PROJECT COMPLETION CERTIFICATE

This is to certify that the project titled Mobile Value Added Services and its demand in India is successfully done by Mr. Gangasagar Amula during the IV Semester of his / her course Master of Management Studies (MMS 2007-2009) in partial fulfillment of the Master's Degree Management Studies recognized by the University of Mumbai through the Prin.L.N.Welingkar Institute of Management Development & Research, Matunga, Mumbai. This project in general is done under my guidance.

__________________________ (Signature of Faculty Guide) Name: ______________________ Date: ______________________

ACKNOWLEDGEMENT
I am indebted to my guide Prof. Nitin Joshi for giving me this opportunity to work on this project. His constant support and instant feedback helped me to develop the thought process to view the problems differently and thereby approach to solution in an unconventional way. I would like to extend my sincere gratitude towards my colleagues for providing valuable inputs which helped me during different phases of the project. I thank my B-School, Welingkar Institute of Management Research and Development for having given me this opportunity to put to practice, the theoretical knowledge that I imparted from the program. Last but not the least; I am grateful to my brother Dr. Gangaprasad Amula for providing support every time and whenever needed.

Table of content
EXECUTIVE SUMMARY............................................................................................................4 INDIAN TELECOM MARKET OVERVIEW.............................................................................6 VALUE ADDED SERVICES IN INDIA....................................................................................15 SMS based Service:..................................................................................................................19 IVR............................................................................................................................................22 Key Drivers of VAS:................................................................................................................23 STRATEGY AND APPROACH.................................................................................................28 Airtel Strategy:.........................................................................................................................28 Reliance Strategy:.....................................................................................................................31 Vodafone Strategy:...................................................................................................................33 Idea Strategy:............................................................................................................................34 BSNL Strategy:.........................................................................................................................34 Tata Teleservices Strategy:......................................................................................................34 RESEARCH METHODOLOGY.................................................................................................35 Objective of Study:...................................................................................................................35 Need of the Project:..................................................................................................................35 Scope of Project:.......................................................................................................................35 Methodology:............................................................................................................................36 ANALYSIS AND RESEARCH FINDINGS...............................................................................37 Primary Data Analysis:............................................................................................................37 Characteristics of the mobile VAS favorable person:.............................................................43 Demand for mobile VAS:.........................................................................................................46 Basic service categories:..........................................................................................................49 CONCLUSION.............................................................................................................................52 BIBLIOGRAPHY.........................................................................................................................55 ANNEXURE................................................................................................................................56

EXECUTIVE SUMMARY
When we all are worried about recession, the one sector which is not affected by recession is Telecommunication. The telecom industry is recession-proof. Unlike other countries, where the telecom industry has peaked, the Indian telecom sector is in the growth phase. We have moved from quantitative growth to growth of quality of service. A lot of things still need to be done to steady the sectors growth such as unrestricted voice over internet telephony (VOIP), mobile number portability (MNP), etc. Taking a step back and looking at the history of mobile industry which started in 1997/98, it can be observed that there has been a continuous rise in mobile subscriber base in India. India is one amongst the fastest growing mobile market in the world. Mobile telephony has overtaken the traditional fixed/landlines in terms of subscriber base. It is obvious that the increase in number of mobile subscribers increases the chances of mobile VAS users as well. When mobile just came into the Indian market in early 1998 there were around 1 million GSM subscribers and very few mobile operators providing the service. Today there are ~260 million (GSM + CDMA) as per Dec 2008. SMS was one amongst the first Mobile VAS services which was started in early 2000. Today we have wide range of mobile VAS services offered by various service providers which includes CRBT, content downloads, games, Internet access, mCommerce etc. There are various types of mobile VAS players and mobile operators today. Some mobile operators spread their business offerings across larger parts of the value chain, while others are focusing on their core business. Similarly some mVAS service providers are focusing on their initially implemented products and services and trying to concentrate on improving the performance of their existing products and trying to make it cost effective to satisfy their clients, while other mVAS providers are in constant look out for new technologies and applications. Both the strategies seem to be taking them in positive direction.

As we are just starting to understand the possibilities of VAS we need to investigate the market to find out the true extent and nature of demand of mobile VAS. The more that is known about what end users demand the better operators will be able to meet those demands now and in the future. Market study was conducted to understand nature of demand for mobile VAS.

