Looking Back for the Future of VAS

Friday, 15 April 2011 11:46  |  Einar Lindquist, Teligent CEO

In this bylined article, Teligent CEO Einar Lindquist analyses how revenue-generating VAS based on voice and SMS traffic are still enjoying rapid take-up – and why they will continue to grow.

Vilfredo Pareto’s 80 / 20 principle is often surprisingly accurate in business.  Never more so than in the mobile world:  in 2010, despite all the hype and investment in next-generation services, 80% of global data and messaging revenues were delivered by the humble, decades-old Short Message Service.

Traditional voice services figure even stronger, with mobile voice revenues currently running around 90 / 10 relative to data revenues globally, although data is expected to grow to around 20% of voice (once again, neatly fitting Pareto’s 80 / 20 principle) in the next 3 years.  Pretty good for services that are over 20 years old, isn’t it?

One for all

The reasons for the continued strength of these long-established services should come as no surprise:  universal and ubiquitous access to voice services is key to maximising customer revenues, especially in emerging markets.  And SMS continues to be popular because of its low cost, and wide interoperability across all devices and mobile networks.

However, while operators and service providers in emerging markets are basing offerings around long-established technology, the services they are offering are just as innovative and, arguably, even more business critical as the latest next-generation mobile apps.

These services are designed to link robust, reliable voice and SMS-based functions to more sophisticated data and web services – and can even bridge gaps in users’ education and literacy.

Crucially, these services can also help to support and restore MNOs’ revenues against a backdrop of intense price competition, which is putting pressure on ARPUs.  Let’s take a closer look at the types of services that are deployed in emerging markets.

Developing innovation

As mentioned earlier, price competition driven by MNOs seeking market share, and the recruitment of second-wave customers, is eating into revenues.  A key method for combating this is to reduce the number of uncompleted calls – where the called party’s line is busy or unavailable, the caller hangs up before the call is answered, or the person being called chooses not to answer.  We estimate up to 70% of all calls on a mobile network are not billable.

While voice mail services can address this, a traditional, static, answering-machine service may not significantly increase call completion rates.  However, more flexible, personalised and intelligent voice messaging services can drive up the ratio of billable calls, and each percentage point increase in completion rate makes a big difference to the operator’s bottom line.

These services include features such as multiple greeting and information capabilities on voicemail facilities – which assure callers that the called party is only temporarily unavailable, encouraging more messages to be left, or simply stay on line to get more information about the called party’s movements.

Another key service is missed call alerts to users – notifying them that someone was trying to call, helping to drive return calls.  It is very important to operate missed-call alert services together with a mailbox facility, to maximise the likelihood that a message is left, and in turn maximise possible revenues.

Let’s talk about text

SMS messages can also be a driver for call completion, as well as a revenue generator in their own right.  For example, in northwest Africa, Teligent is working with a local MNO to deliver a range of SMS messaging options including Voice SMS (text to speech conversion as experienced by the end-user), to serve the needs of users with poor reading or writing skills – enabling a wider range of subscribers (especially the second-wave customers mentioned earlier) to benefit from mobile services.

Innovative text-based services can also overcome the limitations of the basic handsets that are typically used in emerging markets.  Although 95% of Africa’s population do not have a data connection, SMS services can convert emails or IM chat to text – turning simple handsets into unified messaging devices by linking specific numbers to subscribers’ email accounts.

From past to future

By focusing on the two bedrock, universal mobile services, voice and SMS, operators can boost traffic - not just in developing countries, but also in territories that are regarded as developed.  After all, high-speed connectivity can be patchy even in advanced networks.

And increasing voice and SMS traffic, even by modest increments, can make a big difference to operators’ bottom line for a relatively modest investment, which is a useful extra revenue stream while future messaging technologies are still maturing and not yet ready to deliver significant return on investment.

Sometimes, looking back to established services really is the best way to build for the future.

www.teligent.se

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