In parallel with the Web universe the Russian mobile world is emerging fast. In 2006 the Russian value-added services (VAS) market developed steadily, and continued its growth in 1Q 2007, reaching USD 615 million, a 34% year-on-year growth, reported ComNews Research. All three major players of the VAS market, operators, content providers cps tester and aggregators, as well as subscribers are growing with it. Major Russian mobile operators introduced more aggressive and assertive policies in the VAS scene, launching new WAP-portals and services and severely reducing the number of content partners. The VAS share in operators' overall revenue structure reached 14% in 1Q 2007. With the launch of the first 3G networks in 2007-2008, Russian operators will only increase their content offering. Consolidation and stricter policy by operators cut the number of core content providers to 80-100 companies. Last year CPs honed their skills in providing IVR and RBT services, pushing for more video content, mobile games and community services.

Major cps tester pushed for better quality content offering, introduction of new products and global market expansion. Today the winning formula of the Russian VAS market is ensuring content quality and diversification of products and services. IVR, SMS-based TV lotteries, RBT and mobile games starred in the most popular and successful content services section. IVR services caught the "Lady Luck" of revenues in 2006. Furthermore, continuous WAP penetration growth, mobile community services and user-generated content all promised that this year will be positive.

However, the otherwise resurgent market has its pinch of salt. Piracy is on the rise, while low content quality and SMS-spam remained a significant obstacle to the market's faster development. Finally, remaining high WAP-traffic rates and operators' high revenue shares serve as the additional burden to the market evolution.

What's the Name of the Game?

Pavel Roitberg, Head of Department of Products and Services, MTS, noted at the last Mobile Content Forum held in Moscow in June 2007 that "we have changed the rules of the game." While before MTS, the largest Russian mobile operator, had 250-300 content partners, the analysis showed that 70% of all revenues come from 15 major partners, 20% from 20 CPs and 10% from 35 partners. As a result, MTS ceased contracts with ineffective partners, thus cutting their overall partner number to about 100 companies. And this is pretty much the same situation for its rivals, VimpelCom and MegaFon.

Low quality of content, as well as an abundance of fraudulent offers, diminished subscribers' trust in CPs and resulted in a sharp fall of content sales in 2005. Learning from that negative experience, major operators and content providers rushed to ensure the better quality of mobile content. For example, MTS created a content quality control program making its partners directly responsible for the content quality. At the same time, major Russian CPs created an association to control mobile content offerings.

In 2006 the sales of "heavy" and expensive content grew further, as subscribers got more familiar with video, games, software applications and full mp3 tracks. Subscribers' purchasing power in major urban areas increased, and they are satisfied paying more money for 'heavy" content. A noticeable trend of 2006 is the resurgence of operators' activities in the VAS niche. Several Russian mobile operators created and promoted their own portals, and took part in joint promotion with some largest content providers. Moreover, operators launched new billing methods, such as WAP-tariff: MT-charge and WAP-click.