INDIAN TELECOM MARKET OVERVIEW

Wireless services remain the primary driver of growth in the Indian

telecommunications market with declining wireline access lines and slow uptake of broadband services. With higher opex in the rural areas and lower revenue per minute in the urban areas due to low end subscriber additions, carrier margins will be under considerable pressure. On the wireline side, emergence of wireless as a substitute and limited new rollouts has led to declining subscribers along with marginal decrease in ARPU. Wireless subscriber base in India has grown at a CAGR of 63% in the last five years. Device prices have fallen rapidly, reaching Rs500, coupled with availability of life time plans at Rs100, low denomination recharges of Rs10 and declining tariffs. In contrast, wireline remains plagued with a weak business case and multiple network rollout issues, which are reflected in a declining wireline base with limited new rollouts and slow wireline broadband uptake.

Wireless: Decline in ARPU with decrease in voice tariff, increasing share of lower ARPU customers and limited VAS uptake Wireline: Decline in fixed access lines due to substitution by wireless and high cost of roll-out for new lines Marginal decline in ARPU with competition from private carriers Broadband: Slow wireline broadband uptake due to limited wireline infrastructure, low penetration of access devices and high monthly access charges. Wireless broadband offering limited to tier 1 cities with a focus on small and medium enterprises.

Indias telecom market is experiencing explosive growth Crossed 217 mn subs by Oct 07 with net adds of nearly 8 mn subs / month over last 4 months Despite continued record growth over last 12 months, only 23% of 1.1 bn population owns a phone There are 6-7 telcos operating in each of 23 license areas. Airtel, Reliance, Vodafone & BSNL, who are the Big 4 have 74% market share Growth is expected to continue and even accelerate, reaching a projected 496 mn mobile subs by 2010 Near term outlook shows a continuing focus on acquiring new low end customers Improved regulatory structure has lead to increased competition, and operators aggressively tailoring strategies to acquire customers across all segments by making mobile services more affordable and increasing coverage Prepaid users comprise over 85% of total subs and over 95% of net new additions, further adding to the impact of 7

 tariffs on falling ARPU Almost half of Indian mobile subs use low cost handsets and this is expected to increase further with new additions Further innovation in entry-level handsets and call tariffs will continue to drive growth Operators will need to look at alternative revenue streams like VAS as they mature Traditional VAS has been primarily SMS-based, with Bollywood and Cricket the largest content drivers VAS services contribute approx 7% of total wireless telecom revenues for Indian operators Total market size of VAS was USD 678 mn in 2006, projected to touch USD 926 mn at the end of 2007 Most VAS services are provided over SMS, IVR and WAP. Revenue growth has been driven by SMS (including P2P, A2P, P2A), contributing over 55% of total VAS revenues in 2006 Bollywood & cricket remain the killer content, whether for SMS alerts, ring tones, games, wallpapers, etc. Rural applications initiatives have launched in pilots, and are likely to grow quickly in less developed geographies because of the willingness to spend on services which enhance livelihood

Statistics (2007):

Operating Circles:

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Competition leading to Growth:

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Over the recent years, most new subscribers being acquired have been low-end users, resulting in falling ARPU. ARPUs are dropping as volumes increase With increased competition, tariffs of voice calls have gradually declined over the years Most of the subscribers added are from the bottom of the pyramid with low usage resulting in reduced ARPU. Operators are focused on acquiring customers. The fall in ARPU will continue unless operators look at alternative revenue streams like VAS It is unlikely tariffs will increase given aggressive competition between operators to add subs. Minute of Usage (MoU) in India is already the second highest in the world at 476 (Jun 07), behind only USA.

Operators are tailoring service packages for low-end users making mobile service more affordable.

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Prepaid in India comprises of over 85% of total subscriber base and over 95% of net new additions. Unlike more developed countries, prepaid comprises 85% of GSM subs & 87% of CDMA subs. As recently as 2005, prepaid only accounted for 76% of subs, this shift s driven by the nearly 95% of net new subs being prepaid. With the focus of telco expansion moving to tier II & II cities, A & B Circles are now contributing the highest prepaid net new additions. Given prepaid will continue to increase to above 90% of total subs, telcos and VAS providers need to be aware of how to provide solutions for this market. New regulations allowing new players, dual technology and MNP are likely to further increase competition. New Player: TRAI recommended no cap on number of operators in each circle. Combined with a leniency in M&A, this has lead to over 500 license applications (equivalent to 22 PAN India operators), including from companies with no telecom experience but wanting to capitalize on the boom. Even if 2 3 new players are allowed in each circle, this will increase competition which would significantly affect operator strategy and potentially pricing, as well.

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Dual Technology: CDMA players being allowed to provide GSM operations and vice versa is equivalent to having new players entering the market, again increasing competition. Mobile Number Portability (MNP) In a cost conscious market with high number of prepaid users and no commitment with the operator, it is likely that the operators would reduce price to keep their customers and lure others.

