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How to Respond to MVAS Demand and Increase Revenue

Table of Contents � Introduction ........................................................................................3

� MVAS Market Growth in India ....................................................4

� Understanding the MVAS Market and Opportunities .......5

� Models for MVAS Service Delivery ..........................................6

� The Challenge of the MVAS Demand .....................................6

� Technologies Needed to Support MVAS Application ........7

SS7 with ISUP............................................................................7

Transcoding.................................................................................7

The D-Series: Voice Transcoding .....................................8Netborder Transcoding Gateway ......................................8GSM ...............................................................................................8

The W400 GSM Board ...........................................................8

� Conclusion .........................................................................................9

3How to Respond to MVAS Demand and Increase Revenue

IntroductionThe Indian telecom market has seen an exponential growth in the past years. The number of subscribers to telephony and data services continues to growth as the reach of the network goes beyond urban areas and into rural territories. Telecommunications had traditionally been a voice communication service. The services today have moved beyond their fundamental role of voice communications to a variety of services, which in telecommunication parlance is called Value Added Services (VAS). These are enhanced services that add value to the basic telecom services. The Indian market has embraced VAS igniting innovation for new business opportunities. With the expansion on mobile networks Mobile Value Added Services (MVAS) is challenging service and content providers to take advantage of the expansion while providing a reliable and consistent experience to their clients. This document evaluates the current state of the MVAS market in India and presents solutions to the technical challenges that the growing MVAS market presents.

4How to Respond to MVAS Demand and Increase Revenue

MVAS Market Growth in IndiaThe telecom market in India is one of the largest in the world and all signs indicate that it will continue to grow at a record setting pace. The mobile sector has grown from approximately 10 million subscribers in 2002 to 960.90 million at the end of May 2012, reaching a Tele-density of 79.28 . While urban areas seem to have reached a celling, rural areas have showed increasing growth, with a monthly growth of 1.78% vs. 0.91% in urban areas.

A study released in November 2012 by the consulting firm Zinnov, projects growth in the Indian mobile value-added services market to over US 6 billion by 2013. Another study by the Internet and Mobile Association of India (IAMAI)-IMRB suggests that more affordable mobile devices and lower data subscription rates are expected to push the mobile value-added services market in India to Rs. 33,280 crore by 2013 (equivalent to roughly US 6.1 billion). Both studies show that the telecom industry in India has a large subscriber base, with 79.6% tele-density, but very low revenue per user (ARPU), being among the lowest worldwide. Even though ARPU has declined over the years due to lower voice service rates, the per user spent on MVAS grew by 28% representing 27% of the ARPU. Carriers are shifting their focus, looking for new value added service to broaden their portfolio and increase revenue. ARPU is becoming less dependent of voice services and more of MVAS.

“ARPU is becoming less dependent on voice services and more of MVAS.”

5How to Respond to MVAS Demand and Increase Revenue

Understanding the MVAS Market and OpportunitiesThe study by IAMAI-IMRB divides the MVAS Market into two major categories: Traditional MVAS (63%) and Emerging MVAS (37%).

The Traditional MVAS category consists mainly of two major applications:

27% Custom Ring Back Tone (CRBT)

17% SMS Based applications

Other applications in this category include: News Services and Reverse CRBT.

The new generation of mobile phone called smart phones has opened opportunities for the Emerging MVAS category. The Emerging MVAS is the advent of the rapidly growing market for applications that are installed and run on the mobile device. These applications rely heavily on accessing the Internet. The new MVAS market is experiencing fragmentation due to different technologies adopted by manufacturers. There is not a clear worldwide standard for the new smart phones industry. Regardless of the technologies behind these new applications, the data network that supports them is the same. This simple fact still puts the Traditional MVAS category in a very competitive position.

Although the Emerging MVAS is already taking 37% on the market, Traditional MVAS remains strong. The Indian market has accepted these services and will continue to do so in the future. New subscribers and novice users easily adopt SMS based applications. In addition, the expansion of mobile services into the semi-urban and rural regions presents an interesting scenario for the introduction of Traditional MVAS services that can foster social development for isolated communities and provide new revenue streams for providers.

