Mobile value-added services market set to grow at 50%

The mobile value-added services (MVAS) market is expected to have a compound annual growth rate (CAGR) of 50 per cent.

Thus, the revenues from MVAS (excluding person-to-person SMS) are expected to be around $348.8 million (around Rs 1,395 crore) by 2009, says a report by Boston Analytics"" a knowledge process outsourcing firm.

While the MVAS market is growing, there might be a few challenges including the revenues sharing model.

There are multiple stakeholders in the MVAS value chain "" the telecom operator, content copyright owners, customised content creators, content aggregators "" but mobile operators retain the largest chunk of revenues across the chain.

The current revenue sharing model gives limited incentive for growth of the MVAS ecosystem, hence, operators will need to encourage other players by sacrificing revenues share, says the report.

The revenue sharing arrangement for non-enterprise MVAS is typically 60-70 per cent in favour of the operators, 15-25 per cent for content aggregators, and 10-15 per cent for content creators. Further, royalties paid out to the copyright owner account for 10-15 per cent of the total revenues.

Similarly, in the non-enterprise MVAS, even in the case of enterprise solution services, the operators retain 70 per cent of the revenues, while the remaining accrues to the service providers.

The revenue sharing arrangements in India are significantly different from those in evolved mobile markets such as China, where the share of the operator ranges between 20 and 30 per cent, while the aggregators and the content owners get a majority of the pie.

Moving ahead, the report predicts that the share of operators is expected to decline from 60 per cent to 30 per cent by 2010, with other players across the value chain accounting for almost 70 per cent, compared with 40 per cent at present.

Apart from this, authentication standards need to be set up for operators and aggregators that apply to the download of content.

The report suggests that despite considerable growth in the mobile subscriber base, low feature handsets continue to remain the order of the day. The purchase decision for handsets continues to be driven by basic utility for voice.

According to the India Mobile Handset Usage Satisfaction Study 2006, an integrated digital camera, FM radio, and speaker phone features remain the most likely upgrade drivers.

Features such as tri-band, Bluetooth, infrared port, are growing but are far from developing mass appeal. The lack of widespread adoption of feature-rich mobile handsets is a barrier to the growth of MVAS in India.

GPRS connectivity in India continues to be low given limited handset capability and operator constraints. There is a large population of users who are not familiar with accessing GPRS.

The report notes that regional content, mobile Internet and location-based services will be accessed in future.

GETTING SAVVY

MVAS to be Rs 1,395 crore market by 2009

Telecom operators take 60-70% of revenues in the non-enterprise MVAS segment

Operators will retain 70% revenues in enterprise services solutions