Reviving Indonesian mobile VAS

Neha Dharia/Ovum
13 Dec 2011
00:00

The Indonesian mobile VAS market suffered a setback in October. In response to a rising number of complaints from consumers unhappy at having to pay for unwanted value-added services, the Indonesian telecom ministry implemented a rule that cancelled all subscribed-to services as of 18th October 2011. Customers had to resubscribe to the value-added services of their choice, and those services became subject to a stringent set of rules and procedures.

This development brought the mobile VAS industry in the country to a grinding halt. Not only has it drastically reduced revenues, but also the image of the industry will require careful rehabilitation. The industry is currently in the process of mapping out a road to recovery, and will focus on educating customers about the various services active on their connections. Because trust is viewed as the key to regaining a strong presence in the Indonesian mobile VAS industry, most telecoms operators are looking at earning the trust of their customers.

Revenue from mobile VAS in Indonesia was $2.62 million in 2010, and was predicted to grow by approximately 15% in 2011 to reach $3.02 million. However, the actual figure will fall short of this estimate following the October 2011 halt in revenue generation. The real impact on revenue will be seen in 2012, as operators and industry players work to rebuild Indonesian VAS. Mobile VAS is currently a key component of non-voice revenue in Indonesia, and, when SMS is included, accounts for 88% of all revenue in this space.

However, even before the disruption of October 2011 Ovum had estimated that the growth of mobile VAS in Indonesia would flatten out by 2013. From 2013, it is expected that the effect of mobile applications and other OTT players will strongly impact VAS revenues, forcing operators to be more creative around the data services they offer. Low levels of subscriber trust, stringent VAS subscription rules, and the growth of free OTT services are together creating a tough road to recovery for the Indonesian mobile VAS market.

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