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A2P SMS: Interconnect Issue (Part 2)

November 11th, 2009 · 61 Comments

TRAI needs to intervene immediately in the matter of SMS Interconnect charges and do the following:

  • Change the “forbearance” policy to “Bill-and-Keep” until further direction. This will ensure that arbitrary charges between operators do not start creating havoc for SMS aggregators, enterprises and consumer SMS companies.
  • Start a consultation process to determine SMS costs and then decide on the issue of SMS interconnect charge (should it be there, and if so, what should it be)

What TRAI will find is that the cost of carrying an A2P SMS in the system is about 1 paisa or less. The cost of carrying a P2P SMS is 2 paise – the additional 1 paisa comes primarily due to the billing that needs to be done.  Interconnect needs to be cost-based — and there are three elements to the SMS value chain: the originating operator, the long-distance carriage, the termianting operator. The IUC (interconnection usage charge) is paid by the originating operator to the terminating operator. So the IUC that TRAI can possibly levy will need to be will probably be 0.25 paisa for an A2P SMS and 0.50 paisa for a P2P SMS.

Given these ‘nano’-charges, TRAI may perhaps determine that Bill-and-Keep is better for all parties as compared to keeping track of the SMS counts back and forth.

PS: On the issue of SMS Spam, here is what I had written earlier.

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