         ARPU: Average Rev per user: It is the revenues from mobile voice communications divided by the total outgoing minutes of voice communication excluding VAT, but including access charges.

·         APPU: Average price per user

·         STV: Special Tariff Vouchers

·         IG: Incoming: Calls which a customer receives

·         OG: Outgoing: Calls done by a customer

·         TT: Talk time

·         FTT: Full Talk time

·         MFTT: More than full talk time

·         MOU: Minutes of usage (IG+OG)

·         KRO: Key retail outlets. Any retailers who does the acquisition equals to a set no is said to be a KRO

·         RPM: Rate per minute

·         ER: Effective Rate. It is

·         CR= Cumulative Rate. It is
CR = Net ARPU/ OG mins

·         FAT: Free Airtime: all the additional benefits: when a Customers recharges with a recharge value, he gets some benefits so the benefits which are not in terms of money are known as FAT. For eg. Of a Customers gets a recharge of RS X done, and he gets a benefits of 1000 mins call free, these 1000 mins are FAT

·         PF: Processing fee – In few cases (or products) a PF (% of MRP) is given to the retailers on every recharge. It is not mandatory. It is done so that retailers push the required product to the customers.

·         PRR: Prepaid recurring revenue. This is one of the most important things in prepaid revenue. It is the revenue of the recharges done on daily basis. It is the portion that is likely to continue in the future and that is why its called recurring revenue.

·         MVNE: Mobile Virtual Network Enabler. It is a term used for that operator that provides services to MVNOs. Services like billing, network element provisioning, operations, support of business support systems and operations support systems, and provision of back end network elements, to enable provision of mobile network services.

·         MVNO: mobile virtual network operator. It is a term used for that operator that does not own the spectrum or wireless network infrastructure over which it provides services to its customers. Generally, MVNO enters into a business agreement with another operator to obtain bulk access to network services at wholesale rates and then sets retail prices independently.

·         MTC: Mobile termination charges: These are the charges which one to operator charges to another for terminating calls on its network. Will explain the same in detail in next chapter

·         IUC: Inter Usage Charges: This is one of the most important payouts for any operator. MTC is a part of it. IUC are the charges paid by one operator to another for using its network in any form. Will explain the same in detail in next chapter

·         EVD: Electronic vouchers: Recharges done via retailer’s mobile

·         PRC: Paper recharges

So above are few terms used in this industry. Plz feel free to comment if I have missed out anything! Would love to hear from youJ

Keep smiling and keep learning

Intelligence Network (IN)

I know I would be writing on a very extensive and one of the most important parts of the telephone network. I cannot write about the technical stuff related to IN as this blog is all about the non technical part of the technical things:) And so I am just going to describe what actually IN is, why there was a need to bring in a centralized system:)

So, lets go ahead...

The Intelligent Network (IN), is the standard network architecture whose most important aim is to improve and centralize all the services managed by a telephone operator. 

Initially the primary aim of IN was to improve the core telephony services offered by traditional telecommunications networks, which was majorly making and receiving voice calls. But this was the aim of the “Classic” standard IN services, representing the 1st generation of IN services, which offered limited opportunities for the differentiation between operators.

And therefore the next generation of IN services allowed the operators to introduce and manage other value added services and the traditional ones together with a higher sophistication. IN changed the marketing approaches of the operators completely and thus, helped in the introduction of many VAS services like Mobile Number Portability, financial calling, other utility VAS services which provide limited opportunities for rev generation but which has potential of 100% penetration!
It can be said that IN is the gift at the end of network operators' efforts to modernize their core networks by introducing fully digital components… In general, the IN can be considered as an additional layer on top of any traditional network, such as Public Switched Telephone Network (PSTN), Integrated Services Digital Network (ISDN), or Broadband- ISDN (B-ISDN).
IN provides a service-oriented network architecture, which separates service control functions from service switching functions.
Now, in simple words, it can be said that intelligence is taken out of the switch and placed in a system nodes that are distributed all over the network. It definitely helps the operators to manage the services more efficiently. Also, IN added a scope of introduction of many other services.
IN is supported by the Signaling System #7 (SS7) protocol between telephone network switching centers and other network nodes owned by network operators.
Event Notification
Integrity Management
Customer’s Profile management
Accounting / Billing Management
Logging / Auditing
Directory Access
Configuration / Provisioning Management
Performance Management
 Services managed
Call Control
Messaging (email, voice)
Multimedia messaging
GPRS/ data browsing
Customer care / telemarketing
Information appliances

Why IN?
The traditional network architecture was perfect and used to operate in a distributed fashion, by signaling to each other across the network, rather than being controlled by a central processor running the equivalent of a computing application program. It worked perfectly well and no doubt, formed a very vigorous framework when all the network did was set up circuits, time the calls and release the circuits when one of the terminals went on hook.

But as service providers began to develop more complex applications and as the market started growing competitive, the need for new services started developing! And soon, it became clear that only a completely intelligent network would offer a whole range of required advantages.
IN architecture brings all of the switching and transmission functions under the control of a distributed computer system so that a high level of sophistication can be built into services right across the network, instead of being applied only to specific parts.

IN made the monitoring of whole networking system centralized from placing a call to a mobile, logging of the requested number, checking and authenticating the call, allocating a frequency to signaling the receiver’s handset and thanks to IN.

