The value added services market in Nigeria, cum Africa is booming, thanks to developments in mobile networks and innovation strategies from operators targetings to increase their non-voice revenues. ADEYEMI ADEPETUN examines the growing trends.FOR telecommunications operators, the core service they are meant to provide is voice communications and of late data services, thanks to various fibre cables in the country. However, there has been increased demand for value added service, which is a secondary focus of operators and this has become a money spinner for them both in Nigeria, other parts of Africa and globally.For the purpose of definition, a value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions but, it can be used in any service industry for the services providers provide for no cost to promote their main service business.VAS offers innovative services on the mobile phone via Short Message Service, Unstructured Supplementary Service Data and IVR virtual numbers. These services cover several economic and social domains such as m-Money, m-Banking, m-Marketing, m-Enterprise, m-Content, m-Infotainment and m-Government.In the telecommunications industry on a conceptual level, value-added services add value to the standard service offering, enabling the subscriber to use their phone more and allowing the operator to drive up their average revenue per user (ARPU). For mobile phones, while technologies like SMS, MMS and GPRS are usually considered value-added services, a distinction may also be made between standard (peer-to-peer) content and premium-charged content.A new report from Informa Telecoms & Media, estimates the mobile VAS market in Africa to grow at a strong compound yearly growth rate of around 22 per cent and to be generating revenues of over $11.5 billion by 2014.The report observed that some world-leading services (such as mobile money transfers) have been launched in Africa, showing the great dynamism of local companies. It stressed that operators in Africa have to be particularly innovative when developing new services, as they have to not only meet the local demand but also fit the budget of a customer base with mostly low spending power and limited access to high-end devices.To TeleGeographys GlobalComms Insight, Africa will be the one region, which will see double-digit average yearly growth rates over the next five years in various telecoms service markets.It stated that, spurred on primarily by a doubling of its wireless subscriber base, the total African market will grow by well over $40 billion by 2013. At that point it will still have by far the lowest service penetration rates compared to other regions, indicating the opportunity for continued strong growth over subsequent years.Already, the 2010 Facts and Figures of the International Telecommunications Union stated that there are about six billion mobile subscribers worldwide, out of which 87 million mobile subscribers are Nigerian. In the last three years, about 6.1 trillion text messages were exchanged across the world, according to ITU statistics and this has enabled operators and service providers to reap revenues in billion dollars.Value-added services could be provided in-house by the mobile network operator themselves or by a third-party value-added service provider (VASP), also known as a content provider (CP). VASPs typically connect to the operator using protocols like Short message peer-to-peer protocol (SMPP), connecting either directly to the short message service centre (SMSC) or, increasingly, to a messaging gateway that allows the operator to control and charge of the content better. In the mobile phone market, new models are being rolled out with features targeted at specific user groups. There are feature phones for business people, with fast email services and document editing capabilities. On the other end of the spectrum are multimedia phones, further sub divided into units with advanced imaging and/or audio capability.This was recently attested to by the Head of Communications, Nokia Nigeria, Osagie Ogunbor, who said that the newly launched Nokia E7, provides value added services to users, stressing that, it provides direct, secure and real-time access to email, calendar, contacts and so on.Ogunbor noted that the E7 offers a wide range of entertainment and social services, which makes it a perfect companion for users.Meanwhile, the VAS could be Person to Application, which are SMS sent by end users for contests and for seeking other information like news and updates; Application to Person are SMS inclusive of service push by enterprise service providers; Also include calls on IVRS for all other services like astrology. Subscribers are been besieged with various solicited and unsolicited ringbones, which includes; monotones, politeness, truetunes and also includes Caller ring back tones (CRBT). In the entertainment circle, we have VAS to include jokes, Bollywood Ringtones & games); Info VAS (Information on movie tickets, news, banking account and so on); mCommerce VAS (Transactional services such as buying railway tickets or movie tickets through the mobile phone). The revenue generation and popularity of these types of VAS revolves around two factors which are perceived value and practical value. To telecoms analyst, in the next few years, there is likely to be further specialisation as network providers offer package bundles comprising of a phone, customised content, applications and a unique pricing plan targeted for some user groups. For example, one could opt for a package with a multimedia phone with huge storage space for music, digital rights management (DRM) software for sharing music and a usage plan that allows limited free downloads of songs and video.With markets being viewed in terms of supply and demand, where vendors and service providers create value for which consumers are willing to pay, it is only reasonable to project that, in the emerging digital world, it is just as likely to be consumers themselves that create the value. A couple of examples: SMSs or Short Message Services are perhaps the biggest success that telephone companies have had in persuading users to create their own value. Most recently, SMS-based voting used in competitions like American Idol/Pop Idol have generated large revenues