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#MCS09: Interconnect Charge Worries Plague VAS Companies

A significant point of discussion that has been repeated through quite a few sessions at IAMAI Mobile Content and Services conference today, is that of mobile termination charges that might be implemented by telecom operators in India, specifically for enterprise services. This means, that when a marketing or content SMS is being sent from one telecom operators network to another, as a part of its enterprise service, an additional charge will have to be paid.

Both Kumar Apoorva, COO, ValueFirst and Abhijit Saxena, CEO of Netcore that runs the MyToday free SMS service mentioned the same at the conference, as did Beerud Sheth, CEO of SMS Gupshup in a yet-to-be published interview with MediaNama.

Kumar said that “There are organizations that have built their businesses circumventing the telecom operator ecosystem, and now there is a situation where they will implement interconnect charges. The regulators will keep sitting, and by the time they respond, it will be too late. At an additional 10-15 paise per SMS, the (enterprise) consumers will end up paying more. The only people it adds value to is the operator.” During the session on Mobile Marketing, Saxena said that the viability of the mobile medium for marketing will significantly come to question if interconnect charged are brought it, and it is a cause for concern.

Sheth was more circumspect, telling MediaNama that “The cost of messages is a variable that we have to deal with in our business, but it also related to revenues for us. It has dual impact. We just have to navigate through any changes that come along. Ultimately, a reasonable rate regime is in the carriers interest and our interest, and it should reflect the underlying cost of the carrier, and yet be stable and predictable so that you don’t have disruptions and uncertainty. We have to manage through it.”

Our Take

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Frankly, it isn’t just about mobile marketing, but for companies like MyToday and SMS GupShup, which send out millions of SMS’ daily, an interconnect charge of Rs. 0.10-0.15 will lead to a massive, almost nine or ten fold increase, in costs. This means that they might be forced to further limit the number of SMS’ that they send out daily, or find ways of passing the cost on to the consumer.

From what we have heard, because Tata Indicom changed the way they were charging for bulk SMS pushes, a significant amount of messaging shifted to them, and away from other telecom operators, which still had to continue receiving capacity. One solution that has been suggested is setting up capacity for sending messages within the operator ecosystem – say, only Vodafone to Vodafone, Idea to Idea and Airtel to Airtel. Costs for the companies would increase if that is done.

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© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