Search the Internet          Tips  Sites: Finance, Investment

Short messaging, cheap messaging

Sanjay K Pillai

Short messaging service, which is immensely popular in the country, may become cheaper. At present, cellular operators charge close to Re 1 for a message. A message sent while roaming is billed at Rs 3.

Such high rates do not hold good since the recent directive of the Telecom Regulatory Authority of India has brought down voice-roaming charges to Rs 3 per minute from Rs 10 per minute.

Although Trai does not specify any charges for SMS, market watchers say mobile operators do not have any reason to impose equal charges for text messaging and voice services.

RPG Cellular, operating in Chennai, has already announced reduction in SMS rates, to be applicable soon. More operators are expected to follow suit.

Despite converting SMS from a free service to a paid one, cellular operators have seen a steady increase in traffic.

In developed markets, revenue from SMS contributes as much as 10 per cent to the total revenue of a cellular operator, but in India the figure still remains in the 1 per cent to 2 per cent range.

Arun Sikka, vice-president (marketing) of RPG Cellular, said the company earned as much as 2 per cent of its Rs 1.60-billion turnover from SMS traffic.

"We are looking at increasing the share of SMS revenue to our topline to at least 5 per cent next year," Sikka said. RPG's managing director, Dilip Mehta pointed out the firm's SMS traffic stood at around 2 million in February.

Globally, SMS is one of the few services in the annals of consumer history that have grown very fast without corresponding decrease in pricing.

In the case of mobile phones, reductions in the cost of handsets and phone services have led to increases in usage.

While factors like these have helped in bringing younger people into the mobile market, the price of SMS itself stayed steady because the networks were having trouble handling the volumes of messages being sent and dared not reduce prices.

To quote some statistics with over 590 millions GSM users worldwide, the GSM Association reported that in December 2001 alone, 30 Billion SMS messages were sent with a projection of over 100 Billion SMS messages per month for the next two years!

Few people predicted that this hard of use service would take off. There was hardly any promotion for or mention of SMS by network operators until after SMS started to be a success.

Funnily enough the reason SMS became so popular was the difficulty associated with its usage, according to analysts.

Young people said that they were going to overcome the man machine interface and other issues and use the service anyway.

The mobile industry, market watchers say can learn a lot from SMS as it tries to create other non-voice services- the only other non-voice success- i-mode in Japan has seen unprecedented and unexpected success.

The non-voice revolution has started to arrive and now it is not a question of whether, but when it will unleash its full potential.

Powered by

ALSO READ:
The Rediff Budget Special
The Rediff-Business Standard Special
Money

Tell us what you think of this report