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VALUE ADDED SERVICES IN INDIA

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VAS services presently contribute about 7% of the total telecom revenue for Indian operators. The mobile VAS industry in India is estimated at USD 679 mn at the end of 2007 and is estimated to grow to touch USD 926 mn at the end of 2008. Non voice revenues have been increasing since 2002. The revenue growth is driven by SMS (including P2P, A2P, P2A), contributing over 55% of the total revenues in 2008. Over the last three years the % share of revenues coming from SMS is on a decline as other services gain. SMS, Ring tones, Voice VAS will continue to be the highest revenue generating services. The vast offerings across VAS services are still delivered predominantly using 3 platforms of SMS, IVRs and WAP portals

Delivery Platforms SMS Entertainment SMS Ring tones Customized Wallpapers Animations Quiz Jokes IVRs Religious chants Music on Demand Fengshui Personality test Alerts and News Cricket / Match Alerts News Astrology, Vaastu, Fengshui, Personality test Banking Info /Alerts Travel alerts details like Train, Flight details etc Astrology Vaastu Mobile banking Ticketing Commerce Mobile banking Ticketing Travel and Holiday bookings

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Delivery Platforms SMS Social VAS Location, infotainment Search Advertising Enterprise VAS Pull on Short Code for contests, voting, information Push for Advertising Enterprise IM Group messaging IVRs Astrology services Voice SMS Voice Portals WAP Portals Mail Mobile-Greetings Dating, Chatting, Bogging etc Infotainment Internet Search Advertising Messenger Mobile VPN Push E-mail over handheld devices (e.g. BlackBerry) / Wireless e-mail Mobile calendar Access to Intranet and Core Business Applications Location based information Internet Mobile e-mail IVR based Contact Centers Self Help centers

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SMS has offered a new lease of life to TV by making one way broadcasts an interactive medium through contests and voting. SMS Based Contest FY '07-08 saw SMS marketing and contests reaching new heights. P2A (person to application) and A2P (application to person) SMS services gained popularity, driven by voting based TV shows. The SMS based contests have been targeting varied age groups through a variety of products Indian Idol Youth Kelloggs Housewives and Children Cricket Predict & Win Mass Market Two finalists of Indian Idol 3 drew a combined tally of 70 mn SMS votes in the final 9 days of Sept 14 23. At an avg cost of INR 3, the revenue generated reached around INR 21 crore (USD 5.25 mn). The volume averages to 320,000 SMS per hour 5,400 SMS per minute 90 SMS per second Kelloggs India tied up with Mobile2Win to promote its Chocos brand targeted at kids in the age group 4-11 years. The contest, called "Rescue chocos from Crafty Croc, was available by solving a crossword puzzle on the back of Kellogg's Chocos packs, and then SMSing the correct answer to 8558. With more niches TV programming being introduced this segment of VAS is bound to have positive impact on the SMS.

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SMS based Service:

Reasons for enterprises to use SMS: Instantaneous delivery & does not rely on recipient to retrieve from a server Reliable means of getting time-sensitive messages to recipients, including automated delivery acknowledgement Compatible across all users and handsets SMS-based mobile data services are being used by several forward-looking enterprises for the following applications: Asset / Automatic vehicle tracking when integrated with GPS Fleet dispatch Inventory management Utility services (metering by electricity boards) Interactions on SMS are typically of the following types: Request: Authorized users can request internal company information, i.e., company phone list, stock/ warehouse, latest prices, internal news, customer facts. Services are used by internal customers (employees), extended customers (vendors, partners) and end-customers Group transmission: Users can send messages to a group of people at the same time (i.e., employees, customers, etc). Messages can be identical for everyone in the group (a broadcast) or individualized (a narrowcast with each person getting a different message) Push/Notification Services: Users can create automated event or scheduled alerts, e.g., generate a request every morning at 8 am for revenue of the previous day or stock status Almost all operators with content service provider offer cricket news, views and promotions. Companies like Reliance, Airtel and Vodafone continue to build their communication strategy around being the lead sponsor of major cricketing events Reliance was one of the primary sponsors of the recently conducted T20 World Championship, the only Indian company amongst the group 19

Airtel is one of the key sponsors of the much hyped India Pakistan cricket series Most of the telecom companies use media space during matches to promote their products and services including content like match scores on mobile and ball by ball updates Contests like predict and win make your own team and similar promotions are run using Pull SMS services by media companies and advertisers. All game developers have specific downloadable mobile cricket games and games using cricket stars as the hero Airtel has also been sponsoring cricket reality shows searching for budding talent e.g. Cricket Star

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Music claims one of the largest shares of Indias mobile VAS market size, estimated to be worth about USD 324 mn (35%) including CRBT and ring tones as the major applications. Operators are aggressively building their mobile music brands by promoting nationwide uniform mobile music portals and launching marketing campaigns. Airtels music portfolio is over 50,000 complete tracks, ring tones, ringback tones and corporate jingles. Introduction of music discovery services like Airtel's Song Catcher created further ease of use, packaging, and flexible pricing for effective product differentiation. Hutch (Now Vodafone) introduced Full Song Download and announced the music premier of Krissh through this service. Hutch (Now Vodafone) & Idea introduced ease of use for CRBT by allowing users to copy another users CRBT by pressing * while listening to it.

