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
Till then
Ciao
Mahesh
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