Telcos pore over value-added services to reap revenues

As the Indian telephony market moves from smart phones to entertainment phones, the convergence between telecom and media is likely to push value added services (VAS) as the next key revenue-generator for service providers. The recent launch of iPhone, BlackBerry’s Bold and other evolved feature phones embody a move in that direction, opine experts.

Speaking at the XIIth national telecom seminar, Communique ’08, organised by Symbiosis Institute of Telecom Management (SITM) in Pune on Friday, Sanjiv Mittal, vice-chairman, Bharti Telesoft said as much.

“With the emergence of 3G, new technologies will come in that will push the growth of VAS in India,” he noted. “Currently, VAS contribute about 10-13% of the revenues of a service provider. But by 2013, we expect it to grow to 21%,” said Kunal Bajaj, managing director, BDA Connect.

Abhinav Mathur, chief strategy and technology officer, Cellebrum Technologies, seconded the opinion. “According to Indian Market Research Bureau, the VAS market in India is expected to grow to about Rs 7,510 crore by December 2008 and Rs 9,760 crore by January 2009,” he said.

Incidentally, the Indian telephony market, which has been dominated largely by low-end phones, is now seeing a huge growth in feature phones.

Said Bajaj, “The sale of entry-level phones is going down, while that of feature phones is picking up fast.” The entry of iPhone and BlackBerry’s Bold will push up the VAS market further, he noted.

That service providers are looking at VAS in a big way is also driven by the fact that chipmakers like Qualcomm are developing innovative chips to make feature phones available at low costs.

According to the SITM’s annual telecom forecast, the telecom-media convergence has brought about opportunities that could be considerable, but are fraught with uncertainties.

“Telecom operators in the future will have to battle with a wide array of new competitors, including traditional media companies, information technology players, and even industries such as financial services,” it says. It predicts predict that SMS volumes will cross the 140-million mark in 2009 and the near future will see more and more SMS-based utility applications.