Emergic: Rajesh Jain's Blog

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A2P SMS: A Summary of the Interconnect Issue

September 14th, 2009 · No Comments

Description:

  • Some operators have started initiating action to do bilateral agreements on SMS interconnect (P2P and A2P)
  • The current situation is that of bill-and-keep – the operator through which the SMS is initiated does the billing and retains the revenue thus generated
  • The current regime of no inter-connect charges payable between operators on SMS should continue

Drivers:

  • SMS interconnect charges will increase the pricing of SMS (especially on A2P SMS)
  • The cost for an operator to carry SMS traffic is near-zero
  • SMS is becoming part of business processes of companies and is also being mandated by RBI and SEBI for specific types of transactions
  • An inter-connect charge introduced at this point will stunt the growth of the nascent A2P SMS industry and may also impact P2P SMS usage negatively
  • India has the opportunity to produce global cos. which leverage SMS as a channel for permission-based media and communication

Who Affected:

  • Operators: Some believe that they are being forced to carry A2P SMS traffic without being compensated for it (especially if they are not in the business of selling A2P SMS capacity)
  • SMS Aggregators: will see a dramatic fall in business due to the significant increase in costs that they will need to pass on their customers
  • SMS Media companies: will effectively see their business being killed since they send SMS for free to opt-in consumers, and it will be difficult to charge advertisers a higher price to cover the inter-connect charge
  • Businesses: will see an increase in costs and will thus limit the use of SMS wherever possible
  • Consumers: may not get services they have become used to, or will have to start paying more money for SMS

Now, let us take a look at what has been happening on the ground, and then look at what is the road ahead.

Continued tomorrow.

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