In India the Personal Computer (PC) penetration is low. Computers and the Internet are services mostly offered and consumed in urban areas. The mobile phone offers the best form of a communication for the common man especially in rural areas. A study called “Mobile Value Added Services (MVAS) – A vehicle to usher in inclusive growth and bridge the digital divide” released by Deloite and ASSOCHAM in January 2011 presents a very detailed research of how MVAS can be utilized to deliver services that will advance social development. This

“Utility MVAS broadly expands business opportunities for tradi-tional MVAS applications while digitally empowering citizens by providing efficient access to essential information and services that foster inclusive growth”

6How to Respond to MVAS Demand and Increase Revenue

study calls these services Utility MVAS and divides them in three kinds of services:

1. Information-based services, which usually involve one way dissemination of information such as epidemic alerts, disaster management updates, etc.

2. Application-based services, which have a level of interactivity, and require the consumer to play an active role, such as checking the status of payments, IVR-based language training services, etc.

3. Enablement services, which include services forming a close substitute of those provided by a physical infrastructure, such as a bank or a school. These services usually involve transac-tions such as person-to-person payments, travel reservations etc.i

Utility MVAS broadly expands business opportunities for Traditional MVAS applications while digitally empowering citizens by providing efficient access to essential information and services and fostering inclusive growth.

Models for MVAS Service DeliveryThere are a number of architectures that can be used to deliver MVAS. There are two predominant models in India, one that is Operator Centric and one that is Publisher (or content provider centric). Products and software from Sangoma can be used in support of either of these architectures, from the smallest SMS service that may have only a few lines of connectivity, to one that supports thousands of simultaneous sessions.

According to the IAMAI-IMRB research, the Operator Centric model is the most prominent model for service delivery. In this model, the service provider takes full responsibility (and risk) for providing the service. The infrastructure is owned and managed, and the service marketed by, the carrier. Application owners and content providers are paid a small percentage of each transaction for the use of their intellectual property.

On the other hand, in the Publisher Centric model, the bulk of the infrastructure is managed by the application or content provider. The carrier is simply used as transport device for that content.

The Challenge of the MVAS DemandNo matter which architecture is employed, providers of MVAS need to be prepared to respond to increasing demand. These increases may be incremental as an application slowly finds its audience, or it could burst – if an application catches on and goes viral. Providers can only hope that they create an application like “Draw Something” which reached the 1 million subscriber mark just nine days after its release.

i Mobile Value Added Services (MVAS) - A vehicle to usher in inclusive growth and bridge the digital divide. https://www.deloitte.com/assets/Dcom-India/Local%20Assets/Documents/Deloitte_ASSOCHAM_MVAS_Study.pdf

7How to Respond to MVAS Demand and Increase Revenue

The challenge relies in effectively increasing the density of the application by upgrading the current infrastructure in a cost-effective way that satisfies the demand as well as the business objectives.

Technologies Needed to Support MVAS ApplicationSS7 with ISUPOne of the key technologies required for delivering MVAS applications is an interface to the SS7 network. If the provider is using a SIP-based environment (like Asterisk® or FreeSWITCH®) to create the application, then a SIP-to-SS7 gateway is required. Sangoma has a white paper in our library Mobile Value-Added Services with Sangoma that details exactly how to use SS7 with ISUP to deliver cost-effective and scalable MVAS applications. The Sangoma NetBorder™ SS7 VoIP Gateway can now be easily integrated with either Asterisk or FreeSWITCH to enable these platforms to communicate with the SS7 Network and provide Value Added Services, including CRBT to the mobile market in a very cost effective implementation.

