Mobile operators would love to have millions of customers like Raman Sapra. And that's not just because he spends Rs 700-800 a month on talk-time. Raman also puts aside Rs 300-400 for GPRS (which allows him to access the internet with his mobile) and assorted value-added services. "I download two-to-three games a month, I use my phone to surf the web and keep my messenger on all day. I find these services extremely useful and entertaining. I love them," gushes Raman. The last game he downloaded onto his Nokia N.Gage was Prince of Persia: Sands of Time. When Hutch-Raman's operator-had a contest to promote its games, Raman came second in a contest called Rahul Dravid's 11, a full-featured cricket game that can be downloaded on your mobile for Rs 99. He won a bat signed by Dravid.

Lucky Raman. Luckier Hutch

If you thought that mobile phone service providers are close to hitting a brick wall, what with the voice market becoming increasingly commoditised, you haven't seen anything yet. After all, cellphones aren't just about talk, right? Like Raman, you too could download games and surf the internet. And there's a lot more you could do too: keep tabs on your daily horoscope and your bank balance (not necessarily in that order), pay your credit card bills, and soon even be able to buy railway tickets. It's a whole new world out there for both subscriber and operator, a wide world of value-added services (vas).

Globally, vas (including SMS) contributes over 15 per cent of operator revenues, and with creamier margins can contribute over 25 per cent of profits. In India, most operators (who charge for services) believe vas contributes 6-12 per cent of revenues, depending on the circle of operations, numbers being highest in Delhi and Mumbai. This averages out at around 10 per cent nationwide, which pegs the vas market at over Rs 1,500 crore (estimating the Indian mobile market to be worth Rs 15,000 crore). But it's the growth rate that's more exciting than the absolute number, which analysts predict could be in the 15 per cent range over the next five years.

Atul Bindal, Director, Mobility (left) and Mohit Bhatnagar, VP, New Product Development BHARTI TELE-VENTURES Even though it can cost up to Rs 150 per download, Airtel's game service has seen the number of downloads soar from 9,000 a month in January to over 50,000 in April

Higher Margins

"Customers want more from their phones," states Pratapa Bernard, Head (Marketing), OnMobile, a Bangalore start-up that's created the back-end voice-activated system for a variety of telecom operators across the country. Whenever you dial 646 on Airtel or 123 on Hutch, it is OnMobile's interface that you are using. Other than the more obvious benefits of higher margins and better utilisation of bandwidth, as Harit Nagpal, Vice President, Hutch, puts it: "In the short-term, the biggest benefit of such services is brand differentiation. People will soon start choosing operators based not on their voice capabilities but by the type of services they offer." Adds Kobita Desai, Principal Analyst (Telecom), Gartner India: "Voice is a commodity; if one operator cuts rates, others will follow within a few hours. In a crowded market, vas is the way ahead."

So if Tata Indicom has launched Fundoo Calling, Airtel, an EasyCharge facility, and Reliance, mobile banking, and if BSNL declares it is inviting companies to offer vas on a revenue-sharing basis, the direction in which mobile telephony is ahead is pretty obvious. According to Datamonitor, a global research firm, by 2005 over 200 million mobile phone users will use their handsets to play games. A majority of these users will be from East Asia (Japan, Korea and China). According to the ARC Group, a consultancy, mobile gaming recorded revenues of over $1.5 billion worldwide in 2003; this number is expected to grow at over 60 per cent annually with revenues of $7.4 billion by 2007 and will form a major chunk of the overall $25 billion global 'mobile entertainment' market. A large part of this growth is expected to come from emerging markets such as India.

Although vas in India may still be at a nascent stage, it's beginning to pitch in to profits. Hutch's Nagpal reveals that vas on the entertainment front is making a "significant contribution to the bottomline". It's easy to see how: You'd have to fork out between Rs 49 and Rs 99 to download a Java-based game on Hutch. On Airtel, the price of some top games can touch Rs 150. And Mohit Bhatnagar, Vice President (New Product Development), Bharti Tele-Ventures, is finding plenty of takers. "We are surprised to find kids who download games and wallpapers. In fact, sometimes we find they might talk less on their phones to be able to download these games and wallpapers, particularly if they use pre-paid cards."

The price for downloading ringtones, logos and wallpapers ranges depending on the type of phone, from Rs 5 to Rs 25. Yet, according to numbers from Hutch, over 160,000 games were downloaded last month, and Airtel has seen its numbers grow from around 9,000 downloads a month in January to over 50,000 in April. "When the service becomes relevant to the user such as the 'missed call' facility, the numbers become even more significant. When we launched the 'click-print' facility, which allowed subscribers to take prints from their camera phone, we had 20,000 hits in the very first week," Nagpal points out. Small wonder, point out industry observers, that Hutch enjoys monthly revenues per user "at least 10-15 per cent" higher than the industry average of around Rs 400.

