TRAI regulation aimed at curbing pesky SMS hits messaging platforms on feature phones

Post the Telecom Regulatory Authority of India’s (TRAI) decision to levy termination fees on SMSes, instant messenger service platforms have taken a hit.

While the companies are absorbing the two paise charge, they are unable to pass-on the rise to end users.

TRAI, in June, has levied a charge of two paise on SMSes that are sent from one telco to another, i.e. if a Vodafone user sends an SMS to an Airtel user, the former pays (the latter) 2 paise for the message.

Absorbing cost

According to market sources, some of the instant messaging companies such as Facebook and Nimbuzz – that provide an add-on service notifying updates or replying to these updates through SMSes — are now bearing this additional cost.

In the case of the instant messaging companies, the SMS-based notification works on both feature-phones and smart devices (phones and tablets). An update (in Facebook) or a chat message (in Nimbuzz and Facebook) pops up on the screen like a normal SMS even when the user is not connected to the Internet. Accordingly, users reply through dedicated numbers (given by the company). Messages are automatically updated through the reply facility.

In the case of Facebook and Nimbuzz, these are free services i.e. a user does not incur a charge if he replies via an SMS to the given number. Now, Facebook and Nimbuzz will pay the telco this two paise levy.

“Facebook remains a free service. So such termination charges are borne by the company,” an industry source told Business Line. Facebook refused to comment. But, claimed that “it was committed to be a free service”.

Converting text messages into data thereby charging a fraction of what the telcos charge as SMS-rates have seen the rise of messaging platforms such as “Whatsapp”, “Nimbuzz”and “WeTalk” amongst others. Compared to the Re 1 SMS-charge, a message through these platforms come to just 1-2 paise.

Low User-Base

Interestingly, what has come up in favour of these instant messaging companies is the low user-base of such SMS-based add-on services, especially on feature phones.

Vikash Saxena, CEO, Nimbuzz, said the messages sent are pre-dominantly GPRS (Internet-service) based, i.e. messages sent across the platform are charged as data, both people need to use “Nimbuzz” network at the same time. The company had extended the SMS-based facility as an add-on.

Currently, its SMS-based service, called “Nimbuzz Ping”, is restricted to a “small number of users” and hence, he adds, it does not matter even if the company has to bear this additional levy.

“Today not even one per cent of our users have the Ping facility (SMS-based notification system). So we can absorb the costs as of now,” Saxena said. Nimbuzz has over 20 million users in India.

According to him, Nimbuzz had earlier tied up with Aircel and Idea to use their “SMS-pipeline”; which meant that the two telcos would bear the SMS-termination charges.

“I’m not sure if we still have the tie-up or not,” he maintained. Other players such as Rockettalk and WeChat pointed out that they operate on GPRS-connected handsets and do not have SMS-based notification system.

Marketing Companies

Samir Agarwal, CMO, Rocketalk, said that ideally it is the marketing companies – those who send SMSes for marketing purposes – or bulk SMS sites like “way2sms” who will be hit.

“All instant messaging platforms work only when they have data connectivity. The entire idea of the messenger service is to get round the SMS system,” Agarwal said.

According to him, levy of termination fees on SMS might see people migrate to instant messaging platforms in the coming days.

(This article was published on July 18, 2013)
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