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IVR
One of the most popular TV reality shows in India, Kaun Banega Crorepati (Indian adoption of Who Wants to be a Millionaire) required aspirants to audition using an IVR system. More than 1,000 call center lines were deployed across four metros to handle huge call traffic. The multilingual call center was able to respond to the callers preference. The system also handled inquiries on marketing information, recording complaints and claim inquiries. Niche Applications Stock market alerts SMS based instant messengers Social networking on mobile Group SMSing Commodity pricing on SMS Examination results over SMS (NCERT and other state education boards offer these services) SMS based movie ticketing (e.g. Fame Cinemas, PVR Cinemas)

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Key Drivers of VAS:

The growing telecom subscribers in India and the continuous record additions of >7 mn per month Access to VAS services are becoming cheaper with plethora of compatible handsets available in the market Subscribers are using their handsets to o Play games o Services such as access information from banks, railways and airlines o Download ring tones o Read news headlines o Check exam results o Surf the Internet o Participate in contests, etc. Mobile VAS is offered on multiple platforms like SMS, voice and Wireless Application Protocol (WAP) enabled services etc which increases its reach substantially Market size of VAS industry has been estimated at about USD 993 mn (INR 3,990 cr) at EOY 08 VAS market is poised to grow by more than 35% & generate sales of more than USD 1,250 mn (INR 5,001 cr) by EOY 09 Investment in VAS companies have been typically USD 10 15 mn in the most recent rounds, and less than USD 5 mn for start-ups, which is considerably lower than what would be required in other telecom segments such as networks, towers, etc.

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Company Name mGinger

Comments Provides mobile advertising services Use funds to grow business, ramp up technology stack, marketing & sales force

mChek

Enables users to manage credit/debit cards with mobile phones for over-the-counter, Internet & person-to-person payments Raised funds from Draper Fisher Jurvetson and Rajesh Jain in the beginning. Targeting four verticals - Bill Payment, Internet shopping, Merchant Transactions and p2p payments

NetCell

Plans to become a value added service player for telecom and media companies Plans to raise a total of USD 3 mn to fund its expanision activities

Kirusa

Voice SMS company; Planning to raise USD 5-15mn

Obopay

Obopay US is a mobile payment service that lets users send and receive money from any of the 200+ million phones in the US

Net4Nuts

Recent application MeOnGo enables push email on internet supporting mobile devices Subs base of 20,000+ individual and enterprise users in 100+ countries.

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MapmyIndia

Powers yahoo Maps and also tied up with wayfinder and Airtel for GPS Focus on developing mobile applications such as mobile community services Rocketalk combines video, pics, voice and SMS into one client,

ACL

RockeTalk

and can be used to send messages to any other phone (with the same client) or online (and uploaded to sites like Youtube) Exclusively licenses well known brands like sachin tendulkar,

Nazara

sehwag, dhoni etc and develops mobile content based on these brands

One97

Provides telecom VAS to enterprises and consumers and also powers IVR services of corporate. Probably one of the two VAS companies (the other being OnMobile) that owns servers at the telco's premises.

Mobifusion

Mobifusion has a wide variety of Mobile content and applications suitable for the global market Deployed m-CRM and m-coupons initiatives and plans to enable money transfer from ATM to mobile and video streaming Product called reqall allows users to instantly record voice notes using mobile devices. The software then recognizes the speech

Movedsystems

Q tech

and organises the recording which are searchable using keywords, and reminders can be the set (and uploaded to sites like you tube) Webaroo is a technology startup company with offices in US and India

Webaroo

STRATEGY AND APPROACH

Airtel Strategy:

