Cut to 2008. Tata Teleservices Limited (TTSL) got aggressively into the A2P SMS business. They invested in SMS capacity and offered aggregators significant SMS capacity and aggressive pricing. This helped grow usage dramatically.
Airtel lost market share in the A2P SMS business. With Airtel having more than a quarter of the mobile subscribers, it still had to terminate the SMS traffic coming into its network. (A couple years ago, the situation was the other way around – Airtel was pumping most of the A2P SMS traffic to other operators.)
Over the past few months, there was chatter that Airtel was looking to get back into the A2P SMS business albeit with a different strategy – that of putting an interconnect charge ranging from 10-15 paise on SMS termination into its network. This now has become a reality with Airtel enforcing an agreement with the Tata mobile companies (TTSL and TTML) for a 15 paise interconnect charge.
[In parallel, Airtel and Idea are believed to have signed an agreement with an interconnect charge of 10 paise. It is not clear at this time which other operators have signed the interconnect agreements with Airtel.]
What this means is that SMS aggregators (and therefore enterprises) wanting to send SMS to Airtel subscribers from Tata (which is the dominant A2P SMS capacity provider) would have to buy capacity from Airtel itself, and thus Airtel would be able to effectively charge whatever price it wanted for A2P SMS capacity. It would also work the other way for messages flowing from Airtel into Tata, but given current volumes, the impact of that would be marginal.