Can commercial clash lead to suspension of utility?

Thomas K .Thomas New Delhi | Updated on November 17, 2017 Published on November 23, 2012


The dispute between mobile operators over transmitting SMS is threatening to set a dangerous precedent to the future of connected networks.

It raises a key question: Can services offered to consumers be disrupted because of a commercial dispute between two operators?

Brewing since 2009

This dispute over SMS has been brewing since 2009 when the larger GSM players such as Airtel and Vodafone said that they would start charging a termination fee for SMS coming in from any other network. So each time a subscriber on Reliance Communications network sent an SMS to an Airtel subscriber, the latter wanted to charge 10 paise for each SMS.

Airtel and Vodafone would also pay a similar charge for SMS sent by their customers to other operators. While this seems a fair deal on paper, in reality such termination agreements are skewed in favour of the larger player. That’s because the percentage of calls coming to the operator with more subscribers is always more than the outgoing messages. So the larger operator usually ends up being revenue positive.

As a result many operators, including Aircel, declined to sign the agreement with Airtel and Vodafone. The big players took Aircel to the Telecom Dispute Settlement Appellate Tribunal, which ruled in favour of Airtel. Aircel then dragged Airtel to the Supreme Court where the case is pending hearing.

Even as the operators are fighting it out legally, Airtel and Vodafone have taken the drastic step of blocking SMS to and from Aircel’s network. The immediate trigger for this action, according to Airtel, is the large number of bulk SMS being sent by Aircel to Airtel subscribers. According to Airtel the huge amount of telemarketing from Aircel’s network is choking its network and since Aircel was not prepared to give any money, it had no choice but to block all SMS.

According to market experts Airtel could have filtered bulk SMS instead of blocking all SMS. “There is technology available that can enable an operator to selectively block unwanted SMS instead of blocking SMS even from a normal consumer,” said B. K. Syngal, Former Chairman, Videsh Sanchar Nigam Ltd.

High termination charge

The other issue is whether Airtel is right in charging 10 paise as SMS termination. Aircel thinks that this is too high a charge and disconnecting SMS service is a way to arm-twist it into signing the agreement. According to data submitted by a major mobile operator to the Telecom Regulatory Authority of India (TRAI), the cost of sending an SMS is just one-fifty-sixth of the cost incurred for carrying a phone call. This means that if operators can offer voice calls at an average of 50 paise a minute, SMS should actually be free. A standard SMS message comprises 160 characters which is just about a tenth of a kilobyte. A tenth of a kilobyte can accommodate 1/4000th of a song on it, which is virtually nothing. Operators, therefore, assign only limited bandwidth on the signalling channels that carry SMS.

Professor Srinivasan Keshav at the University of Waterloo in Ontario showed in a paper that wireless channels contribute about a tenth of a cent to a carrier's cost and a text message doesn't cost providers more than 0.3 cent. According to experts, the TRAI should intervene in this matter and settle the termination charges for SMS. “Nowhere in the world are operators allowed to disrupt consumer services. The regulator should step in and make it clear that blocking services is not acceptable,” said an industry watcher.

Settling this issue is important for delivery of services in the future. Today it’s only SMS which has been blocked; tomorrow an operator can shut down voice calls or data services if another service provider does not pay a fee. “The regulator and the government should ensure that the consumers do not get affected no matter what the dispute is about,” Syngal said.


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Published on November 23, 2012
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