The commercial SS7 signaling stack at the foundation of Sangoma’s NetBorder SIP-to-SS7 Gateway software product provides a field-proven and very stable product at a very competitive price. The NetBorder SS7 Gateway (NSG) is fully compatible with Asterisk and FreeSWITCH for simple and efficient integration that leverages existing architecture of these two OST software environments and ensures seamless SS7 operation. The Asterisk and FreeSWITCH integrate with NSG via a SIP trunk and allows SS7 call-specific information to be passed to the gateway with the help of additional SIP X-headers.

TranscodingAs the need to connect disparate networks and endpoints increases, transcoding becomes an important technology. It is even more important as mobile apps are used to deliver video content to a variety of endpoint devices, across multiple networks. Sangoma has a white paper Specialized Hardware Answers Booming VoIP Transcoding Demands in our library that discusses many of the issues regarding high-density transcoding. This white paper explains transcoding and codecs, outlining their operation and application to VoIP, along with relevant products from Sangoma Technologies, delineating their value proposition and benefits for buyers.Video-related tasks, including trans-rating (which deals with handling variations in frame rate as implemented by

FIGURE 1: A CRBT SERVER BUILT USING SANGOMA PRODUCTS

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different endpoints) and trans-sizing (which deals with issues created by the need to display the video content on screens that can range in size from those available on a mobile handset up to those on today’s HD home theater systems), also add to the complexity of delivering video as part of an MVAS application.

The D-Series: Voice Transcoding Available in PCI and PCI Express form factors, Sangoma’s transcoding boards support hundreds of simultaneous sessions of transcoding from one type of codec (e.g. G.711) to another (e.g. G.729), without affecting latency or using up precious host CPU resources.

Netborder Transcoding Gateway The NetBorder Transcoding Gateway (NTG) offers an elegant and simple solution, by providing integrated high density transcoding in a 1U form factor appliance. The NTG allows running from 400 to 4,000 transcoding sessions of a wide range of narrow band and HD voice codecs with unmatched quality.

GSMAs mentioned previously in this document, the introduction of mobile wireless technology in rural India is expanding the MVAS market to new customers eager adopt the technology and make it part of their everyday life. The basic support for GSM and SMS messaging are often overlooked when visions of massive deployments are being considered. However, an effective and profitable MVAS service can be deployed on a micro-scale, delivering content using just a basic SMS message. Interesting services can be quickly created and deployed using an Open Source Telephony platform that supports both SMS and Voice Services.

The W400 GSM BoardThe W400 also enables both open source and proprietary telephony platforms to send SMS messages over the GSM network, enabling the IP-PBX to act as an SMS gateway. For added flexibility, SMS messages can be sent while a voice conversation is active on the GSM port.

9How to Respond to MVAS Demand and Increase Revenue

ABOUT SANGOMA TECHNOLOGIES

Sangoma is a leading provider of hardware and software components that enable or en-

hance IP Communications Systems for both telecom and datacom applications. Enter-

prises, SMBs and Carriers in over 150 countries rely on Sangoma’s technology as part of

their mission critical infrastructures. Through its worldwide network of Distribution Partners,

Sangoma delivers the industry’s best engineered, highest quality products, some of which

carry the industry’s first lifetime warranty. The product line in data and telecom boards for

media and signal processing, as well as gateway appliances and software.

Founded in 1984, Sangoma Technologies Corporation is publicly traded on the TSX Ven-

ture Exchange (TSX VENTURE: STC). Additional information on Sangoma can be found

at http://sangoma.com.

ConclusionIt is undeniable that new technologies have always disrupted the status quo. The Internet and mobile technologies are certainly the disrupters of this era. Developed and developing nations can take advantage of these technologies and thrive. Technology is indeed the great equalizer. India is experiencing tremendous economic growth and although the social development is slowly catching up with this growth, the country is ready for a new era of better opportunities for everyone. Mobile Value Added Services are an attractive business not only for entrepreneurs and technology innovators but social organizations looking to improve the quality of life of the people in need. Scalability, interoperability, security and of course profitability are key aspects to any MVAS implementation. Sangoma provides the experience and quality needed to succeed.