The value added services (VAS) market is expected to witness tremendous growth over the next few years, propelled by the steady increase in 3G service uptake and the launch of 4G.

For companies like Mahindra Comviva, this growth entails encouraging business opportunities to consolidate its presence in the Indian VAS space.

In an interview with tele.net.in, Arun Tanksali, chief technology officer, Mahindra Comviva, discusses the opportunities, challenges and the key trends in the Indian VAS market.

How has the company performed over the last year in India? Please mention specific milestones.

Mahindra Comviva operates in the fastest growing markets in the mobile ecosystem - India, Africa and Latin America. In 2012, the company registered growth in terms of business focus, customer acquisition, product launches and brand recognition.

Significant milestones reached in the last year include:

Mahindra Comviva signed a strategic partnership with MasterCard to launch the Mobile Money Partnership Program. This is aimed at helping over 2.5 billion financially underserved consumers globally to gain access to mainstream financial services - via their mobile phone.

Tech Mahindra acquired Comviva in 2012. The synergies between both the companies will help Mahindra Comviva to further consolidate its position in the VAS market.

At Mobile World Congress 2013, Etisalat Group and Mahindra Comviva inked a strategic partnership. We will be providing Etisalat Group’s 139 million subscribers across Middle East, Africa and Asia access to consumer email, instant messaging, social networking, phone book backup services as well as popular news/web feeds and other applications through their mobile phone. Users will be able to access these applications either by downloading an application or via unstructured supplementary service data, SMS or MMS messages, thereby, doing away with the users’ dependence on smartphones.

How has the VAS ecosystem in India evolved?

In its early days, VAS industry in India faced difficult times. However, over the last few years, the industry witnessed significant growth, which led the regulator to frame new guidelines for the industry. These regulations facilitated growth in the industry and VAS players began focusing on expanding their product portfolio. Currently, data services are driving innovation, particularly with the increasing adoption of smartphones. VAS is also moving from pure entertainment services to include need-based services covering areas like education, governance and health.

Going forward, what trends do you expect?

Some of the key trends would be the continued focus and dependence on interactive communication among end users. M-commerce, social networking, video streaming, enterprise VAS, and location based services are going to be some of the game changers for the industry. A critical driver for this growth is the changing handset mix. The proportion of mobile phones that can be called smart is changing more rapidly than at any time in the past. The additional capabilities in the hands of users will drive MVAS. The key trends in the MVAS industry are:

Uptake of location based services

The launch of innovative applications and application-based services

Increase in the availability of content in local languages

Increased uptake of mobile commerce

Large scale adoption of interactive voice response services, especially in rural areas.

Increase in rural mobility

Mobile remittance too will drive the growth in the sector. According to industry estimates, the number of 3G mobile subscribers is expected to grow at a compound annual growth rate of around 80 per cent between 2011 and 2013. By 2013 there will be about 55 million 3G users. With the Indian mobile subscriber base reaching 861 million, operators are now preparing to revolutionise rural remittances through mobile banking. Through this, a daily wage earner in a metro city will be able to remit some amounts to his relatives in his village through a local mobile retail outlet at a very nominal cost.

What are the biggest challenges before the company in India?

Mobile VAS is much dependent on the internet speed accessible to the consumers on their handsets. Such speed is possible only through evolved technology and not on the 2G networks.

Further, Indian language support in a uniform manner across all new handsets will go a long way in encouraging adoption of services beyond the existing users. The catch-22 situation around committing to supporting it in all devices by the OEMs versus delivering new services on the existing limited devices is resulting in a face-off on who needs to move first. This can be resolved only through close cooperation between different stakeholders.

What is on your regulatory wish list?

The regulatory environment so far has been conducive and has led to the encouraging growth in the industry. However, now that the VAS industry has evolved, a greater push from the regulators is required.

In 2012, Telecom Regulatory Authority of India (TRAI) announced norms for the operators to receive a confirmation from the subscriber in writing or via SMS, email or fax for the activation of VAS services. This initiative could impact growth of the industry.

Most importantly, a fair and balanced revenue sharing model is required.