MVAS Regulatory– Technology and Business Impact on VAS companies

The government regulator initiative to govern VAS vendor and mobile service provider to protect end consumer needs further re-calibrations. Post consultation paper release in FY10-11 and subsequent responses from ecosystem stakeholders highlights showstopper as well as hidden opportunity around proposed MVAS. This article highlights Technological and Business continuity challenges posed towards VAS developer, Owner’s, and aggregators.

Before going into details of impact, MVAS regulation makes it mandatory for the VAS service provider’s to take authorization from end user to activate requested VAS service. Post authorization, Service Provider would be able to bill end user. The process must be repeated at the end of VAS service expiry.

The government regulatory wanted to address end user concerns of repeated billing or lengthy process of deactivating unwarranted VAS services but in-turn forced VAS ecosystem players to realign their VAS design, development and delivery mechanism

The technological and financial impact on the VAS providers would be the followings:

Technological Impact

1. All VAS provider would be enforced to change the service delivery mechanism both on the service and business logic level to support the regulation on Service Creation,Execution, Activation, QoS, Provisioning and Assurance
2. Enhanced two way Security, Business Intelligence, Reporting and Billing upgrades
3. All VAS provider would be enforced an automated customer care portal integrated with mobile operator website in order to seamless adhere regulation
4. VAS provider would be required to integrate minimum feature set of Service Delivery Platform and integrated CDN
5. All VAS provider must offer certified product or service w.r.t standardization for seamless integration with Mobile Operator Network
6. All VAS services or product must be certified across devices in order to get the security clearance from mobile operator
7. All VAS provider must have dynamic feature set with a capability of segregated and aggregated mechanism to enable and disable business and service logic based on the product offering

Financial Impact

1. Due to the high capex and opex cost by Mobile operator, there is a high probability that mobile operator would renegotiate the price point with VAS provider
2. High Capex in implementation required regulatory compliance feature set
3. High Capex in certification process
4. High Capex to upgrade VAS service or product attached  technological platform
5. Lower customer adoption and subsequent low VAS revenue due to stringent mechanism.
6. Low ARPU per customer across Apps, SMS, Data- music, video centric service
7. High Capex to offer committed QoS
8. Low RoI and High TC

In the midst of high competition, margin pressure and added hidden threats of MVAS regulation may take Indian Mobile Operator into VAS tariff war which till now was not affected with the same.

In conclusion, MVAS regulation might bring cheer for end user but High TCA, TCO, UAC and cumbersome processes would translate into Low - VAS Revenue, ARPU, Margin, RoI. It also possesses great opportunity for the innovative VAS companies to tap untapped VAS userbase.

Quality of Service (QoS) Guarantee of Data Service required to kick-start higher adoption

Currently Mobile Operators are considering new subscriber as data subscriber because new subscribers are enabled on data enabled network. Based on the government document on subscriber numbers, the data subscriber base would be around 430 million ranges whereas the VLR active data subscriber would be around 290 Million. The recent thrust by incumbents’ mobile operators such as Bharti Airtel, Reliance, and Vodafone to differentiate them self is from challengers such as Idea and Tata DoCoMo generated new specifics around network, services and product Quality of Services (QoS). In the recent past most of the mobile operators used to run their network on Best Effort mechanism as the focus was on non real time product portfolio. With the investment on 3G and increase penetration, mobile operators started tweaking network parameters to offer differentiated services to their end customers on the real time product portfolio segment. It increases their data centric revenue as mobile subscribers are getting uninterrupted real time data oriented services. The recent strategic moves by few incumbent and their constant focus on data segment started reflecting in their quarterly result. These must have network KPI's should be exploited by Mobile Operators to define new service and product portfolio's to generate new sustainable long term revenue opportunity.