Bridging The Digital Divide

Issue Date - 16/06/2011

Digital inclusion has in it the ability to empower people in the remotest corner of the country. Given the increase in mobile penetration in the country, it is time that digital infrastructure be leveraged. Mobile Value Added Services will not only help in digital empowerment, but also help achieve inclusive growth. 4PS B&M analyses the Indian MVAS market which is estimated to be worth Rs.480 billion by 2015. Last Mile Services With more than 840 million subscribers the mobile phone has definitely become ubiquitous in India. TRAI estimates that by 2015 the mobile penetration in India will be approximately 100% with 1.25 billion subscribers. Given the advancement in technology, mobile phones are capable of supporting powerful applications which empower (information exchange via SMS, personalised health alerts, accessing bank account details, etc.) citizens. It is this compatibility that makes mobile phones a perfect medium to deliver a variety of content and services to the Indian masses in a cost effective and efficient manner, even without physical access. The Next Wave of Growth From the early days of P2P SMS, the industry has witnessed a growing portfolio of services to include games and contests. Mobile Value Added Services, MVAS, industry is estimated to grow at a CAGR of 30.5% to Rs.482 billion by 2015 from the current estimates of Rs.122 billion. Telecom operators view MVAS as the next wave of growth and a large chunk of revenue is expected to flow from VAS in the near future. Declining ARPU, need for brand differentiation, the growing focus on entertainment related content and increasing user comfort with basic mobility services are the growth drivers of MVAS.

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Bridging The Digital Divide Issue Date - 16/06/2011 Steady Transformati on As compared to US, Germany, China, or even the global average the non-voice revenue in India is a lowly 10%. However, with mobile VAS in India all set to enter its second decade where mobile TV, video on demand and user generated content are expected to be the growth drivers, non-voice revenues share will increase. The mobile VAS industry is slowly but steadily transforming from being a basic telephony (voice only) market to a value driven one with mobile services being introduced which serves specific needs of infotainment, search, making a fund related transaction etc. Low on Social Indicators Considering key development indicators, it is but apparent that India lags behind development indicators such as basic health and education facilities.

Given the governments intention towards inclusive growth, mobile technology and, in particular, MVAS can be efficiently used to deliver these services be it in the areas of banking, health or education. As a matter of fact, these are the focus area. Telecos see a profitable proposition as far as M-Education (e.g. Dr. Math-an initiative in South Africa) and M-Health is concerned. Mobile technology can invariably assist the governments overarching M-Health initiatives in terms of service delivery.

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Bridging The Digital Divide

Issue Date - 16/06/2011

A key to Financial Inclusion MVAS which seek to digitally empower citizens by providing them the much needed access to essential information and services can foster inclusive growth. According to Boston Analytics, government policies and advancement in technology will help to make rural India a lucrative MVAS market. The maturity of the MVAS is expected to give impetus to M-Commerce (MPESA in Kenya is success story where remittance services offered by Vodafone and Safaricom are utilised by 27% of the population). With RBI contemplating regulations to promote M-Commerce, it has the potential to promote financial inclusion and foster economic growth for large sections of society.