Surely the phrase, necessity is the mother of invention does not entirely apply to the field of value addition in mobile services. These services after being offered became a dire necessity; just a common example of the short messaging service (SMS) is sufficient enough to cater for the validity of the aforesaid. Value Added Services (VAS) also have a certain time dimension associated with them. Subjectively speaking, a value-added service today becomes a basic service when it becomes sufficiently common place and widely deployed to no longer provide substantive differentiation on a relative basis.

Today, mobile phones are not considered to be ‘just’ a basic device with the sole purpose of communication, but an extension to a dimension of human life. Apart from being an indispensible commodity in a society, mobile phones have started to define the very fabric of personal life; it is used for expression, entertainment and day to day work to such an extent that the user feels handicapped in its absence. It is largely due to these reasons that the customers have become increasingly demanding. Apart from voice calls, cellular phones are used for Internet surfing, email, music, news bulletins, video on demand (VoD), social networking, banking, billing and other such related activities. The potential of facilitating the cellular users via value added services (VAS) in their daily life is enormous and untapped to its full potential, especially in the context of Pakistan.

The worldwide cellular industry is furiously competing to provide “innovative value added facilities” to customers, the subscribers have a choice. They get to choose their operators on the basis of the value added and the data services being offered. The introduction of the value added services has come as a mutual benefit for the industry and subscribers alike; it has been the cause of generation revenues sky high in multiple industries, it has brought about a pivotal change in the marketing strategies and played a vital role in consumer retention as well. The increase in popularity and importance in VAS has lead cellular phone manufacturers to manufacture handsets with powerful processors to facilitate technologies like, for example, wireless access. Development in VAS is the only road to the salvation of the telecommunications industry to generate new revenue streams. The figure below clearly shows the future market trend by the comparisons of downloads and revenue generated.

A study was conducted by GetJar, a neutral app store, specifically aimed at forecasting of financial and market growth of mobile applications and value added services. The findings of the study indicates that the market for mobile apps would boost to US$ 17.5 billion till 2012, which would exceed the sale of CDs that year. Furthermore, the market showed a Year over Year (YoY) growth of 92%. The application market growth is expected to rise from US$ 1.94 billion in 2009 to US$ 15.65 billion in 2013. According to Gartner research, global downloads in mobile application stores are expected to surpass 21.6 billion by 2013 (figure 2).

Every existing industry has a value chain, so does the Mobile VAS industry. This industry started initially supplemented the mobile value chain, however gradually as it matured it established its roots into various segments of the industry. In this case the value chain is not a simple line up of related entities; on the other hand it compliments and adds value to the services provided by other sectors.

Subscribers of Mobile Value added services have rendered changes into the business model framework of the industry; it has given rise to supporting industries such as content development and aggregation. In today’s market multiple stakeholders are on board the mobile VAS value chain with overlapping interests, roles and functions.

A recent research by TNS highlighted the change in technology usage trend of the customers, indicating where market for premium applications and content has significant growth for potential (figure 4). According to research, 40% of the users pay to download mobile applications or content. The Qualcomm research also revealed that 63% of the mobile users would spend more time accessing and purchasing content online if it was easier to find; 80% of the users had problems obtaining content on their handsets and whereas 58% of the users believe in carrying their content along with them regardless of the device. By analyzing these trends, one can easily determine that the future of VAS is bound to be enormous.

The fast growing popularity of using multiple services on a single mobile handset can be judged by the following estimation of Wireless Intelligence data, SNL Kaaan and Yankee group, the global mobile internet users have already surpassed global broadband subscribers and the trend is expected to increase rapidly in next couple of years (figure 5).

Many services with the help of multi-industrial collaboration have been started worldwide. M-Banking is a value added service that caters for Mobile Money Transfer, Mobile Payments and Mobile Ticketing; it acts as mobile money for the unbanked. According to Juniper Research Ltd, mobile phones globally will handle $587 billion in financial services by 2011. By 2012, CGAP foresees that 1.7 billion people will have a mobile phone but no bank account and 20% of them will be utilizing mobile money. M-Health is another emerging service; the concept behind this idea is to improve public health systems via mobile technology in the developing countries. The United Nations is already working on such projects. Moreover, M-Learning service is used to educate people of developing countries to learn languages through mobile technology; it has already been implemented successfully and M-Information service is especially helpful in agricultural sectors; it informs the farmers and retailers about the weather and prices as per fluctuation. It includes classifieds, advertisements and announcements as well. These are just a few examples how mobile VAS acts as an agent of mutual interest between different factions of the industry. With the assimilation of VAS and industry, a boom in general economic growth trends have been predicted, especially in purview of the 3G technology entering the market; the economic impact is bound to be substantial. It is very interesting to note that in the estimated Compound Annual Growth Rate of South Asia and Middle East, Pakistan shows the highest rate hence indicating a greater opportunity for a competitive market (figure 6).

Pakistan has observed an immense growth in Telecommunication sector both in terms of infrastructure and subscription. Attaining an incredible mark of over 98 million subscribers in the country, the competition between operators in Pakistan has exasperated. Consequently, the mobile operators have realized that the success of VAS has become important for their growth. This has led to a sharp focus on marketing and tie-ups and a somewhat limited focus on development of content. Most mobile operators are trying to innovate in their VAS offerings and create sharper differentiation for their offerings.

Operators are facing keen competition and the margins from their voice businesses are declining. Therefore they are looking at VAS as the next wave for growth. It has become the flywheel of telecom growth and a large chunk of revenue for operators is likely to come from VAS services in the years to come. Pakistan telecommunication industry has emerged as one of the fast growing telecommunications industries of the world. Due to this fact, Pakistan has always appeared as a lucrative investment environment for foreign investors in the telecom sector; it managed to attract US$ 815 million in 2008-09 even with the global financial depression setting in.

The other factor is the increase in user comfort with basic mobility services. The Pakistani mobile telephony market has gained immense strength due to increased affordability of mobile services as well as increasing comfort and basic mobility services. A large number of users are comfortable with operating their mobile phones and would progress on to demanding more value added services beyond the basic services, spurring the next phase of growth. Delivery of high speed mobile broadband services is now a key to nourish the value additions in a mobile market.

Furthermore, personalization of content and devices is a very important subscriber based factor. The mobile phones have gradually become an identity or an extension to ones personality in this part of the world. More and more subscribers personalize their ring tones and caller tunes and are further willing to adopt services which offer them services with further opportunity of personalization. The mobile user base in Pakistan is divided into three categories as shown in the figure below; the three generic user bases in Pakistan have unique characteristics and consequently demand different types of mobile services from the service provider.

Pakistan is a country of over 170 million and while in its developing stage it still has over 41% of its population below the poverty line and 55 % of its population classified as literate. Due to economic degeneration of the international market over the past few years and the war on terror, Pakistan has been dented financially. Clearly in purview of the prevalent conditions, the outreach of facilitation is limited. With mobile subscribers far exceeding the literate segment of the society along with the television viewers and internet users – mobile has become the most feasible resource for facilitation of the general public. The operators working in Pakistan are currently offering value added services which has greatly facilitated the masses in general to conduct their day to day affairs easily and effortlessly.

The scope of VAS especially in a country with the demographic and economic condition of that of Pakistan is enormous. Mobile VAS is an emerging stream of revenue for both the telecommunication sector and other related industries and provides a strong hope of rescue of the industry from the decline ARPU. Moreover, in Pakistan in specific it will act as an agent of change in the social uplifting of the rural and under privileged society in specific.