The Telecom Regulatory Authority of India’s decision to lower the termination charge for SMS will hurt bigger players, according to the Cellular Operators Association of India.
The telecom regulator has fixed 2 paise per SMS as the termination charge for retail consumers and 5 paise for commercial messages.
Until now, the regulator had not specified the termination charges and had left it to the market to determine the rates. As a result, there was dispute among smaller and bigger players as the latter wanted 10 paise for SMS. Recently, Airtel had disconnected services to Aircel after the latter declined to pay 10 paise. “TRAI’s decision is a major victory for our customers,” said Aircel spokesperson.
Termination charge is a fee paid by the operator on whose network the SMS originates to the operator on whose network the message is delivered. Therefore, bigger operators stand to lose if these charges are lower because the number of SMS coming into their network is much more than what goes out. For instance, SMS traffic between Uninor and Airtel will be skewed in favour of Airtel so at a higher termination rate Uninor ends up paying more money to Airtel.
Rajan Mathews, Director General, Cellular Operators Association of India, the industry body primarily representing bigger GSM operators including Airtel, Vodafone and Idea Cellular, said “While we welcome the TRAI’s initiatives to address telemarketing issues, the new interconnection charges will benefit smaller players. We will have to see how the bigger players deal with the loss in revenues.”
The Association of Unified Service Providers of India, representing the interest of Reliance Communications and Tata Teleservices, said that TRAI move was a positive one because until now large operators were using their clout to impose an SMS termination charge as high as 10 paise on small operators interconnecting with them.
“The new SMS termination charge of 2 paise set by TRAI will set right the prevalent market distortion, in the rightful interest of the Indian consumers,” AUSPI said.