for all stakeholders within a very short time. The ubiquitous nature of mobile phones is ensuring that they play a key role in every major idea of this decade. As mobile phones evolve into versatile platforms for content exchange, telecom operators will be under pressure to deliver new, exciting content to grow their revenue base. It will be recalled that some few years back, MTN sealed a deal with value-added services enabler and content provider IMImobile, to provide enhanced repository of current and globally popular content to 21 markets of MTN over a single platform.IMImobile would address the local and international content needs of the company providing different flavor of music, news, sports and local contents, bringing online contents and mobile to 130 million users of the company.The deal, then, would also enable MTN to launch new voice and data services in its regions of operation. IMImobile is expected to earn around $150.2 billion in 2011 from mobile content and services. In Nigeria the list of content providers and platforms are growing by the day, some the major providers include, MTech, GTS-Infotel, SaveMyContacts, Textnigeria, Entegration Solutions, Cellulant, among others generate mobile content to deliver value-added services via the GSM network operators.Investigations, however, revealed that the mobile operators share the revenues equally with these private VAS companies.Besides, the main players in the Mobile value added service chain in Nigeria apart from the National mobile operators are the content aggregators. They provide content to mobile operators; perform in-house content development and aggregating contents from other small players. They own the short codes and they have a tie up with multiple operators to ensure subscribers of all operators can access same short codes. Revenue sharing chain percentages will either encourage more independent developers or discourage them from rolling out innovative services that will promote the 3G. As it stands today, if the operators do not radically change the present revenue sharing structures which allows them to retain chunk of the value added services revenue, development efforts might not be encouraging after all. A VAS specialist, who spoke to The Guardian on the condition of anonymity, noted that growth is still stifled in the VAS market in Nigeria because National mobile operators are playing safe and concentrating only on mass services for which content is readily available and chances of failure less.According to him, mere deployment of the 3G Networks will not automatically incite content aggregators to start developing contents, but that additional investments in supporting infrastructure like in areas of digital map for those going into location based VAS, promises to be one of the leading services in Enterprise solution VAS in Nigeria. He added that the prevalence of low end mobile handsets is a major factor in the uptake and penetration of advance mobile technologies, stressing that, many services are not performing to their potentials despite their usefulness and many others, which cannot be introduced. Another VAS expert, Emmanuel Okoegwale, said that operators need to focus on Value added services to survive the cut throat competition they are experiencing right now, reduction in voice revenues and to achieve growth forecast.He noted that, there are quite a handful of innovative value added services like the Remote mobile phone book back up, by SaveMyContacts, Vehicle tracking systems, ring tone downloads and the highly successful caller Tunes. Caller Tunes has demonstrated that subscribers are ready to adopt a service that offers them an option of personalisation. Mobile users always want to carry forward their individuality to their mobile phones. In Nigeria, the mCommerce unit seems still crawling in the mobile VAS market, whereas, the entertainment value added services seems to be more popular because they are designed for mass appeal and leisure time usage while mobile commerce is popular in Banking industry but with few users. Simple reason is that subscribers have not just seen or perceived a compelling reason to engage the mCommerce and others.Globally, sport and adult contents are the chief revenue earners in the mobile value added service industry. Entertainment VAS seems to be the leading service that is driving the VAS market in Nigeria, this is because entertainment based VAS drive the market both value and volume terms.The Managing Director, GTS-Infotel, Dr. Pierre-François Kamanou, recently urged the Nigerian Communications Commission to license mobile Value Added Service providers in the telecoms industry. This, according to him, will fill the missing link in the mobile service value chain, as well as boost revenue generation in the telecoms industry.Restructuring the industry via licensing and regulation by the NCC, according to him, is very necessary and the commission is central to this.He said, In view of the sustainable development of mobile VAS/Audiotex services branded by third party services providers in Nigeria, it is critical that this new market be well structured and should be based on the following pre-requisites: Availability of a specific type of special numbering services licence granted by the NCC to telecommunications VAS providers (aggregators); availability of virtual numbers range (shortcodes and longcodes) granted to telecoms VAS providers by the NCC; establishment of interconnect and revenue sharing agreements between each mobile operator and the aggregator related to the operation of virtual numbers for audiotex services over SMS, voice and USSD.The GTS-Infotel boss said VAS providers in the country were currently facing multiple challenges such as lack of regulation by the NCC and discouraging payout by mobile operators to VAS providers.He said, Most of mobile network operators are reluctant to provide IVR and USSD interconnectivity to the VAS operators. Other challenges facing the VAS operators include very long delay or impossibility to obtain and activate an SMS or IVR short code at a particular end-user tariff across multiple operators and very long delay (up to eight months sometimes) to receive our payout from a mobile network operator.
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