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:)

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