Where on one side, the value-added services providers in India are happy due to 40 per cent growth annually on the other hand, the mobile industry players are dissatisfied with the hike in mobile prices.

Motorola India’s Director Marketing of mobile devices, Lloyd Mathias says “as markets saturate, focus will be on increased average revenue per user (ARPU) and value added services (VAS) is the easiest ARPU driver”

A major challenge for VAS and telecom providers is getting the customers to use the services. Customers find the download process frustrating and expensive and lose interest.

Another challenge is moving away from music, which accounts for 50-60 percent of the revenue from VAS now. “Music drove the first set of users. For the next set, we have look at other areas,” said OnMobile Global’s CEO, Arvind Rao.

Mobile VAS market in India is estimated to reach 55-60 billion rupees in 2007/08, Rao said. It contributes about 10 percent to telecom firms’ revenue now.