There has been a tremendous growth in the mobile subscriber base in the past few years. However, voice tariffs have only headed southwards, translating into lower ARPUs and a decline in operator margins. To develop alternative revenue streams, operators are now focusing on offering more value-added services (VAS).

Currently, operators generate around 10 per cent of their revenues from VAS offerings. According to Frost & Sullivan, the Indian mobile VAS market is slated to grow at 16.6 per cent annually between 2008 and 2015, driven primarily by the demand for 3G services. High speed data services like mobile TV and video calls, which are at a nascent stage, will get a major fillip with the uptake of 3G services.
3G services will also enable effective bundling and packaging of services, which will increase the market size.

tele.net takes a look at some of the strategies adopted by the major telecom operators in the country...

Mahanagar Telephone Nigam Limited
Mahanagar Telephone Nigam Limited (MTNL) was the first company to launch 3G services in the country in January 2008.The state-owned operator, which was initially struggling to attract 3G subscribers and planning to outsource the management of its 3G network to global players, has taken big strides in the past one year.

MTNL caters to over 400,000 3G subscribers in the Delhi and Mumbai circles, and expects its 3G customer base to reach 600,000 by August 2010.

To further strengthen its 3G subscriber base before the launch of 3G services by private players, MTNL is now looking to improve its 3G VAS portfolio. It has recently launched India's first 3G-driven mobile TV services in association with Aksh Optifibre. In February 2010, MTNL tied up with Spice Digital to offer 3G-based VAS offerings like video-on-demand (VoD). The operator has also launched location-based services, enabling users to avail of information while on the move.

Bharat Sanchar Nigam Limited
Bharat Sanchar Nigam Limited (BSNL), which launched 3G services at around the same time as MTNL, has witnessed a higher uptake of these services. The company crossed the 1 million 3G subscriber mark in March 2010 and is planning to extend its coverage to 760 cities by September 2010. BSNL has already launched 3G services in Maharashtra and Gujarat in June 2010.

The company has been focusing on providing innovative VAS through 3G to compete with private players. In September 2009, the operator launched VoD services for its 3G customers.

Bharti Airtel
Known for its innovative operational models, Bharti Airtel has been focusing on strengthening its VAS portfolio. The company's non-voice revenues (primarily VAS) rose from 9.3 per cent in December 2009 to 11.8 per cent in March 2010.

SMS has been a major contributor to the operator's VAS earnings, but Airtel's revenue from this segment has been declining since 2009. On the other hand, the operator's rural VAS offerings like mandi rates have been successful.

With the rural population accounting for 30 per cent of its wireless subscriber base, extending services to the rural markets has become a major focus area for the company. Airtel has set up public call office boxes for about 100 farmers across 20 villages in Vidarbha, Maharashtra.

Another initiative by the operator in the mobile VAS segment has been the operationalisation of the mobile application store. Providing such facilities has been a recent trend in the industry since handset manufacturers like Nokia and Samsung opened their application stores.Airtel's facility, which comprises 1,200 applications, was launched in February 2010, replicating the business model of Apple, the pioneer in this space.

In June 2009, Airtel signed a threeyear contract with its sister concern, Comviva Technologies, for the management of its 2,000-plus VAS nodes.
Comviva will also manage Airtel Sri Lanka's 30 VAS offerings.

In an off-beat initiative, the Bharti Airtel Innovation Fund was formed in September 2008 with a corpus of Rs 2 billion. This fund will provide an initial capital of Rs 200-Rs 250 million to companies that offer innovative solutions. Of the 150 proposals seeking this funding, about half have been from MVAS start-up companies. For Airtel, it is an opportunity to increase its VAS portfolio, which will help it retain and increase its customer base.

Reliance Communications
With most of its rivals launching mobile application stores and the expected launch of 3G services, Reliance Communications (RCOM) has also planned to open its own application store. To launch the facility, the operator has partnered with GetJar, the world's second largest application store.With this alliance, GetJar's catalogue of over 65,000 free mobile applications will be available to RCOM customers.

The operator is planning to create a platform for the rollout of 3G services in the country. Currently, it is planning to roll out a specialised MobileNet plan, which will offer unlimited internet access across 24,000 cities and 600,000 villages.

RCOM, which sees a huge potential for its products in the rural market, launched a series of plans like BharatNet,Grameen VAS and M2M in August 2009 to cater to this segment.

While BharatNet is a high speed wireless internet service (153 kbps) covering 20,000 rural locations, Grameen VAS offers specialised services such as mandi prices, agriculture updates, weather forecast, local information and news in Indian languages across 500,000 villages.

In mid-2009, RCOM formed a joint venture with Krishak Bharati Cooperative Limited, a government-promoted cooperative society for retailing farmer-specific VAS in rural India.

