SMS can still earn up to 30% of an operator's data revenue

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Though voice call tariff rates have become equal to SMS, consumers rely on text message for certain types of communications like seasonal greetings, reminders, business cards, television show voting, etc, as it has certain unique advantages. Due to the increased penetration of mobile services, the SMS based services are increasing day-by-day. Most of the services require reliable SMS delivery which has become the biggest challenge for every operator. SMSs some times do not reach customers, especially during festive seasons like new year and diwali, and during normal peak hours also.

In the overall service providers' revenue, SMS based revenues are estimated to be about 4-6% of their total revenues in both P2P and P2A2P SMS categories. In FY 2008-09 cellular service revenue was Rs 95,271 crore, and SMS revenue was about Rs 3,811 crore (V&D estimates). SMS segment is very important for SPs already, and it will assume a greater significance especially when enterprise SMS applications have a huge potential to mint money. It is critical that network operators realize this and understand the issues involved in making SMS delivery reliable.

The ARPU Enhancer
If SMS business is managed properly, it can represent up to 30% of an operator's data revenue, and thus represents a significant part of the operators' overall revenues. Tarvinder Singh, director, marketing & product management, home & networks mobility business, Motorola India says, "The success or failure of SMSs can mean loss of opportunity for the service providers. When compared to voice calls, SMS uses the air interface for a fixed duration of typically less than one second. Thus, from the utilization standpoint, more the number of SMSs sent, more are the chances of higher revenue over one hour's time. This is the reason tariff packages from operators encourage SMS usage, because it works out as a win-win situation for both subscribers and operators." Udit Shanker, vice president, South Asia, Acision says, "Ensuring the reliability of SMS will encourage subscribers to continue using SMS, resulting in higher ARPU for operators."

Mobile operators can really take advantage of providing a lot of critical enterprise applications, if they can make SMS reliable and guarantee the delivery within a certain time period. Imagine a customer service department receiving alarms directly from all their products deployed worldwide in the form of SMS to their mobiles. Praveen Nallapothula, managing director and CEO, TeleDNA says, "Enterprise SMS can be a huge traffic, and enterprises will be willing to pay a premium on these kind of services, as it can reduce their huge network operations center costs dramatically and provide instant support to their customers. It is ideal for mobile operators to have a dedicated short message service center (SMSC) for reliable SMS traffic that cater to some critical enterprise applications." Lalit Chowdhary, director, sales, Alcatel-Lucent echoes a similar thought, "Enterprises are dependent on SMS for its workflow automation and improving their offering to their customers through regular alerts and infomercials. It further increases the revenue opportunity for network operators."


Mobile service providers need to purchase and provision adequate capacities in terms of transactions per second (tps) of SMSC that can handle peak SMS traffic during these peak seasons Praveen Nallapothula, managing director and CEO, TeleDNA	The challenge is to optimize the infrastructure for peak traffic during large scale events which typically last for a relatively short period of time, and therefore build the right level of investment for predicted over capacity CR Rao, head, consulting and systems integration, Nokia Siemens Networks India	Voice SMS could be part of the differentiation strategy that each operator will need to have to build stickiness, and attract new users to choose their services over other available alternatives Tarvinder Singh, director, marketing & product management, home & networks mobility business, Motorola India

Advertisements on SMSs is another revenue generation avenue for operators. There are other applications like LBS which use SMS as an enabler. When such services are launched in India, it will increase the use of the SMS resources, further increasing the revenues.

Build Your Capacity
The reliability of SMS delivery is questionable during the festive seasons and peak hours. This is mainly due to under-dimensioning of network elements in the path of SMS delivery. SMSC is the main equipment that receives the SMS request from the sender, processes it, and delivers it to the destination mobile. SMS, however, has to traverse through a tower to a switch (MSC-mobile switching center) to a signaling transfer point (STP) or a signaling gateway to reach the SMSC, and vice versa back to the end customer. SMSC also has to make a query to the HLR (home location register) to find the destination mobile location area. Any intermittent failure on any of this equipment can cause SMS to fail, and any delay in any of this equipment will delay the SMS delivery.

SMSC is the equipment that mobile service providers purchase to provide SMS to their end customers. This equipment should be capable of handling traffic during the busy hours also. Challenges-including air interface congestion, signaling bottlenecks, capacity limitations, and prepaid charging capacity limits in the network-need to be resolved. Praveen Nallapothula, managing director and CEO, TeleDNA says, "Mobile service providers need to purchase and provision adequate capacities in terms of transactions per second (tps) of SMSC that can handle peak SMS traffic during these peak seasons. Lack of such capacities will queue the messages, and the delivery can get delayed by even twenty-four to forty-eight hours."

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