ValueMax

Mobile VAS - Tough Times

In India, the Telecom Value-Added-Services (VAS) was referred to as the business of ABCDJ – Astro, Bollywood, Cricket, Devotion and Jokes. This was the volume and revenue driver for almost all mobile operators beyond the voice and text revenues and it sure was a significant one (if we include the ringtones and call-back tunes within Bollywood or Devotion category).

With the TRAI’s new SMS guidelines, the VAS players cannot send SMS based content to users who are on NDNC. There are talks of partial NDNCs but the fact remains that this business has been hit in a big way. The VAS players had been using SMS both as a channel for marketing and for delivering content too. The ones who have been hit the worst are the ones where the content is the text.

So what now? I think one of these may happen

1. Telcos/VAS players will build a case & convince TRAI. Given the fact that Telco’s almost enjoyed a significant portion of the VAS revenues, this is surely already happening. The VAS players would need to show that the content is being delivered only to subscribed customers and the customers have an easy way to opt out it. (Airtel had started a on/off service for all products, now all might have to adopt it). There would surely be a lot of genuine customers who need a regular dose of ABCDJ delivered on their handset.What the VAS players might not get, is the use of SMS as an advertising channel to sell their services. If this happens, the cost of customer acquisition will go up, and hence the profitability metrics would be negatively impacted.
2. Non-SMS channels for delivery. SMS was the ideal channel for content delivery as it allowed the VAS player to just focus on acquisition and content. Delivery was a no-brainer. There was no classification needed basis handset type etc to see if the content was delivered or not. With SMS gone, the players would want to explore GPRS based rich media delivery of content. Here the customer’s handset type will decide whether the specific user should be targeted with this content or not. Maybe now Telco’s will start focusing on selling smart phones either bundled or as part of a special deal. Any smart phone sold by Vodafone, gives them a customer to whom rich-media VAS can be sold. Maybe now the likes of CellTick will have a second lease of life in the Indian market.
3. More active role by Telco in selling VAS. Till now, the role played by Telco in selling VAS content was restricted to sharing data with the players, and opening up a pipe for them to deliver. Now the Telco will remain the most important touch-point, and if they want the VAS revenues to grow, they would need to “sell” it now. Telcos might invest in a VAS emarketplace of sorts so that pulling the content is much easier.

Time will tell, what finally happens, but my guess is, that it surely is a critical discussion point at most Telco board rooms.

Its an oft repeated statement that an

No more SMS SPAM

optimist see opportunities where others see challenges. It can not be truer in a business scenario esp when something changes drastically in the overall environment.

One such change has been the TRAI’s gag over SMS- the true bane of India’s mobile growth. We used to get 20 SMS daily about new housing projects and a similar number of messages for increasing height or losing weight. So apart from the customers who are genuinely happy, its very interesting to see how businesses are reacting to this change. Do remember that mobile (& SMS specifically) has been a very strong and efficient channel for many businesses because

• It ensured delivery + view (unlike emails which might not be opened or hit SPAM)
• It was real time, so alerts could be sent and verifications could be done while the customer was online
• Cost effective, the cost per SMS from many a providers was as low as 3-4 paise

So once the SMS were put on hold, earlier this week interesting responses have been witnessed from players.  Here’s some of the interesting ones:

1. Talk it out with the regulator – The JustDials of the world seem to have done this, coz by the evening there was an announcement with a new clause that allowed JustDial/Zatse and few others to send SMS to customers who call in for local search. Similar benefit has been extended to Google/Facebook etc kind of brands. This is interesting because all along, the draft that was circulated contained only a few pre-decided categories where transactional SMS  would be allowed.
2. Read the fine print and find a way out – Apparently all this applies only as long as you use the pipes of Indian telecom operators to push text SMS to customsers. There are players now offering SMS’s delivered through international gateways (although at a much higher cost).
3. What? When did this happen – Its very funny to talk to some call centers and hear their agents give the standard response that you will get a SMS from our side. Here it seems, no one within the company bothered to check/find how it affected their processes. I am sure their Ops guy in on an extended vacation.
4. No Problem, we will innovate – well this is the segment that does proud to the word – “Jugaad”. There are players out there selling a “missed-call” solution in lieu of SMS verification. A very smart alternative indeed and the robustness of the current system is the only constraint.

While the change is very recent and many more innovative solutions would come up, one thing is certain- it has casted a death spell on very many business models (read that as VAS services, players selling mobile numbers, mobile marketing services).