VAS in a shifting landscape

Fresh leadership across Europe collides with China’s VAS market opening. Will this spark innovation or a land grab by Chinese giants? Changing regulations, investment tides and data privacy concerns are all up for grabs, so what is the future of Europe’s lucrative value-added services sector, asks Paul Skeldon?

The old Chinese curse warns “may you live in interesting times’ and this Summer’s wave of European governmental changes – particularly in France and the UK – has brought that to the VAS market.

The changes in Europe coincids with a pivotal moment in China, where its VAS sector has recently been liberalised. Brace for impact.

In case you didn’t know, telecom VAS encompasses a wide range of non-core services offered on top of basic connectivity. This includes mobile payments, streaming platforms, cloud storage, gaming and a multitude of other applications. VAS has become a significant revenue driver for telecom operators, offering higher margins compared to traditional voice and data plans.

European governments have historically maintained varying degrees of control over the telecom sector. Some have fostered competition by promoting multiple service providers, while others have allowed dominant national carriers to hold significant sway. This fragmentation has created a complex environment for VAS development.

The new governments across Europe may have different priorities regarding the telecom industry. Some might favour increased competition and innovation, while others might prioritise infrastructure development or network security. These varying visions will influence regulations that affect VAS providers and their ability to thrive.

Three European Impacts

Typically, there are three key areas of impact. Firstly, governments advocating for a more competitive environment might introduce policies that break dominant player monopolies and encourage new entrants. This could attract foreign investment, especially with China’s recent liberalisation, potentially leading to a surge in innovation and VAS offerings for European users (see below).

Governments across Europe, if not the world, are also prioritising data security and new political will might impose stricter regulations on VAS providers, particularly those handling sensitive user data. Balancing user privacy with innovation will be crucial to ensure a healthy environment for VAS development. Finally, there is infrastructure investment. Governments keen on accelerating digital transformation might prioritise investment in fibre optic networks and 5G infrastructure. This would not only improve core connectivity but also create a faster and more reliable platform for developing and delivering advanced VAS services.

CHINA’S VAS REFORMS: A DOUBLE-EDGED SWORD?

China’s decision to open its VAS sector to foreign investment presents a double-edged sword for European players.

On the one hand there are a number of interesting opportunities. For example, European VAS providers may forge strategic partnerships with Chinese firms, leveraging China’s vast user base and expertise in certain areas like mobile payments. This could expand their reach and create new revenue streams. Access to Chinese innovations in AI, blockchain and other technologies could also fuel the development of novel and advanced VAS offerings for European markets.

But there are challenges too. Chinese VAS giants, with their vast resources and experience, could pose a significant threat to established European players. This could lead to price wars and consolidation within the European VAS market.

And of course there are the ever-present data security concerns. European governments might be wary of allowing Chi- nese VAS companies access to sensitive user data, potentially hindering collaborations and market entry for Chinese firms.

Navigating The New Landscape

Either way, European VAS providers will need to adapt to this evolving environment, maybe not in 2024, but certainly in the years ahead. To do this the telemedia sector needs to up its game. VAS providers need to identify their unique selling points and cater to specific market niches. This could involve specialising in areas like cybersecurity solutions or augmented reality applications. We are already starting to see this happening, but it is going to have to be the norm.

Meanwhile, the VAS sector needs to embrace openness and collaboration. Strategic partnerships with players across Europe and beyond can enable access to new technologies and markets.

And, of course, there needs to be a prioritization of data security and transparency.

Building trust with users regarding data handling practices will be paramount in the current climate.

The recent governmental changes in Europe and China’s VAS reforms create a dynamic new environment for the European telecom industry. By navigating the complex interplay of competition, regulation and technological advancement, European VAS providers can seize the opportunities that lie ahead. Their success will depend on their ability to adapt, collaborate and prioritise innovation while ensuring user privacy.