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 Leverage PAN India presence to offer Single window solutions including Fixed, Mobile, VSAT etc. Leverage past relationships, roaming and international reach for data services like BlackBerry Use first mover advantage by focusing on introducing innovation Bundling applications is the major focus, as no new bundled handheld is approved unless it has some exclusive preloaded applications o Key criterion include: push mail, scalability to support high end applications, exclusivity for a defined time period to leverage first mover advantage, and complement to leadership image Segmentation Faced with diminishing marginal returns on voice revenues, Airtel has abandoned a one-size-fits-all demographic segmentation and has reorganized users into different segments based on attitude, adoption of value added services and revenues generated per user Approach Airtel will focus most of its activities on a group theyve defined as the Funsters, a group 18-35 years old, but with a common trait: a high adoption of VAS o This group accounts for VAS spending of INR 100 per month and sends on average 300 400 messages a month. Airtel believes that with some targeted marketing, spending can be pushed to INR 250 o Has revamped its WAP portal and is expected to relaunch it soon o Exclusive tie-up with apps provider like Google o Have identified music on demand as a key value proposition and is offering subscription to 30 minutes of music for INR 30 (USD 0.75), which users can download and listen to for a month Top 5% of users are defined as the Achievers. This segment isnt a high adopter of VAS, but contributes to revenues nearly 10X that of Airtels ARPU, currently at INR 399. 29

o To enhance customer experience for this segment, Airtel has separate priority relationship managers and will additionally rollout further service-based segmentation based on usage behavior o They have also partnered with HTC and Blackberry for the high- end handsets catering specifically to this segment.

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Reliance Strategy:
Network: High Bandwidth CDMA 2000 1x Tightly integrated data network Intelligent platform (Reliance Application Platform) Handsets: (appx USD 100 500) One click access Java / BREW, MMS, WAP etc. Special Memory Management and DRM enabled Video streaming & multimedia capabilities Approach Reliance has been aggressively promoting CDMA 1x data cards for business users Reliance has created an ecosystem where external developers can contribute to increasing the application portfolio of the carrier Bundle applications with connectivity for SME / SOHO By offering wireless data connectivity for POS terminals and ATMs, Reliance has established a strong image in dealing with BFSI and Retail enterprise customers Reliance became the first CDMA player in India to launch BlackBerry, and the first in India to launch BlackBerry 8830, which provides inter-operability on both CDMA and GSM networks. Strategy will focus on following areas o Applications over and above e-mail o Offering pan India coverage and distribution o Focus on SME/SOHO segment o Wireless Data Performance Bundling program with laptops has helped push data card sales very aggressively, over 100,000 units sold in the last 2 years Wireless data was dominant with 4.6% of revenues, while SMS was only 1.4% of total revenues 31

 Has over 12.1 mn Wireless Multimedia users as of Sep 2008 with Wireless Internet Users growing at a rate of 15% QoQ

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Vodafone Strategy:
Will push VAS to small towns though prepaid content Fun Cards which it expects would boost usage as it offers a simple SMS based method to activate and enjoy the service Vodafone was the first operator to abandon a walled garden approach and has seen significant benefits from the same 60% of traffic is now generated through its open strategy Our estimates indicate that 30% of Vodafones subscriber base owns GPRS enabled handsets of which 12% have activated GPRS but only 23% of them are downloading content (Source: BDA analysis) In order to further accelerate GPRS activations, Vodafone is believed to be testing a solution for Automatic Device Configuration for pushing GPRS settings on a subscribers handset as soon as a SIM is activated Approach Undertook most expensive rebranding and repositioning exercise undertaken by a mobile operator in India in Sept07. Using localized mediums such as Point of Purchase and FM radio to promote regional content Aggressively marketing Microsofts Live search Has been pushing VAS awareness among Tier1-2 cities through road shows, marketing events and contests Wireless Data Performance Over 60% of VAS revenues for Vodafone are from Non-SMS based services Vodafone commands 30% CRBT penetration, the highest amongst all GSM operators

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Idea Strategy:
New focus area is push mail services for high-end users and USB data cards Idea has been able to leverage its excess data capacity on its network to create new revenue streams by offering differentiated services at higher prices than they could charge for standard mobile offerings

BSNL Strategy:
Services bouquet extends from SIM Based, Short code base, IVR based VAS (News, Entertainment, Movies, Astrology etc.) and GPRS / SMS based services, matching all private players in terms of VAS offerings Has been able to launch some VAS before even the private operators like short movie clips etc. Lack of focus on VAS even though network expansion has been limited, means that uptake will remain lower than other operators

Tata Teleservices Strategy:

Follows a very similar strategy and bouquet of services as Reliance Even though one of the last operators to focus on VAS services, recently it has upped its marketing in this area with good results and uptake Handset bundling with preloaded features at affordable price is the way forward to increase revenues from VAS Phone with mobile browser Samsung Explore Low cost web browser phone at INR 1,799 Launch of high-end Moto-Q Windows Mobile phone Search functionality on phones, Mobile radio USB based data cards

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RESEARCH METHODOLOGY
Objective of Study:
People are learning that mobile phones can be used for more than just making phone calls. The future of telecommunications also promises diversified usage of mobile phones. Innovation of future mobile applications is limited more by the imagination than by technology. As we are just starting to understand the possibilities of VAS we need to investigate the market to find out the true extent and nature of demand of mobile VAS. The more that is known about what end users demand the better operators will be able to meet those demands now and in the future.