To strengthen its VAS portfolio, the operator has launched mobile TV services in the country. It has also introduced the "sachet pricing" scheme for VAS offerings to drive the uptake of these services in the Indian market. Under this scheme, users can try out services on a time-based measure.

RCOM's offerings in the VAS space also include "Live Chat"; "Socially", which enables users to track their friends' recent activity; "iStock", a portfolio-tracking application that provides information about the Indian and international stock markets; and mobile conferencing services.

Idea Cellular
Idea Cellular's VAS revenues increased from 9.5 per cent in March 2009 to 12.4 per cent in March 2010. The operator has been focusing on Category B and C circles for its telecom services and has followed the same strategy in the VAS space. It partnered with Reuters Market Light in October 2009 to increase the reach of its crop information service in the Maharashtra and Goa circles.This offers agriculture-related information on crops, pricing, market geographies, and weather forecast.

Idea has also collaborated with the Indian Postal Department to ensure the availability of recharge coupons at all post offices across Kerala. Through this initiative, the operator intends to make its service easily accessible to the low-income groups.

In an effort to explore the lucrative data services market, in 2009, Idea upgraded its countrywide network using Nokia Siemens Networks' GPRS technology and unified charging solution. This has enabled Idea subscribers to access multimedia services which will be further enhanced post the launch of 3G by the company.

Idea entered into an agreement with IBM in 2009 for the provision of a service delivery platform (SDP) to enable the rollout of innovative messaging and WApbased content services over 2G and 3G networks. In addition to operation and management of the SDP, this contract will enable the operator to offer services like content management, subscription services, integration with business support systems, and other VAS applications.

Idea's initiatives in the VAS domain include its tie-up with coffee chains Barista and Café Coffee Day in the Mumbai and Delhi circles, to introduce m-menus and m-bills at their outlets as a follow-up to the operator's `save paper' campaign. It has also become the first operator to launch the `PreTones' service in partnership with Oorja Mobile Services in the Andhra Pradesh circle. This service allows users to listen to content of their choice each time they make a voice call. The company recently started offering stock market alerts on mobile phones in the Punjab circle.

Tata Teleservices Limited
Tata Teleservices Limited (TTSL) has also been active in the VAS space with 150 types of VAS on offer. It is looking to add 1,000 such services in the near future. TTSL's revenue share from VAS touches 14 per cent in some circles. The operator intends to increase this to 20 per cent in the next few years following the launch of 3G.

To achieve this target, Tata Indicom, TTSL's CDMA brand, launched its high speed Tata Photon+ data service over the mobile phone in April 2010. This service offers speeds as high as those provided by 3G services. In addition, services such as live TV, push mail and VoD were launched as a part of this package.

Like other operators in this space, Tata Indicom has also been promoting rural applications, and in July 2009, it partnered with Ossian Agro Automation to launch Nano Ganesh, an electric starter used to operate a water pump from a remote location using a mobile modem and a handset.
The company also provides weather forecasts and market price updates to farmers.

Other services launched by TTSL in 2009 include the green money transfer facility, which allows instant money transfer through mobile phones. TTSL offers a vehicle and cargo-tracking service, which uses a GPS unit to send information about the vehicle's position.

TTSL's GSM brand, TATA DOCoMO, in February 2010, launched the "persecond" billing plan to mobile SMS by charging Re 0.01 per character.

With an attempt to target the youth of the country, the largest users of VAS, TATA DOCOMO has launched the Buddynet service on its CREATE platform, which has witnessed significant uptake.

Other operators
Other operators are also looking at VAS as a way to differentiate themselves in the competitive market. A case in point is Aircel, the first operator in the country to launch its mobile application store, which offers a mix of free and paid applications.To expand its VAS portfolio, the operator has selected TeleDNA Communications' VAS infrastructure platform, including SMS and MMS centres, a cell broadcast centre and location-based applications.

Vodafone Essar launched a bouquet of innovative VAS in the Kolkata and West Bengal circles in May 2010 to celebrate the 150th birth anniversary of Rabindranath Tagore. Through this scheme, the company intended to personalise its services in the region.

The new entrants in the Indian telecom market are also exploring the VAS space. Comviva and Etisalat (including its Indian arm, Etisalat DB) have signed a deal under which the former will be offering solutions related to voice, video, music and messaging. MTS, the CDMA brand of Sistema Shyam TeleServices Limited, has launched a high speed mobile broadband internet service, MBlaze. Loop Mobile has launched the "reply all SMS" service, which allows subscribers to communicate simultaneously with multiple people through SMS. Uninor has also been developing innovative offerings at its Telenor VAS Lab in Kuala Lumpur.

With urban areas nearing saturation levels and voice revenues stagnating, VAS is projected to offer the next level of growth in the sector. Realising this, operators are leaving no stone unturned to diversify their VAS portfolio and gain a larger market share.