Can Mobile Apps and VAS Get Along?

Mobile apps and VAS (Value Added Services) are competitors in the race for subscribers. According to research conducted by J’Son&Partners Consulting, MNOs (Mobile Network Operators) are making less profit from voice, SMS and MMS traffic. This happens because:

  1. The competition between MNOs is very high;
  2. The consumption model of communication services by subscribers has changed.

In order to diversify, mobile network operators use mobile apps and VAS. However, application markets have been winning the game so far.

Mobile apps help solve various problems in everyday life.

Thousands of applications are launched in app markets such as the App Store and Google Play daily. As a result, MNOs that previously distributed content via VAS need to integrate in the new model of content distribution via apps.

In a white paper published by a consultancy, N. Dobberstein and Soon Ghee Chua argue that MNOs should be “smart enablers”. The key to MNOs’ success is in the encouragement of collaboration between different multimedia market players and in provision of insights of customers’ behavior as well as in offering tailored solutions and recommendations to customers. MNOs have to incorporate mobile apps in their offerings to strengthen the relationship with subscribers.

VAS will always be more expensive than mobile apps. Alan Knott-Craig says that this happens because “mobile operators will always take too much revenue share. In SA [South Africa], MTN keeps about 40%, Cell C about 30%, and Vodacom about 20%.” On the other hand, he also mentions that Visa and MasterCard take from 1%-7% of the revenue share when people buy applications from stores. Another thing that makes the VAS model more expensive is that it relies on costly advertising, such as TV ads.

VAS are not as intuitive as mobile apps and are hard to discover. In order to use the service, the subscriber has to know the exact short code of the service.

The shift toward mobile apps is beneficial for end-users because data is cheaper than SMS, MMS or voice. At the same time the trend is favorable for developers who do not depend on MNOs and can market their services globally without any integration with carrier billing. This allows applications to reach more people than ever before.

Mobile apps and VAS continue their battle for the ARPU (average revenue per user) and it is far from over.

At DAS Solutions we follow the standard Software Development Life Cycle (SDLC) to develop various mobile applications. We develop for Android, iOS and Windows Phone platforms. The choice of picking one platform or technology over the other depends on the customer’s specific requirements.

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