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Soaring Revenue Base through Value Added Services

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The traditional service that telecommunications operators are meant to provide is voice communications. However, there has been increased demand for value added service which is secondary focus of operators that has turned to be a strong source of revenue.
A value-added service (vas) is popular as 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 (eg. Web 2.0) for the services providers provide for no cost to promote their main service business. In telecommunication industry on a conceptual level, value-added services add value to the standard service offering, spurring 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.
There are about 4 billion mobile subscribers worldwide, out of which 67 million mobile subscribers are Nigerian. Over 350 billion text messages are exchanged across the world every month.
Value-added services are supplied either 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.
VAS applications
Person to Application (P2A) these are SMS messages sent by end users for contests & for seeking other information like news &  updates;  Application  to Person (A2P) are SMS inclusive of service push by enterprise service providers; Also include calls on IVRS for all other services like astrology.
Ringtones : This is inclusive of monotunes, polytunes, truetunes and also includes Caller ring back tones (CRBT).
Entertainment VAS (jokes, Bollywood Ringtones & games); Info VAS ( Information on movie tickets, news, banking account  etc); 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.
Technology Enablers    
Short Code Provider: these are the companies who own a short code (e.g. 8888, 3456 among others) which is sold to a third party client for some keyword and a specific period).
In the next few years, there is likely to be further specialization as network providers offer package bundles comprising of a phone, customized 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.
Markets have traditionally been viewed in terms of supply and demand, in which vendors and service providers create value for which consumers are willing to pay. But in the emerging digital world, it is just as likely to be consumers themselves that create the value. A couple of examples: SMS’s 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 powerful combination of blogging or dissemination of personal content with social networking or "communitization" will have a strong bearing on the features and services that will be provided to users. There is a discernible trend in the use of mobile phones for creating and distributing blogs and video content while on the go.
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.
MTN recently has signed 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 will 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.
MTN, having exclusive global content rights for the 2010 Fifa World Cup, will use the deal to deliver exclusive 2010 Fifa World Cup content to the mobiles of customers.
Expanding VAS
In Nigeria the list of content providers and platforms are growing by the day, some the major providers include, MTech, Cellcast, TaviaTxt, SaveMyContacts, Textnigeria, Entegration Solutions, Cellulant, CellTrust, 3G Reality Centre and A3&O among others, which generate mobile content to deliver value-added services via the GSM network operators. The mobile operators share the revenues equally with these private VAS companies, barring M-Tel, which is yet to develop a relationship with a VAS company.
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.
Growth is 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. Entertainment value added service despite the fact that its practical value is minimal, is popular because of its mass appeal especially to youth segment and it is promoted over mobile commerce and infotainment which has the capacity to create real value for subscribers. Mere deployment of the 3G Networks will not automatically incite content aggregators to start developing contents. 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.
Prevalence of low end mobile handsets is a major factor in the uptake and penetration of advance mobile technologies. Many services are not performing to their potentials despite their usefulness and many others which cannot be introduced. As the mobile markets grows, most new entrants are the low ARPU end users as most big spenders had already been taken up and hence most mobile handset coming on board might not have the features that support advance technologies. Operators worldwide are taking initiatives to collaborate with mobile phone makers to make 3G services available to more people with less entry cost through handset development, logistics and marketing initiatives. Notable among such collaborations is the 3G for all campaign spearheaded by the GSM Association that will reduce 30% from the LG phone that has been chosen.
Emmanuel Okoegwale, mobile value added services expert, 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. According to him, 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 personalization. Mobile users always want to carry forward their individuality to their mobile phones.
While the informational and Mobile Commerce are really struggling in the mobile VAS market in Nigeria, 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. British Broadcasting Corporation reported that Nigerians are leading visitors to its site worldwide with 61% and distantly followed by South Africa at 19%.This is a classic example of usage due to compelling reason.
In other parts of the world, 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.
As telecommunications sector is bracing up to implementation Number Portability, value added services stand as a major focus and driver of competition for forward looking operators to survive.
 


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Airtel Boosts NIPR Public Relations Week with Onsite Unlimited Data Connection

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Telecommunications service provider, Airtel Nigeria has collaborated with the Nigeria Institute of Public Relations (NIPR) to provide with unlimited internet access at the institute’s inaugural edition of the Nigeria Public Relations Week.

