Nov 30, 2009

Reliance Takes the First Shot

Last week I blogged about how the mobile operators price war is going to move to the SMS turf soon. Today I was pleasantly surprised at Reliance Communications advertisement about SMS tariff of 1 paise per SMS.

This is actually a BIG news for my application SmsTweet. So far only Airtel is the exclusive provider of Twitter services on mobile phones through SMS. Even for Airtel users though it costs them one rupee to send a Tweet. SmsTweet on the other hand uses a 10 digit long number (9220092200 - local to Mumbai and recently 9243000111 - local to Bangalore). This ensures that you can send a Tweet from any mobile provider at your regular SMS charges. For most of the users it either means a local (1 rupee) or a STD (1.5 rupees) charge.

Now since Reliance has dropped its SMS rates to 1 paise, it means that you can use SmsTweet to send your Tweets at just 1 paise. That is way cheaper than Twitter's exclusive provider. So what are you waiting for Reliance subscribers. Go ahead and tweet through your mobile phone.

Nov 23, 2009

SMS - Telecos next Turf for Price War

Looks like while every one was fighting to cut the price per voice call, no one realised how costly sending a SMS became in comparison to a voice call is. About 10 years ago, when mobile operations began in India even incoming mobile calls were charged. And today both the price as well as duration for payment has hit measurable limits (1 paise per second). But even in this tumultuous time, the price per SMS had just remained the same. one rupee per sms.

But if todays article in Times of India (SMS Prices set to crash) is to be believed, the fight between the operators will soon shift from voice to sms. After all SMS is the second most used service after a voice call. It would have been anybody's guess that SMS prices are going to crash next. In fact the recent unilateral SMS interconnect charges imposed by Airtel would have been a direct cue to TRAI to wakeup and regulate this medium. Moreover the lobby of SMS aggregators was gaining momentum to bring some order here.

I find that article in Times of India quite funny though. Times of India, in its typical style of saving the world, expounds on how it exposed the obnoxious price of a SMS to the world. Having seen its report, how TRAI jumped into action and is going to bring out a regulation as soon as it could. The description of measuring the cost of a SMS by its data size and time to transmit over the network makes the article only funnier.

Humor aside, I think this news should be a respite to all those companies providing services around SMS'es. The cost of an Application sending a SMS to user was fairly low. As a result we saw a lot of innovative applications such as mobile alerts, advertisements on mobile, emails on mobile etc being born. But the problem was that the communication was usually only one sided. However, if the price of SMS sent by user also drops, it will create space for more feature rich interactive applications.

I can definitely see more people using the SmsTweet application (updating twitter status by sending sms) if the price per sms drops. I can make it more interactive by letting users download their friend's status on their mobile phone.

What is your opinion? any nice ideas around SMS?

(Picture Credit:

Nov 5, 2009

SMS Interconnect Charges - A blow to A2P Service Providers

India enjoys the cheapest call rates on mobile phone available in the world. It has helped India enter the mobile revolution skipping the internet revolution (in one sense). This huge penetration of mobile phones in Indian market prompted a lot of companies to mushroom providing services around mobile phones. One such segment were services around bulk sms'es. But soon this segment is going to be hit badly.

SMS are sent either from a person's mobile phone (P2P) or through an Application (A2P). While SMS sent by a person costs 1 Rupee, SMS sent by an application costs way less. Once you get access to these SMS gateways (which is not trivial), you can send out the sms'es at virtually 0 paise. Huge upfront charges though introduces a barrier to smaller players. But that opens up gates for resellers, who buy SMS credits in bulk from these providers and sell it to more smaller players. Thus evolved an ecosystem of advertisers reaching out to people at low cost, political parties running their campaign on sms, A2P providers, resellers and even smart applications around sms'es.

This was possible because the cost of transferring a SMS from an application to end user was close to 0 paise. There was no interconnect charges between telecos to handle sms originating from one teleco and terminating on another one. Recently though Airtel signed a deal with Tata Teleservices and other telecos wherin telecos will pay 15 paise per sms terminating on Airtel's network. Today Tata Teleservices is market leader in providing bulk smses and Airtel is well leader in number of mobile connections (more that 30%). This virtually means that the 0 paise/sms which was possible till now has suddenly become 15p.

Yes, this move by Airtel (and soon to be followed by other telecos) is going to affect the A2P service market quite adversely. Interconnect charges are required so that the terminating teleco also make some money in handling the sms. This is the same reason why interconnect charges were introduced in voice calls when GSM service providers stopped handling calls from CDMA networks. Moreover it provides a cost barrier for players to enter this field. 'Free SMS to India' will no longer be possible now.

But Ideally TRAI should have regularized this charge after carefully studying the volumes in this market and evaluating the effect of such a charge on end consumer. This move by Airtel is clearly aimed at increasing its revenue in short term and getting back its lost share of A2P market in the longer term. Only Airtel will not be able to provide sms delivery to Airtel mobile phone at close to 0 paise. Airtel being a leader in number of connections will soon attract A2P players from other telecos.

Consumers also will be affected by this move albeit indirectly. Banks, airlines and other institutions are already crying foul on this move. They were able to send real time free alerts to its vast user base because the charges were quite low. But now with the interconnect charges it is going to severely increase their expenses. Other companies such as and which provide email delivery to your mobile phone over sms are also going to be hit badly.

I hope TRAI realizes the gravity of this situation and intervenes immediately before it affects this whole industry in general.

[This article appeared in in the guest column]