Thomas K Thomas on August 22, 2009 on the Hindu Business Line at
Tokyo, Aug. 21 Indian operators should give a higher percentage of revenue share to application developers in order to promote value-added services (VAS), according to Japanese mobile player NTT DoCoMo.
In Japan, for example, NTT DoCoMo gives away as much as 90 per cent of the revenues earned from VAS to the application developers. In comparison, most Indian mobile players keep 60-70 per cent of the income earned from applications.
“It will take a while for them to understand that giving a higher share to VAS players works to the operators’ advantage in the long run. But we will have to persuade them to take a lower share so we can get an ecosystem that supports good data services,” Mr Toshinari Kuneida, Senior Vice-President and Managing Director of Global Business Division, NTT DoCoMo, told Business Line.
Mr Kuneida said that NTT DoCoMo will talk to its Indian partner, Tata Teleservices, to change the VAS business model in India.
In India, value added services contribute only 5-10 per cent to an operator’s revenues. In contrast, operators such as NTT DoCoMo get over 40 per cent of their average revenue per user from interesting data services. That is because while there is not much innovation happening in the Indian VAS segment, Japanese operators are giving services useful to the subscriber’s everyday life.
For example, NTT DoCoMo has launched a healthcare service that gives consumer details about his physical condition including how much he has walked in a day, his body mass index and how much he needs to cut down on food. The service is linked to a medical doctor’s device in the backend that receives data about the subscriber’s health and comes back with an advice. All this over the mobile phone.
In India, VAS are all SMS-based services with little innovation. Most VAS players do not find it feasible to invest in developing high-end applications since the operators are not willing to give more than 30 per cent of the revenue earned from that service.
But with Indian operators on the verge of launching 3G technologies, they will have to encourage application development if they have to start earning higher revenues from data services. Due to the cutting-edge applications being developed in Japan, players such as NTT DoCoMo are seeing 80 per cent of the total traffic coming from data services in that country.