The trailblazing event themed ‘Leveraging Public Relations as a Critical Asset for Nigeria’s Economic and Reputation Renaissance’ is set to run from Monday, April 22nd to Friday, April 26th, 2024, and will welcome thousands of delegates across Nigeria to the prestigious June 12 Cultural Centre, nestled in the heart of Abeokuta, the Ogun State capital.

Speaking on the strategic collaboration, Femi Adeniran, Director, Corporate Communications and CSR, Airtel Nigeria, expressed enthusiasm about the partnership, stating, “Airtel is proud to support the Nigeria Institute of Public Relations in its endeavor to advance the field of public relations.

“The relevance of public relations practice in Nigeria cannot be overstated, as it plays a vital role in shaping perceptions, managing reputations, and influencing public opinion. Hence, our support is a demonstration of our commitment to empowering individuals and organizations with innovative solutions that drive progress and create an enabling society.”

According to NIPR, through the PRWeek Organizing \Committee Chairman, Mr Yomi Badejo Okusanya, the NPRW will gather over 2,000 experts in the fields of economics, PR, and nation-building to discuss strategies for effectively communicating government policies and initiatives to the public.

Other activities at the NPRW will include conferences, the annual general meeting, workshops, induction of new members, breakout sessions with students as well as traditional rulers and a tour of some legacy projects in Ogun state.

With Airtel’s provision of onsite unlimited data connection, attendees and participants can enjoy unparalleled access to online resources, real-time updates, and interactive engagements throughout the duration of the event. This will significantly support the exchange of ideas, foster networking opportunities, and elevate the overall experience for all stakeholders involved.

Airtel Nigeria remains committed to offering unwavering support for initiatives aimed at driving innovation, collaboration, and nation-building.


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World Earth Day: Kuda Partners with Wecyclers to Clean up Communities in Lagos

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In a landmark partnership aimed at promoting sustainable waste management practices, Kuda Microfinance Bank and Wecyclers collaborated to commemorate World Earth Day on April 22, 2024. The collaboration featured a series of impactful activities designed to raise awareness and foster environmental stewardship.

The activities on the day included a webinar session facilitated by renowned expert in environmental management and head of ESG at Wecyclers, Omobolanle Olowu, during which she shared startling data on plastic pollution in Nigeria. She also discussed the importance of proper waste management and its significance in preserving the planet for future generations, providing valuable insights and practical tips on reducing, reusing, and recycling waste.

In a published study on plastic pollution in Nigeria, the country ranked ninth globally for plastic pollution with an estimated 2.5 million tons of plastic waste generated annually and less than 12% of those waste materials recycled.

Also on the day, Kuda staff volunteered for an environmental cleanup exercise, during which they took to parts of Apapa Road, Ebute Metta to empty gutters and collect plastics and other recyclable materials for recycling.

In addition, volunteers from Kuda gained firsthand knowledge of innovative waste management solutions during a guided tour of Wecyclers’ facility in Ebute Metta. The tour showcased Wecyclers’ pioneering efforts in recycling and waste upcycling, demonstrating how technology can be leveraged to address environmental challenges effectively.

Speaking about the collaboration, Emmanuel Femi-Adejobi, Senior Brand Manager at Kuda, expressed enthusiasm for the partnership’s potential to drive positive change. “We [Kuda] are committed to promoting sustainability and environmental consciousness. We also believe that our responsibility is not only to our customers and other stakeholders but also the environment that we all share. Partnering with Wecyclers allows us to inspire communities to adopt eco-friendly practices,” he said.

“Our initiatives towards achieving a sustainable environment and achieving a green earth goes beyond just recycling. We aim to inspire a broader commitment to waste minimization, reusing materials and proper sustainable waste management. As we commemorate World Earth Day, we encourage our staff, customers and general public as a whole to embrace actions that promote a green, safe earth for all,” he added.

Likewise, Esther Chibueyin Fagbo, Head, Human Resources and Partnerships at Wecyclers, emphasised the importance of collective action in addressing environmental issues. “It is very important for organisations to collaborate on initiatives that help save the environment. We are excited about this partnership because such partnerships are crucial to creating awareness and educating people about the impact of plastic waste on the planet and how they can contribute to a change that we all deserve.”