If the costs of downloads are high, there's ample reason for that: A significant portion has to be shared with the copyright holder and the content aggregator. Operators like Airtel are acquiring the "mobile rights" to movies such as Spider-Man 2 and Main Hoon Na for exclusive ringtones, wallpapers, contests and the like. Even then, margins after all costs are included usually exceed 25 per cent and often touch 50 per cent for the operators of high-end 'copyrighted' products. On operator-driven services such as the 'missed call' facility, the only cost incurred by operators is that of sending an SMS-margins, therefore, are close to 75 per cent.

Freebies Galore

The country's largest mobile operator Reliance Infocomm's Reliance India Mobile (RIM) is offering vas free-at least as of now. Most RIM subscribers can, at the click of a button, access 'R World', RIM's innovative mobile internet portal. "People sometimes hesitate to use a service if it costs a lot of money, it is only after they try a service and then find it useful will they ever want to pay for it. Therefore, when we started offering RIM, we decided to make all 'R World' services free, which is useful both from a marketing standpoint and helps people break the technology barrier," explains Mahesh Prasad, President (Applications Solutions and Content Group), Reliance Infocomm. RIM is currently working on a system that will allow users to be able to purchase a railway ticket through their phone. Recently, it also offered students a facility to check the results of over 75 examinations around the country, for which it received over 7 million hits and counting.

Corporate Value-Added Services

Test drive: Mahesh Prasad, President (Applications Solutions and Content Group), Reliance Infocomm It's not just the regular JOE that mobile companies are targeting with their value-added services, corporate clients are also getting services tailored to their needs. "The most popular services are things like phonebook and directory services, but we are working on new innovative services in sales force automation and location trackers for companies as well," says Mahesh Prasad, President (Applications Solutions and Content Group), Reliance Infocomm. And who better to test it than yourself? "Our engineering division uses the service to keep track of repairs on the field, so sitting at our Vashi (Mumbai outskirts) headquarters we know what the situation is all the time; we will make these services available to customers who want them," adds Prasad. Airtel offers directory and inventory management services. "These services are as important as those we develop for our mobile subscribers. In fact, we are currently developing a location-based service that will help logistics companies keep track of shipments. The logistics industry is one of the fastest growing industries and by using our nationwide network of cell towers, it would be possible to track anything anywhere in India," says Atul Bindal, Director (Mobility), Bharti Tele-Ventures. BSNL meantime has signed an MOU with IOC to operate truck-tracking systems, as the PSU telecom giant has a tower roughly every 10 km on the highways. By September, 5,000 trucks will be fitted with this system.

RIM's Prasad believes that the company benefits by being on a Code Division Multiple Access (CDMA) based network rather than the GPRS/GSM (general-packet radio services/global system for mobile communications) based networks of their rivals. "Our connectivity is seamless, and we are able to deliver more data faster than any of our rivals, and we are not limited by character limits on SMS and nor do our customers have to pay vast amounts of money just to be able to download a 20-second clip," Prasad points out. Even as competitors wonder for how long Reliance can offer such free services (when it has to pay copyright fees, for instance), Reliance officials let on that the free ride could end by October.

If there's one huge stumbling block to vas, it's language, which is exacerbated by the heterogeneous nature of the country's population. English may not be the preferred means of communication, but it is the language of SMS in India. That means voice will play an important role in vas. "Indians on the whole prefer talking, and even though it is easier and cheaper to ask for a ringtone or wallpaper through SMS, people would rather talk because language is a problem. If we have to make services available to more people we have to make it available in their own language; most operators are on the way to doing that," says Sukanta Dey, Chief Marketing Officer, Idea Cellular. OnMobile is on its way to breaking that barrier. "Our software can currently recognise eight languages, including English, Hindi, Tamil and Telugu. We are currently developing engines that can recognise even more languages at an even higher rate of recognition-we think we can push the mark up to 95 per cent from the current number in the eighties," reveals OnMobile's Bernard.

Another problem is the lack of penetration of high-end GPRS-based handsets that can take full benefit of several of the services offered by operators. Bhatnagar estimates only about 12 per cent of the market has GPRS capable handsets. Nagpal says that Hutch has only 200,000 subscribers to their GPRS service (around 5 per cent of their total subscriber base), "but that number is rising exponentially, and considering we only had 3,000 subscribers when we launched the GPRS service 18 months ago, this is quite an achievement."

But clearly the technology barrier is slowly but surely getting eroded-GPRS handsets that would cost Rs 20,000 a couple of years ago are now available for Rs 5,000. Services, too, will improve as networks get advanced (Airtel is expected to roll out its new 2.5G EDGE network by September, and other operators will follow suit). Further, as more and more subscribers choose to personalise their handsets with ringtones, logos, wallpapers and the like, and then tell their friends and colleagues about their exploits, the vas juggernaut can only pick up pace. The boy, pug and Piyush Pandey won't like this, but as Nagpal quips: "We believe these guys (his repeat users) play as important a role for us as does the noise Ogilvy (the advertising agency for Hutch) makes for us."