In fact to monitor the movement of the mobile phone and assigning new frequencies or timeslots as its user leaves one cell and enters another is also the responsibility of IN nowJ

Hope the above makes the understanding of IN pretty clearJ. Plz feel free to comment in case you thing something can be added/ changed:)

VAS Vendors/ Content Providers in India

One day, I was just searching for the complete list of all the VAS vendors in India. Needless to say, I couldn't get the same @ one single place and so, I thought to make a list and publish it:)

Below is the list of vendors/ content providers of whom I could think of:
Ask Laila
Acl wireless
Location Guru
Bubble Motion
IMI Mobile

Plz feel free to comment if I have missed any of the Vendors/ Content providers

The increasing share of Samsung

The whole industry is talking about the increasing market share of Samsung in the devices market.  In Europe, Samsung has been able to grab a commendable share of 45% in just one year. And Galaxy S3 has a very major role to play in this commendable success of Samsung.  Well, samsung had conquered the Nokia market long back but last year they also gave a blow to blackberry sales. This is something we all are aware of. But the latest news is that Samsung have also started acquiring Apple’s customer!  Though acc to market research, apple’s cust loyalty is still 80% so guess, they will not get adversely effected with a large blow but then, launching the new Iphone with some amazing and innovative features has become the need of the hr for Apple. And that’s the challenge which Samsung had put forward to all the device makers!
The biggest blow had been to RIM whose market share had dropped down drastically to 10% from 21% last year! Well, RIM has to come up with something equal to Android (if not more) to survive in this brave wide market now, else it definitely runs the risk of becoming a technological dodo! What say?
Anyways, kudos to Samsung for the smart planning and execution in acquiring the major share in not only smartphone market but also, in basic phones! Yes, Samsung hero is supposedly giving a stiff challenge to all the basic phones!
It looks like a cold war between all the device makers in which Samsung is clearly the winner till now. Lets see, who gets to survive and who succumbs to the increasing market demands!

Telecom's Technical Abbreviations

After so many chapters, I just thought to pen down all the abbreviations in one post which were used in last few chapters:
  • FDMA: Frequency division multiple access
  • CDMA: Code division multiple access
  • TDMA: Time division multiple access
  • NNS: Network Management Subsystem
  • BSS: Base Station Subsystem
  • NSS: Network Switching Subsystem
  • BTS: Base transceiver stations
  • BS: Base Station
  • AUC: Authentication Centre
  • OSS: Operation and Support System
  • MXE: Message Center
  • MISN: Mobile Intelligent Service Node
  • MSC: Mobile Switching Centre
  • HLR: Home location register
  • AuC:  Authentication centre
  • VLR: Visitor location register
  • EIR: Equipment Identity Register
  • BC: Billing centre
  • SMSC: Short message service centre
  • MMSC: Multimedia messaging service centre
  • VMS: Voicemail system
  • BSC: Base Station Controller:
  • PCU: Packet control unit
  • MS : Mobile station (a mobile phone)
  • PSTN: Public Switched Telephone Network

Difference between FDMA, CDMA and TDMA

I guess, one of the most basic questions which goes in our mind regarding telecom is what is the difference between the technologies which people generally talks about? Right? They talk about CDMA, TDMA, FDMA! We know that these technologies are different but we genearlly are unable to understand the thing that makes them difference! We think its too technical and stop ourselves from getting into it! Right? Guys believe me, understanding the difference between these technologies is just not difficult!

I will try to put it in a very simple wayJ

Frequency division multiple access (FDMA):
It is a technology by which the total bandwidth available to the system is divided into frequencies. This division is done between non overlapping frequencies that are then assigned to each communicating pair (2 phones)
FDMA is used mainly for analog transmission. Its not that this technology is not capable of carrying digital information, but just that it is not considered to be an efficient method for digital transmission. Because just imagine if the frequencies to handle the customers gets over? What if more capacity is required? The only option would be to drill down the existing frequencies to a much narrower amount which will not be very competent. In FDMA all users share the satellite simultaneously but each user transmits at single frequency.
To understand this technology better, just imagine how FM radio works. All the radios have their own frequency bands and they send their signals at the carefully allocated unique frequencies within the available bands.

Code division multiple access (CDMA):
Unlike FDMA, CDMA separates calls by code. Every bit of a conversation is been tagged with a specific and unique code. The system gets a call, it allocates a unique code to that particular conversation, now the data is split into small parts and is tagged with the unique code given to the conversation of which they are part of. Now, this data in small pieces is sent over a number of the discrete frequencies available for use at any time in the specified range. The system then at the end reassembles the conversation from the coded bits and deliver itJ Does it make sense?
Just think about how you recollect your luggage at the end of the flight journey. When you check in, a tag with a code is given to you which is also given to your luggageJ And at the destination, you collects your luggage on the basis of thatJ I know you will say that you recognize your bag, but then I have a habit of always matching the codes of my bag and the one on the tag given to me and that is how I become sure of not picking up the wrong luggageJ

Time division multiple access (TDMA):
Unlike FDMA and CDMA, In TDMA the division of calls happens on time basis.  The system first digitizes the calls, and then combines those conversations into a unified digital stream on a single radio channel. Now it divides each cellular channel into three time slots that means three calls get put on a single frequency and then, a time slot is assigned to each call during the conversation, a regular space in a digital stream. The users transmit in rapid succession, one after the other, each using its own time slot. This allows multiple stations to share the same transmission medium (e.g. radio frequency channel) while using only a part of its channel capacity.
This technology enables three different users to use one frequency at the same time.
Here there is no need for three separate frequencies like in FDMA. As in FDMA, instead of monopolizing a single radio channel for a single call, TDMA efficiently carries three calls at the same timeJ
BTW, this technology is the one used in our GSM system

Have tried to explain the above technologies via a diagram which is below:

In the above diagram, you will observe:

FDMA: Single frequency is used for single call
CDMA: Single frequency is used for multiple calls
TDMA: Multiple frequencies are used for multiple calls

I hope the difference is clear now:)