Need of the Project:

Due to the fact that VAS on top of mobile communications poses a relatively new type of business for operators, the focus is put on lead demand for mobile VAS. The area of the market study concerned the extent and nature of demand for mobile VAS.

Scope of Project:
The area of the market study concerned the extent and nature of demand for mobile VAS. Answers were sought for the following questions: Who comprises lead-segments of mobile VAS? What are the actual services and service characteristics in demand? The market study was conducted in Mumbai, which can be seen as one of todays leading cities for mobile adoption of technologies.

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Methodology:
In the market study concerning demand of mobile VAS, the driving assumption was that without lead users the diffusion to mass markets and thus standardization of new technology would not take place. The empirical market study was conducted in two phases. The preliminary study was performed to collect existing market information through secondary research. That is, potential VAS were identified and characterized according to their nature. Then to identify the early adopter segments for mobile VAS and their source of demand, a quantitative questionnaire was circulated within a sample group of 100 persons. This sample gave a better chance to study the potential market for VAS. The market study was conducted in Mumbai, which can be seen as one of todays leading cities for mobile adoption of technologies.

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ANALYSIS AND RESEARCH FINDINGS

Primary Data Analysis:

The present study has been undertaken to get the first hand exposure on the mindset of people towards VAS and their involvement in such services. We first took a general overlook at the data collected from the end-user questionnaire. As intended we wanted our sample to consist of people, who have used mobile VAS and are aware about it. For instance those, who do not use mobile VAS, were by default not included in the sample. Everyone in the sample carried a mobile phone. The case in the market, the first general finding is thus that markets today are technically not in a very advanced phase concerning mobile VAS.

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Which age group do you fall in?

Age Group
Under 18, 11

Above 50, 16

19-25, 25 36-50, 25

26-35, 23

Gender

Female, 40

Male, 60

All the age groups were nicely represented, with 11% under 18 years, 25% 19-25 years, 23% 26-35 years, 25% 36-50 years, and 16% over 50 years.

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Do you Internet at Home?

Internet at Home?

Yes, 45 No, 55

Do you Internet at Workplace?

Internet at Workplace

No, 33

Yes, 67

A total of 45% had Internet at home, where a corresponding 67% had Internet at work.

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What is the duration of Internet usage per day?

Internet Usage Per day

Less than 15mins/day, 5 Less than 30mins/day, 26

More than 1 hour/day, 46

Less than 1 hour/day, 23

69% stated that they use Internet around 1 hour a day. It indicates Web surfing is one of the hobby of those in our sample.

Have you ever downloaded music, ring tones through messaging (SMS) the VAS provider?
SMS VAS Awareness

No, 23

Yes, 77

77% means less of a need to educate markets technically for SMS based mobile VAS usage.

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How often do you browse WAP or mobile websites on your mobile phone?

Frequency of WAP usage

0

14

19

30 37

Frequently Few times in a month

Once in a day never

Few times in a week

Observation:
Age group and WAP usage
120% 100% 80% 60% 40% 20% 0% Under 18 19-25 26-35 36-50 Above 50

Age Group Frequently Once in a day Few times in a week Few times in a month

Age group 26-35 is the lead users of VAS. Value-added services may be seen as extra and unaffordable and are therefore not that interesting. The presence of the 36 and over age group shifted strongly downwards as well. Perhaps their existing ways to accomplish daily tasks have already become routine to a greater extent than with the younger generations. It seems like the younger segments play a bigger role in

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relation to mobile VAS. These are the same segments that today show heavy use of SMS.

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Characteristics of the mobile VAS favorable person:

What is the extent of interest of VAS in mobile? *

VAS Interestingness

Very Much Interested, 34

Liitle Interested, 27

Quite Interested, 39

Observation: People who were very interested in mobile VAS had more advanced handset. *Those that were very interested in mobile VAS are termed as the high interest segment which will be used as reference ahead.

High Interest group

40 35 30 25 20 15 10 5 0 Internet at Home Yes No Internet at Work

The usage of the Internet tended to increase as one moved toward the high interest segment.

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The idea was to study the increase in general interest in mobile VAS and spot those characteristics typical of a person in favor of mobile VAS. Who pays the bill?
Who Pays the bill?

Parents/Family member, 21

Company, 53 Self, 26

Observation:
Who Pays the Bill?
120% 100% 80% 60% 40% 20% 0% Under 18 19-25 26-35 36-50 Above 50

Age Group Parents/Family member Self Company

It is likely that those 18 and under do not care about their usage, for instance, because their parents pick up their bills. It may also be that those 26-35 years have company mobile phones that they utilize even in their private life. So they may not worry about their usage. On the contrary the 19-25 years are quite likely to be students and as such, they could be low on money.

