A2P SMS: A Possible Solution to the SMS Interconnect Issue

In the ideal world, there need be no SMS interconnect charges, leaving each operator to make a decision whether it wanted to enter the A2P business or not. But, if there has to be a charge, it needs to be based on costs, and not a randomly high figure like Airtel has chosen to apply. TRAI is best placed to decide on what this charge should be for A2P SMS traffic, but if one were to go by the cost of SMS carriage (as we have seen earlier), the SMS interconnect charge could have a cap of about 0.25 paise.

This ensures that interconnect charge is linked to the cost of carrying an SMS, and is not zero or an arbitrarily high number. A charge like this offers all operators equal opportunity to get into the A2P SMS business should they be ready to make the investments. It also ensures that retail A2P SMS pricing stays attractive for both the consumer-centric and enterprise A2P SMS traffic, thus facilitating continuing growth in the industry.

So, here are the steps that TRAI needs to take immediately:

  1. Decide to make an intervention on the issue of SMS interconnect
  2. Reverse its 2006 policy of forbearance to Bill-and-Keep, until the time it issues it final ruling in the matter
  3. Start a Consultation process with all Stakeholders to decide what the new policy should be (Bill-and-Keep, an SMS Interconnect based on costs, or Forbearance)

My view is that Bill and Keep would be pro-competitive and thus good for consumers because it would bring SMS pricing close to costs. It would also means that no one will have to worry about figuring out what the cost of SMS is — the competition among operators will inevitably align the price to the costs.

Action needs to be taken quickly if one is to prevent a nascent A2P SMS industry being trampled upon.

Monday: SMS Spam

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.