The Indian value-added services (VAS) market has leapfrogged technologies and applications, much like the rest of the industry. The cost-conscious Indian subscriber adapted very early to text messaging, unlike say in the US market and contributes nearly 44 per cent to total VAS revenues. Of course, the other similarly cost-driven customer innovation of ‘missed calls’ is almost an Indian innovation, which, however, does not drive revenues.

Other VAS revenue contributors in India are ringtones and ring back tones (19 per cent), caller line identification (4 per cent), content downloads (5 per cent), GPRS (6 per cent) and others (22 per cent). (Source: PwC India GSM Benchmarking Study 2007).

The VAS market in India grew from 6 per cent of gross service revenue in 2003 to 10 per cent in 2006 and then fell to 9 per cent in 2007. The increasing spread of the market outside metros and category A areas and the entry of cost-conscious subscribers in the new additions appears to have contributed to this tapering off in the last two years. But even with this rate of growth, the VAS market is expected to add nearly $2 billion to the overall service revenues by year-end.

This, of course, is in the pre-3G era. VAS delivery has so far been based on the SMS, interactive voice response and wireless application protocol (or WAP) platforms, delivering a wide range of applications in entertainment, advertising, gaming, news and service support such as travel alert details. More recent successes include short-code interactive participation in TV and radio game and reality shows, extending also into print-led contests.

The improving quality of handsets and their falling costs, lowering age profile of handset owners and innovative content and packaging has fuelled growth in VAS. An increasing number of handsets have colour screens, polyphonic tones and GPRS and provides greater opportunities for innovative VAS services. Mobile penetration in India is still comparatively low and there is further scope of accelerated pick-up in coming years. India has one of the youngest average

ages of the population, considered more amenable to such services, providing an impetus to the adoption of new services. As mobile penetration and volumes increase, VAS-related tariffs are expected to come down, further fuelling the uptake of these services. Music and gaming are expected to drive revenue growth, as are mobile video services, given that Bollywood and cricket drive the Indian entertainment world.

In markets like Europe, where 3G networks have rolled out, music and gaming continue to be growth drivers. What have changed are the quality, variety and complexity of offerings, which drive up tariffs. Wireless operators see 3G customers as more willing than 2G customers to use a variety of multimedia services. Similar growth drivers are seen in Latin America, where ringtones have been the single largest contributor. The Africa/Middle East market shows varying trends across regions. Israel, with one of the highest telecom penetration rates in the world, has a vibrant wireless applications space with location-based services joining music and games as key offerings.

Africa, similar to India, has a high proportion of mobile subscribers to total telecom subscribers, driven by faster wireless rollout, inexpensive handsets and low-cost prepaid cards. Here, money transfers, driven by the lack of banking infrastructure, is a key service need. Within the Asia-Pacific region, a key factor driving telecom infrastructure development is the need to make available entertainment services and operators in Australia, China and Hong Kong are at various stages of providing mobile TV services.

The Asia-Pacific market has the largest mobile music market in the world, expected to grow to over $6.4 billion by 2010 (Source: US Telecom Industry Association). Similarly, Asia-Pacific, led by South Korea and Japan, has the largest mobile video game market globally, expected to grow to $4.6 billion by 2010 (Source: TIA). Globally, Japan leads with over 25 per cent of mobile revenues contributed by non-voice revenues.

Use of the mobile phone as a smart card, replacing plastic in urban and rural areas as well as filling the gap in rural banking infrastructure, will be a trend to watch for. In Japan, where use of the mobile phone as a wallet, has seen the maximum uptake, there now appears to be trend to revert to a single (non-phone) mobile wallet card driven by acceptability across the market and also the reluctance to be bound to a particular handset. Of course, as handset vendors continually innovate, this may no longer be a barrier.

With the growing VAS market, new technologies, an increasing number of content providers and the mobile phone network more closely linked to the Internet, there are rising concerns about security, as a single weak link can lead to content loss, unsolicited content delivery, unauthorised access to confidential data and even network failure. Thus, apart from investing in newer product offerings to attract customers, operators are also investing in making their operations secure from such risks.