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What is your Average Household Income?

Average Household Income per annum

<3 lacs, 9 >10 lacs, 27 <5 lacs, 15

<10 lacs, 24

<7 lacs, 25

Income seems to also play a role in interest of mobile VAS. Of the whole sample, 76% of households reported earning more than INR 5 lacs annually. In the high interest demand segment the corresponding figure is 83%. The implication may be again the question: "Who pays the bill?" The lesser the monetary issues more is the ease in the lifestyle to access such value added things through mobile VAS. Inference: Value-added services may be seen as extra and unaffordable and are therefore not that interesting. The presence of the 36 and over age group shifted strongly downwards as well. Perhaps their existing ways to accomplish daily tasks have already become routine to a greater extent than with the younger generations. It seems like the younger segments play a bigger role in relation to mobile VAS. These are the same segments that today show heavy use of Internet/WAP.

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Demand for mobile VAS:

At this stage we start identifying the services in demand. The purpose is to first reveal existing longer run demand. Since answers of the whole potential target group are considered, the results implicate longer run demand that is most likely to occur in mainstream segments. The idea is to study what are the typical services in demand among subscribers. No matter how one looks at the results, the banking services always score the most points. That is, at the highest interest levels almost everyone would demand banking services.

Services in Demand (% )
Jokes Leisure time Stock portfolio Stock info Sports Event/Festivals Travelling News Items Food/Resturants Weather Dictionary Ringing tones Remote Control City navigation E-mail Phonebook Bank 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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From the above, it is quite obvious what kinds of services are desired and in demand. As the demand for mobile VAS generally rises, the demand for particular services usually also rises. Some services, for example, stock related services, face significant growth in demand in the high interest segment. In addition to banking services, phonebook access and e-mail types of services seem to be very successful. Also, ringing tones and futuristic services such as remote control seem to appeal to the potential markets. Such services as dictionary queries and weather updates seem to appeal on a rather good level and city navigation services on a moderate level. Some services generally face poor demand. For instance, only 24% of the whole potential target group says they want joke services.

How are different services seen by end users?

Bank Services

Pragmatic, 83%

Personal, 89%

Both work and leisure time, 56%

Useful, 86%

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Joke Services

Mass service, 58% Entertaining, 99%

Useless, 69%

Leisure time, 89%

NEWS Service

Customizable, 41% Pragmatic, 77%

Useful, 73% Both work and leisure time, 55%

The percentage figure presented in the above charts refers to how strongly that attribute contributes to the image of the service. For instance, respondents says that banking services are personal, whereas 89% reports joke services as belonging merely to leisure time.

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Basic service categories:

Services can commonly be categorized as entertainment (for example a random joke service), infotainment (for example a news service), or transactions (for example banking, e-mail, phonebook, and remote control services). The first two can be held as pure content provision services. Transactional services are typically services that involve functionality, that is, an event that occurs as a result of service execution. Typically entertainment services facing lowest overall demand are the services that are interpreted as being mass services. Most importantly, these are the services that are reported as being the most useless. Their function is merely to provide entertainment for leisure time usage. In turn, infotainment services facing moderate level demand are reported as being quite the opposite of entertainment services. They are seen as pragmatic and quite useful services. The distinction between mass and personal service is no longer so clear. The source for the interest is the personal component of content. For instance, one may request for the stock quote of ones personal portfolio, a weather forecast of the city where ones apartment is located, or the translation for a Hindi word in the language of the country where one happens to be. The distinction between user role is not that clear either since these services can be used for both work and leisure time. Transactional services face the highest level of overall demand. These services are used to perform a routine daily task. For instance, a banking service may be used for personal money transfer, a remote control service may allow one to control personal devices of interest, and a phonebook service may be utilized for initiating a call. Transactional services are mostly seen as very useful, personal services. The utilization of these services does not know the limits between work and leisure time. Further, different types of people use these services for customized purposes. The transactional services are thus very feasible for mass customization. The entertainment here may be seen as creativity. Downloading a personal ringing tone 49

to a mobile phone is but useful also creative and thus entertaining. Transactional services are the kind of services where mobility adds most value. The daily tasks need to be performed somehow, and sometimes the mobile phone provides the most feasible means.

