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TRAI’s SMS License Raj: Expands Telemarketer Definition To Include E-commerce, Brokers, Insurance & More

The Indian telecom regulator TRAI, in its latest directive on SMS based media services, has expanded the categories included as ‘transactional messages’ and exempted them from the 100 SMS limit; two key changes:

1. Transactional message sending entities are allowed to send Transactional messages without registering as telemarketer with TRAI, though they will have to enter into a standard agreement with their Access providers for obtaining any telecom resources and has exempted the transactional message sending entities from the limit of 100 SMS per day per SIM.
2. The following categories are being treated as transactional messages:
(i) information sent by e-commerce agencies in response to ecommerce transactions made by their customers;
(ii) information sent by a company or a firm or depository participant registered with Securities and Exchange Board of India (SEBI) or Insurance Regulatory Development Authority (IRDA) or Association of Mutual Funds in India (AMFI) or National Commodity & Derivative Exchange Ltd. (NCDEX) or Multi Commodity Exchange of India Ltd. (MCX) to its clients pertaining to the account of the client;
(iii) information sent by a registered company to its employees or agents or to its customers pertaining to services or goods to be delivered to such customers;

A couple of things to note:
1. E-commerce: The information that e-commerce companies can send can only be related to transactions made by the customers and cannot be promotional in nature.
2. Brokerages: the information that can be sent by brokerages, insurance agencies, mutual funds etc is loosely defined. It may pertain to the account of the client, but promotional messages like asking an existing client who has life insurance to also get an additional policy related to travel or health at a special rate may be seen as ‘pertaining to the account of the client’. This may leave the door open to one of the categories that spams most – insurance – making the policy redundant.
3. Everyone can send? The third category that is being treated as transactional is even more vague. These companies will have to be registered as telemarketers. But the definition of the messages that these companies can send is very broad, and vague enough to be exploited, saying that these are messages pertaining to goods and services delivered to such customers. Now what if the message itself is the service – if it is a publishing house that is sending content as a service? How does one define a customer, and how can a company validate whether someone is a customer or not? The TRAI’s SMS guidelines do not define the phrase ‘customer’. To take an example of something that happened to me – of I go to the Hard Rock Cafe in Mumbai and give my number for booking a table – am I a customer for life? A message being delivered to me regarding a band playing a gig at HRC is a message related to a service being delivered to a customer. To me, sitting in Delhi, that is Spam.

I know the title of this post mentions “License Raj“, and there is no license being issued for telemarketers, but in essence, it is similar. How do you “regulate” a wild, free-for-all situation that typified the SMS Spam ecosystem? You first shut almost everyone out, then enable registration, and bit by bit, expand the mandate to let every body back in. Look at what is being done with the white-listing process. This time, because of “registration” (which is not very different from licensing, mind you), you only allow a certain set of people in, and they’re in your control because of the punitive provisions that go along with it. And the policies are vague enough for them to interpret how they want.

Also, I wanted to reiterate that we not supporting the free-for-all SMS Spam situation that existed before, but the way the TRAI is approaching the SMS Spam process is regressive (excessive regulation).

Update: We had mentioned that the TRAI hadn’t had a consultation for this regulation, and Kesava Reddy then pointed us towards a consultation paper from the TRAI. Our apologies for the error: we stand corrected. Thanks for pointing it out Kesava. This post has been edited to remove the error.

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