Why do internet providers look for VAS (Value Added Services)?

October 27, 2021

5 minutes reading

Because a Value Added Service (VAS) for internet service providers is a useful and cost-effective digital management and security solution for internet service providers of all sizes (small, medium, and large). It's that simple.

First and foremost, the usefulness of a VAS (Value Added Service) for internet providers is related to the level of security and control the subscriber has over the internet .

In other words, by delivering truly useful advantages and benefits to internet service provider users. This certainly increases user satisfaction and results in customer loyalty .

Secondly, but no less importantly, there is the issue of increased profitability that a VAS (Value Added Service) provides for internet service providers.

Without a doubt, this aspect is the most relevant reason and the main answer to the question in the title of this article: why do internet providers seek VAS (Value Added Services)?

In fact, the usefulness of a VAS (Value Added Service) for internet service providers is what makes it profitable. Consequently, it is a differentiator and a competitive advantage that increases the profitability of internet service providers (ISPs) .

Advantages and differentiators of a VAS for internet providers

Value-Added Services (VAS) are solutions developed and improved to enhance the subscriber experience when using the internet from small, medium, and large internet service providers.

Initially, these are the advantages and differentiators of a VAS (Value Added Service) for internet providers that directly impact customers .

However, the impacts that truly matter stem from the quality and benefits of the services provided and offered to ISP subscribers.

Above all, because VAS (Value Added Services) allow for the optimization of internet service provider administration and management . In fact, they are essential for enabling the business model of providing internet access.

They increase the LTV (Life Time Value).

They reduce the CAC (Customer Acquisition Cost).

They reduce the tax burden.

They improve profitability and returns.

Without a doubt, a good VAS (Value Added Service) makes all the difference for subscribers and, especially, for internet providers .

Because it generates value for ISPs and their subscribers, it becomes a necessity, an important asset, and adds strategic value and a competitive edge to the business model of internet service providers.

Specifically, because the SVA format for internet providers offers the benefits of security, protection, and control over internet usage by the subscriber .

But mainly because it generates significant tax savings for internet service providers .

Increasing and decreasing : the advantages and differentiators of a VAS for internet providers.

When internet service providers deliver stable, high-quality broadband access, they fulfill their primary purpose as a Multimedia Communication Service (MCS).

When internet providers offer truly useful and innovative VASs to subscribers , they gain customer loyalty.

Without a doubt, a good VAS (Value Added Service) makes a difference in subscribers' lives and greatly contributes to increasing user satisfaction and loyalty .

In practice, then, we can say that VAS (Value Added Services) are of great importance for the management of ISPs .

Since they contribute to obtaining indicators and valuable metrics for managing businesses with recurring sales .

Increasing LTV (Lifetime Value) is one of the significant indicators impacted by good VAS (Value Added Services). Because the more satisfied subscribers are, the more loyal they become.

Thus, the revenue that each customer generates for internet providers, while remaining a customer, tends to INCREASE . This is because satisfaction in the business relationship tends to increase the number of months spent as a subscriber. Often, it fosters loyalty for years on end.

At the same time, the higher the LTV index, the better the relationship with another important metric , the CAC (Customer Acquisition Cost).

Reducing CAC (Customer Acquisition Cost) is another important impact on the business model of ISPs.

Similarly, good VAS (Value Added Services) solutions for internet providers contribute to REDUCING the effort (measured financially) required to acquire a new subscriber.

Just to give an example, an ideal ratio between LTV and CAC is considered to be 3 to 1. That is, a subscriber should remain a customer of internet providers long enough to "leave" (LTV) at least three times more than the investment made to acquire them (CAC).

Reduce and improve: the advantages and differentiators of a VAS for internet providers

Above all, the main advantage of a VAS (Value Added Service) for internet providers is the ability to pay less tax and thus increase the profitability of the business. The direct consequence is improved profitability.

This is why value-added services are so important to the business model of ISPs. In this sense, the relevance of management in choosing and deciding on the best VAS solution for internet providers .

While good VAS (Value Added Services) solutions for internet providers make a difference when it comes to increasing LTV (Lifetime Value) and decreasing CAC (Customer Acquisition Cost), they are indispensable when the focus is on reducing the tax burden and improving profitability!

Ultimately, VAS (Value Added Services) for internet providers are exempt from ICMS (a Brazilian sales tax) and can represent a significant tax reduction. Depending on the tax planning strategy, this can mean a reduction of between 20% and 50% in ICMS alone.

Since ICMS tax rates on telecommunications services (SCMs) can vary between 27% and 37%, depending on the Brazilian state, the tax savings are undeniably more than relevant for increasing the profitability of internet service providers.

The importance of tax planning for internet service providers (ISPs) is undoubtedly evident and depends on at least four factors:

the tax rate applicable in each state of the federation;

of qualified management;

of good tax planning; and

of a good VAS solution for internet providers.

Surprisingly, market data indicates that the vast majority of ISPs are unaware of the advantages and benefits of VAS (Value Added Services) solutions for internet service providers.

A good VAS solution for internet providers.

Lumiun ISP is a Value-Added Service (VAS) for internet service providers that offers competitive advantages , differentiators , and benefits for ISPs and their customers.

The Lumiun ISP DNS filter in SVA format for internet service providers was developed to offer greater security and control over the subscriber's internet connection and increase the profitability of ISPs.

Discover the competitive advantages and strategic differentiators of Lumiun ISP , the best VAS solution for internet service providers .