SMS may be next to topple

Posted on the November 5th, 2009 under General, Review by CellBharatTeam

All the telecom operators are already in the top gear to sustain their market value and its customers. It is evident from their day-to-day discharge of their new tariff rates for call charges depending on the package. So it is expected that the SMS rates may be the next to get tumbled.

An average SMS data is 11 KB which takes only a fraction of a second for transportation and termination, so the cost to the mobile service provider to deliver a message from one network to another network is less than 1 paisa.

In telecom sector the new contestants are pouring in, SMS tariffs could become the next major leading edge of the pricing war in Indian telecom industry. This disclosure not only contradicts asserts that India has among the lowest tariffs in the global arena but also sets the phase for SMS rates to fall stridently.

From Rs 1 lakh crore- plus returns annually 10% of revenue is obtained from SMS and other value added services. Here the operators plays a wise game they keeps the entire amount and bills you for the SMS and pays nothing to the network on which the SMS is sent.

So, Congestion across networks occurs and the cost of execution is insignificant. Forbearance is set by TRAI to monitor whether the competitive markets are working and tariffs reflect true costs. Without this then the true cost of sending an SMS would never have come to luminosity if new entrants had not been forced to sign interconnection agreements with existing operators at a price that is far higher than the actual cost.

Reducing the tariffs may bring in new competition and it is sardonic that tariffs are coming to light due to squabbling between existing operators and due to lack of concrete guideline. Customer’s interest on cost based tariffs should be intervened.

To solve this few suggestions are confronted by new entrants to TRAI. The lack of cost-based Interconnection Usage Charge (IUC) is conceivably the most noteworthy anti-competitive practice that is hampering gratis and fair-haired competition, it has to be renovated.

Reduction of IUC charges for voice calls from 30 paise to 20 paise has been intervened similarly TRAI must undertake authoritarian interference to create a level paying in the industry. Till the last March review TRAI had not included a new tariff policy for SMS, but new entrants are flooding so they have to survive and flourish so TRAI has to intervene if they complain to ensure a level playing field.