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Rivalry among big operators to get additional spectrum, and for tweaking regulatory policies in their favor is not new. Most of the leading operators are not competing with each other in the tariff space, and they only react to offerings from players such as Aircel, Sistema Shyam TeleServices, or Tata DOCOMO. But leaders always lead from the front, when they want to deal with money matters.

The big guys are at it again, writing rules of the game at their convenience. This time the fight for words (short messaging services) is primarily between Bharti Airtel, which is the #1 mobile player, and Tata Teleservices.

The industry pundits say that the battle between Bharti Airtel and Tata Teleservices to mouth a bigger bite from the Rs 300 crore A2P SMS market, will not only pinch companies that bulk push these messages, but may also end up digging deep into the consumer's pocket.

Currently, SMS interconnect charges are under forbearance by Telecom Regulatory Authority of India (Trai) which means operators can charge any amount for termination. There was no fee set by the regulator, and the most common practice was bill and keep. Till some time back operators had been charging an interconnect fee, an amount to be paid to network operators that receive the SMS, charged at around 4 to 5 paise per SMS. However, recently it was tripled and charges up to 10-15 paise.

The worst hit by this move are SMS aggregators, and businesses like banks, airlines, cinema halls, that are largely dependent on SMSes for mobile marketing and advertising. SMS is becoming a part of business processes of companies, and is also being mandated by the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) for specific types of transactions. These companies will either try to limit the number of SMSes that they send out, or thrust the cost on recipient consumers.

Industry players allege, that this kind of increase is being pushed by Indian telecom giant Bharti Airtel, which about two years back owned nearly 85% of this space, and decided its own price. Tata Teleservices saw an opportunity, and got aggressively into A2P SMS business. It invested in the SMS capacity; and offered aggregators significant SMS capacity, and aggressive pricing. This helped usage grow dramatically and the tables were turned. Airtel lost the the lead in A2P market. In spite of it having maximum number of subscribers on its network, most of the SMS terminate on Airtel's network. Thus, to regain lost ground, the operator decided to charge interconnect fees.

Kumar Apurva, COO, ValueFirst says, "It is obviously, being promoted by dominant players in the market. As of now Airtel has the largest subscriber base. Of all SMSes sent, around 30-35% terminate on its network. In fact, new operators will not like to get in to it, as they do not have a subscriber base so large; and also charging for every SMS received is not a very simple process."

Netcore CEO Abhijit Saxena agrees, "It is basically Airtel's initiative. It has signed an interconnect agreement with TTSL and Idea Cellular; following this many other operators have gone ahead to sign interconnect agreements with other operators."

"The fee has to be rational. The companies will not absorb high interconnect fee, and may pass it on to consumer. The volume of SMS will fall drastically. The customer will be willing to pay, if it is not a burden," Apurva says.

Saxena says, "Trai should look in to the actual cost of sending an SMS, and then make a decision on that basis. It is thoroughly an anti-consumer move, they may withdraw from many SMS services."

Internet and Mobile Association of India's (IAMAI) president has written to the telecom regulator, seeking it's intervention in the SMS IUC matter.

New licensees, including Datacom, Loop Mobile, Etisalat, and Unitech Wireless have already expressed their IUC on SMS concerns to the regulator.

"IAMAI and the member companies are of the view that there should be no SMS IUC at all, and if there is, then tariff proposed should commensurate with the costs involved in termination of cross network SMSes," Shubho Ray, president, IAMAI says.

Some other industry experts are also against SMS IUC. Ashok Jhunjhunwala, professor IIT, Madras, has made some calculations on the cost of sending an SMS, and says that charging many times higher fee than the cost is not fair. "I think Trai should intervene, and stick to 'bill and keep' practice."

However, there are some players like Way2SMS who survive on SMS business, are not completely against levying interconnect charges. Way2SMS CEO, VV Raju says, "I do not completely sign off the concept of levying IUC for SMS, but I think it should be rational. I welcome a single digit levy, as it was earlier, as it is important to charge some fee to organize players in the market; unorganized players will be wiped out."

While the companies involved in bulk pushing SMSes have been vocal about the new threat to their business, most of the operators choose not to comment on the matter. When approached, TTSL refused to talk about it.

Averting any question on whether the operator has an interconnect agreement with some other operator or not, a Reliance Communications spokesperson said that it is not a very great thing to initiate something which does not exist. The Indian telecom market is very competitive, ARPUs are already declining; starting with such a thing might put pressure on smaller operators.

Rajat Mukharjee, chief corporate affairs officer, Idea Cellular says "I don't know whether it is one operator that has been influencing the market." He further adds nothing is wrong with this. "As long as it is a bilateral agreement between two operators, it means that both parties are willing to levy the charge," he points out.

"As I understand, this is being done to minimize the burden caused by not so important messages on the network. The companies bulk sell SMSes, and this interferes with rest of the traffic," he says.

An Airtel official said that no service can be absolutely free, whether A2P or P2P, it has to be sent through the network, and should be charged.

"Besides, I don't think it is a very complicated thing to distinguish between an A2P and P2P messages. Most of the operators can distinguish between these messages. If the message is coming through a registered mobile marketing company, message will be pre-coded; if it is not-then they are the ones flouting the Trai norms, and should be stopped immediately," says Mukharjee.

"I don't see charge on A2P SMS effecting consumers; prices of SMS have in fact gone down," he adds.

But, India is not alone facing issues with the SMS IUC. Operators in the US and Europe have had their share of trouble from spammers, who would bombard a number of SMSes, and clog networks. In fact, most of the operators in Europe are charging for SMS termination.

More recently, four Japanese mobile operators have agreed to interconnect SMS services. NTT DOCOMO, KDDI and its unit-Okinawa Cellular Telephone, EMOBILE, and SoftBank Mobile have agreed to interconnect SMS services.

Trai has been emphasizing on the need of making the industry consumer-centric and consumer-friendly; but the current scenario appears ironical. Earlier too, the debate on whether SMS should be regulated or not has been shut inclusive. The regulator may soon pay heed to the industry's call, and step in.

Heena Jhingan
heenaj@cybermedia.co.in