Classification of Services: EntertainmentInfotainmentTransactionalServices

Towards transactional services the weight and importance of those characteristics illustrated on the left hand side of the figure grows. These are overall the most valued characteristics of the value-added services. Service categories by service nature:

Entertainment Event/Festivals Sports Leisure time Jokes

Infotainment Dictionary Weather Travel City navigation News Stock 50

Transactional Bank Phonebook Remote Control Ringing tones E-mail Order/Restaurant

Stock portfolio

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CONCLUSION
From the results discussed above we can draw several marketing implications: Value-added services may be seen as extra and unaffordable and are therefore not that interesting. The presence of the 36 and over age group shifted strongly downwards as well. Perhaps their existing ways to accomplish daily tasks have already become routine to a greater extent than with the younger generations. It seems like the younger segments play a bigger role in relation to mobile VAS. These are the same segments that today show heavy use of SMS. The personal component of the services seems to be a very important one. Those services in demand the most are those that are personal; a banking service to control ones personal accounts and money matters, an e-mail service to control ones personal messages, and a remote control service to control ones personal devices. The ringing tone service, on the other hand, turns ones mobile phone into a personal device that can be recognized from the masses. Mass customization cant be separated from personal services. The most in demand services enable a wide range of mass customization. Different people, for instance, may utilize E-mail, quite divergently and for different purposes. There may thus be identified several subscriber groups that utilize the same technical solution for rather different purposes. The usage of services is not limited to the "one person, one role". The same service may be accessible in ones private life as well as at work. It seems to be very important that common, every day services are accessible independent of time and place. This means that the really in demand services are such, where mobility actually adds value. For instance, it may be very important to have access to e-mail all the time without having to carry a laptop. On the sea or at a leisure home it may be important to find out the 52

weather forecast. In a restaurant it may be important to check the translation of a word. While on the move if you do not remember your friends or business colleagues phone number, the best way to get it might be with your mobile phone. Closely related to the importance of mobility is the importance of information tied to time. People do not see it crucial to have a piece of information, when it is not crucially important. Results show that certain services may not seem as appealing, for instance news items, sports results and stock updates. Such things one may as well handle at a later time. The information that is most in demand is that information that is personal and that one needs at a certain moment regardless of where one is. This is especially important when there is a lack of a better way to get information or handle a matter. Importance of communications related services is clearly visible. E-mail and phonebook services relate directly to communications, whereas banking in the form of transactions may also be seen as communications. The concept of unified messaging is thus extremely interesting especially in meeting long run demand. The concept and underlying idea of unified messaging is to integrate e-mail, fax, voice mail, and SMS services. Our results on the popularity of communication related services encourage this direction. Those services that offer real value are most in demand. Merely entertainment is not seen as that appealing. Merely entertaining services scored the lowest scores in the whole study. Low scorers were joke services, leisure time service packages, sport results, and lottery numbers, all of which to some extent serve almost no other purpose than entertainment. On a mobile phone, entertainment is more or less seen as time consuming instead of as a convenience. So, using mobile phones for services needs to offer some degree of real personal value. The service characteristics discussed above are typical of long-run mobile VAS demand. These services become profitable to the operator because they

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allow personal, mass customized usage. Different types of people, for example, people of different ages, use the same services for personal, customized purposes. Further, the same people use the same services while having different roles.

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BIBLIOGRAPHY
Websites: www.bdaconnect.com www.trai.gov.in www.mydigitalfc.com www.mobilepundit.com www.financialexpress.com www.mobilevasasia.com economictimes.indiatimes.com www.wirelessduniya.com

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ANNEXURE
Questionnaire Name Gender : :

Occupation : Which age group do you fall in? Under 18 19-25 26-35 36-50 Above 50

Do you Internet at Home? Yes No

Do you Internet at Workplace? Yes No

What is the duration of Internet usage per day? Less than 15mins/day Less than 30mins/day Less than 1 hour/day More than 1 hour/day

Have you ever downloaded music, ring tones through messaging (SMS) the VAS provider? Yes No 56

How often do you browse WAP or mobile websites on your mobile phone? Frequently Once in a day Few times in a week Few times in a month Never

Characteristics of the mobile VAS favorable person What is the extent of interest of VAS in mobile? Liitle Interested Quite Interested Very Much Interested

Who pays the bill? Parents/Family member Self Company

What is your Average Household Income? <3 lacs <5 lacs <7 lacs <10 lacs >10 lacs

Check the box against which you wish to have VAS (Multiple Choice) Bank Phonebook E-mail 57

City navigation Remote Control Ringing tones Dictionary Weather Food/Resturants News Items Travelling Event/Festivals Gambling Sports Stock info Stock portfolio Leisure time Jokes

How do you see these services as? (Multiple Choice) Bank services Personal Useful Both work and leisure time Pragmatic

Joke Service News Customizable 58 Mass service Useless Leisure time Entertaining

Useful Both work and leisure time Pragmatic *****

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