So as I mentioned in my earlier post that sending sms from internet to the mobile phone will not be free. The sms aggregators have to pay money to the terminating network. So what? As a end user I don’t have to pay anything so why should I worry about it?
Yes, today we don’t have to pay anything so who is going to pay for it. The sms aggregators have very thin marging so either advertisers have to shell out more money for marketing OR may be if I am a sender of sms from internet I might be charged for it.
Lets see in detail what are the possibilities. Now as Tata & airtel have made it an agreement every sms terminating on their network will fetch them revenue. It is said that for each sms terminating on their network they will get around 10-20 paise per sms. So the cost of sending an sms via internet will be around 20-25 paise. This cost was close to zero till few months back. That means a rise of around 20-25% rise in the cost of marketing. So are the marketing companies going to spend 20-25% more for their mobile marketing? Looks difficult. So, are the sms aggregators are going to reduce their margins by 20-25% . Looks difficult. So in the end the end user might have to pay for the sms. So it is quite possible that the era of free sms is going to get over. Today the terminating charges are comparatively less however if tomorrow these charges keep on rising then the cost of sending an sms will keep on rising. Its quite possible that this model will soon come into Phone 2 phone (P2P) market and you have to pay more for each sms sent.
So how does the end user get relief for it. The answer is simple THE REGULATOR have to intervene. The Telecom Regulatory Authority of India (TRAI) have to intervene and stop this war of terminating charges for sms (also called as interconnect charges). There has to be cap on the money charges for terminating an sms on a network.
In fact IAMAI (Internet and Mobile Association of India ) president has already written to TRAI for its intervention in the matter.
Let us try to look it from a perspective of small mobile players. If I am a small mobile players and try to offer a sms capacity to any sms aggregator, then I there will be few takers as I don’t have a huge subscriber base so there is a possibility that majority of sms will get terminated on other networks so the sms aggregator/ advertiser/user have to pa y more for an sms thus denying me chance to compete fairly with other players.
So its high time that TRAI should look into the matter & try to draw some guidelines for this competitive market.
Today in India it is easy to send the sms from internet to mobile for free. There are various players in the market who offers free sms to be sent from portal. Few of the players are way2sms, 160by2, SMS gupshup, ACL wireless, one97 communications etc.
There is an idiom stating,” There is no such thing as free lunch”. Now if these players allow us to send free sms who pays for it. Well the business model is simple. These players get money from advertisers whose text advertisement is sent along with the sms content.
How do they send sms on the mobile network?
They have tie-up with mobile cellular players. With the help of these players they send the sms to all other networks and the mobile players get paid for it by the players mentioned above.
So the advertiser gets platform to advertise. The free sms provider get money from advertisers and the mobile players get revenue from the free sms providers. All looks good? Hey…but what benefit the mobile players get who receive sms on their network. The answer till recently was NO BENEFIT.
However the market is going to change. Pre 2008 Air-Tel had the lion’s share in the Application 2 Phone (A2P) sms market. Tata teleservices found this as an opportunity and entered the business. They helped lot of players in the industry to build their capacity and increased their revenue from the A2P segment. Air-Tel started loosing their market dominance.
So how does Air-Tel protect its market dominance?
Air-Tel has almost 1/4th of the total subscriber base in India. Now if Air-Tel start charging for every sms received then the other player who is providing the same service will stand to be less competitive. This is because as the maximum numbers of subscribers are with Air-Tel, it will receive maximum sms & he don’t have to pay for it. However if an sms has to be sent from an sms aggregator who uses Tata’s services, he has to pay a terminating charge on Air-Tel network. So it will become beneficial for an sms aggregator to be with a provider who network get maximum A2P sms.
Really confusing isn’t it?
So now the latest news is Air-Tel have decide to charge around 10-15 paise for the sms terminating on its network and Tata teleservices followed the suite. In fact Air- Tel and Tata teleservices ahs entered in an agreement for the terminating charges on their network.
So stage is all set however what impact it will have on the end consumer? How the free sms providers will remain competitive in the market? How the smaller mobile players will react to this ?
Well will try to answer these questions in my next post
Something can explain the nuclear chain reaction in a better manner is the Indian Telecom Induatry. The subscriber addtion is exponential. There were many hurdles on the way, whether it the policy issues or the M&A issues,however the telecom industry kept on growing.
The GSM telecom space is very competitive. IT has nine major players & each of them is trying to have a bigger pie of the telecom industry. To give you an overview the market share & total subscribers of these major players are listed below.
Group Company wise % market share – Oct’2009
Sl. No. Name of Company Total Sub Figures % Market Share
1 Bharti Airtel 113213508 31.87%
2 Vodafone Essar 85826258 24.16%
3 BSNL 53962418 15.19%
4 IDEA 53354950 15.02%
5 Aircel 27746797 7.81%
6 Reliance Telecom 14166675 3.99%
8 MTNL 4435232 1.25%
9 Loop Mobile 2545151 0.72%
All India 355250989 100.00%
Everybody know about the competitive landscape of the GSM market.Mobiles were traditionally designed for the voice communication. However the face of the mobile industry is chaging. Keep following for the latest trends and changes in telecom industry in india.
I lost my debit card yesterday. The first thing that came to my mind was to block the card. I took my mobile to check out the phone banking number for my bank. Oh my god ! I don’t have the phone banking number. What should I do? I immediately called the local phone helpline took out the number for phone banking & in the next two minutes I blocked my card. Hsssssssshhhhhhh…what a relief !!. These mobile phones have made life so easy.
Now I don’t have a debit card to withdraw cash from my bank. The debit card is going to take another week to come. So I need to borrow money from my friends as I stay alone in Mumbai. I was just thinking if I didn’t know anybody in Mumbai & I needed cash urgently how should I get it. Isn’t it possible that I should get the cash through my mobile & I can show that sms of money transfer to my nearest bank branch & get the money. Interesting isn’t it ?
According to a business standard survey, one out of every three persons was ready to change his/her banks to avail free mobile banking services. Around 50 per cent of the people who were surveyed used cell phones to check their bank balance. So why not mobile cash transactions?
Believe it or not, its going to be reality very soon. RBI has given approval for mobile cash transfer upto Rs. 5000 and mobile purchase upto Rs. 10000. I think when companies like mcheck and ngpay have made it possible to make mobile transactions safe. Its time that RBI should think of raising this cap. The landscape of mobile banking is set to change. Mobile cellular operator Bharati Air-Tel has applied for banking licence. They have roped in top notch executive from Citibank to head its m-commerce activities. If bharti bags the banking license, we will soon see AIR-Tel bank.
Mobile Banking will make life much easier for the rural Indians. Say for eg. Ramesh want to transfer Rs. 2000 to his wife in remote village in Bihar. Ramesh simply recharge her phone with Rs.2000 . His wife can simply go to the nearest mobile vendor, can show him the transaction details from her mobile & take cash. AMAZING …..isn,t it ?
This system will definitely help the Indian government to cut its costs by reducing transaction cost. For every Rs 100 shelved Indian government incurs a cost of 12 to 13 rupees for transactions. Mobile Banking will help to reduce this cost to 2 rupees. Thus saving crores of rupees of Indian government.
It really sound interesting, however there are many policy & operational issues that need to be tackled. So lets keep our fingers crossed there are trial which are being conducted by RBI, banks & leading mobile players. If all goes well, we will soon experience another application of mobile phones.