A2P SMS: Market Dynamics

To understand the dynamics of the A2P space, we will now need to stop being general and actually take names. The idea is not to offend or malign anyone, but lay out the facts so there can be a sensible debate about the issues involved. All of this is fairly common knowledge to everyone associated with the A2P SMS industry in India.I want to also mention that my company (NetCore Solutions) is a player in the A2P SMS space, and naturally has a vested interest in the outcome. We are one among many players in what is a somewhat fragmented industry. But this is an industry where there has been plenty of innovation in the past three years with the promise of lots more to come.

During 2006-7, Airtel was the leading provider of A2P SMS services. A2P SMS costs were very high then. I remember buying SMS capacity at 40 paise per SMS during early 2007. As volumes rose in the industry, prices started falling. As we have seen earlier, the incremental cost for an operator to carry an SMS is close to zero, so there was plenty of room for prices to go down.

This is somewhat similar to what happened in the Voice segment. At one time, voice calls cost Rs 16 per minute. Minutes of usage were low at that time. Over the years, they have fallen to a fraction of that (Tata Docomo now offers a tariff of 1 paise per second), and minutes of usage have exploded.

Continued tomorrow.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.