Value Added Services provide ARPU boost in Middle East

Value added services such as music subscription and online storage have the ability to provide fixed line carriers around the world with an opportunity to reduce churn and increase customer loyalty at a time of intense competition, according to new research from Informa Telecoms & Media.

The decline in broadband prices in mature markets and increases in bandwidth means that operators need to look beyond the core triple-play offer of telephony, TV and broadband in order to boost revenues and reduce churn in saturated markets. Certain value added services such as music subscription offer huge potential in terms of reducing churn and increasing stickiness, the analyst firm said.

“Music subscription services are at the top of the list, despite the relative lack of success that such ventures have seen to date,” said Giles Cottle, senior analyst at Informa. “However a new wave of subscription services – such as Virgin Media’s proposed subscription service, and Telenor’s Wimp – are likely to resemble a much more attractive alternative to piracy for consumers. Third party subscription providers will also turn to operators for partnerships, as Spotify has done with Telia in Sweden. Operators are well-positioned to offer these services,” he said.

In the Middle East, mobile service providers are undergoing fierce competition and the Gulf States have reached mobile saturation, a trend that is expected to spread to the less advanced countries of the region, accompanied by the squeezing of voice revenues and constant churn problems.

According to mobile solution specialist MCTEL mobile operators are increasingly focusing on VAS to boost ARPU. “The deployment of VAS thus aims at providing new revenue streams through the delivery of music and entertainment-related mobile content, location-based services, and social networking tools to increasingly tech-savvy subscribers,” said Daniel Mavrakis, MCTEL president and CEO of the firm.

Mavrakis adds that mobile operators must also make sure to capitalise on smart and targeted services. To enable service developers and providers to support personalisation, adequate service platforms must be present to manage both the VAS connectivity and the content delivery operations. MCTEL recently deployed its USSD Gateway for operators in Syria and Yemen.