Kuda’s collaboration with Wecyclers emphasises its commitment to sustainability and championing proactive efforts through education, engagement and action to create an environmentally conscious population and a sustainable tomorrow.


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Defending the Foundations for Connectivity

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By Engr. Gbenga Adebayo

In 2001, when the first GSM call was made in Nigeria, how many of us would have envisaged the digital world that we live in today?

Defending the Foundations for Connectivity

Gbenga Adebay, chairman, ALTON

The pace of growth and the rate of adoption of telecoms solutions in Nigeria has been revolutionary. It is a globally acknowledged case study that we should be proud of and a clear demonstration of what can be achieved.

Almost all of us today are reliant on the network connectivity that it has enabled in different shapes and forms. From the simple need to communicate with loved ones, to the digital platforms that enable our access to and consumption of entertainment, financial products and other critical services.

Our reliance on these systems is becoming more and more acute, whether it is citizens, governments, or corporations.

System downtime is increasingly disruptive and offline manual redundancies are often in the advanced stages of being phased out. The pace of this transition is not slowing down. With the core infrastructure in place, innovation is driving the exponential growth of services that ride on it. From the fully adopted social media that has changed the way we interact, to the emerging Artificial Intelligence (AI) revolution.

While this innovation is enabling exciting new possibilities, there is a tendency to focus on those opportunities, to the detriment of the core infrastructure on which it rides.

It is imperative that we retain a focus on the optimisation of that infrastructure and enable continued investment in its development.

We have seen how the transition from 2G, through to 3G, 4G and 5G have each enabled the development of more and more sophisticated solutions.

The continued development of core infrastructure has to be sustainable, and over the last few months we have begun to see the challenges that the operators that provide it are facing.

Both MTN and Airtel have declared significant foreign exchange (FX) losses in Nigeria, and the stress is not linked to them alone.

The entire ecosystem is battling with a range of challenges that must be addressed. If we fail to do so, the downstream impact on innovation will be severe. Telecoms infrastructure requires a base level of investment to maintain its current capabilities, and significant additional investment to expand and grow. It is capital intensive and that capital has to be generated through sustainable business models.

At the heart of the challenge the industry faces is the issue of rising costs.

Recent financial losses are directly linked to the cost of operating towers that rely on inputs like diesel, which have increased significantly as the Naira has depreciated.

The provisions large telecom companies have had to make, and the consequent losses and impact on their reserves is a red flag.

It tells us that business as usual is not sustainable. If we continue as we are, then those companies will struggle to continue to invest in and maintain existing services.

But those costs are not the only challenge. General cost inflation, multiple taxation, regular and damaging vandalisation of infrastructure and the costs associated with regulatory compliance all help contribute to the high cost of operations.

We cannot continue to follow a path that asks those companies to simply accept those rising costs. It is no longer sustainable, and we have reached an inflection point.

This is a critical moment for the industry.

How we approach and resolve it will define the future of Nigeria’s digital economy.

If you want to be able to enjoy the benefits that digitisation brings. If we want the infrastructure that enables AI and helps us drive growth, then we must take action now.

Cost-reflective tariffs, like it or not, are simply non-negotiable. We have seen the impact of price controls in other segments of the economy, like power.

If providers cannot operate sustainable business models, then they stop investing. When that happens, the existing infrastructure starts to crumble.

For power, a consumer can choose to take ownership of the solution by buying a generator, or a solar panel.

For fuel, the government can step in as the provider of last resort and manage a subsidy regime that mitigates the impact on the population. Those options are not available in the telecoms sector. There is no self-help solution.

We fully understand and appreciate the financial stress that Nigerians are experiencing today. The cost of living is the single most significant factor in most people’s daily lives.

But those people are still able to enjoy the benefits that connectivity brings, at the price they paid before these challenges became so acute.

Imagine a future in which the gains of the last twenty years are reversed. Nigeria, and Nigerians simply cannot afford it. The pain that we would feel under those circumstances would be exponentially worse.

We need to find a long-term, sustainable and manageable solution to this problem. Prices will need to rise, but action needs to be taken in a measured way, through sustainable conversations and partnership with the government. It is time to address this head on.

 

Engr. Gbenga Adebayo is chairman, Association of Licensed Telecom Operators of Nigeria (ALTON).


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