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Forced Into A Corner

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By the end of the day on 27 September — the deadline set by the Telecom Regulatory Authority of India (Trai) to stop unsolicited messages and calls — most of India's 1,621 registered telemarketers and SMS integrators had lost 40-45 per cent of their business — a big blow to a Rs 1,000 crore-industry that has flirted with the law even as it tried to stay within the boundaries.

Web-based players such as Way2SMS and SMS gupshup, and aggregators such as Value Force, ACL Wireless and Air2Web have been severely affected. Even messages from SIM-based telemarketers, say, an individual or a small aggregator, have been capped at 100 a day to numbers that are not registered with the DNC (do not call) list. Industry sources say telecom operators such as Tata Teleservices, Aircel, Idea, Uninor and MTS, along with public sector Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), have also been hit as they were the biggest beneficiaries of the bulk SMS business (since most of it was being conducted on their networks).

Currently, the value-added services category (which includes SMS) constitutes 12-15 per cent of an operator's total revenue. SMS alone is 10 per cent, say analysts. The rest comes from ringtones, music, and audio and video streaming.











A New Plan
The impact on bulk SMS players
Registered SMS integrators
• The focus will shift from push to pullbased applications
• Strict compliance will bring down reach
• Precision targeting of consumers will begin

Unregistered SMS integrators
• These could still be disruptive as they can just get more SIM cards
• A number of service providers offer toll-free dial-in numbers, for which no registration is required

SMS platform suppliers:
• These are already looking at other technologies to offer noncommercial services
• Big players will stay put, but smaller players' revenues will be hit

However, mobile users in India are relieved that the menace was tamed. Some users were receiving 30-40 unsolicited SMSes every day. Before the ban, anybody and everybody was using bulk SMSes — realty agents, astrologers, tuition teachers, weight reduction shops, hair transplant firms, restaurants and others. Users had no way of blocking these.

A few unregistered, rogue players, however, continue to defy Trai. "DND messaging stopped. Don't panic. MiM knows the value of your business. So here we are with email solution. Same procedure. To know more sms MiM to 54242," says an SMS from DM-My Inbox.

Senior Trai officials are confident that the new regulation will be successful. "This is a comprehensive regulation and will be strictly implemented," says Trai chairman J.S. Sarma. Trai will impose a fine of Rs 25,000 on the telemarketer for the first violation. Every subsequent violation will mean a Rs 2.5 lakh-fine and cancellation of the telemarketer's licence. In the US, the first violation is penalised with $11,000 per call, which goes up with successive violations.

The worst affected by the new regulations are those bulk SMS players who had, in fact, registered as telemarketers with Trai. They are praying that the eventual impact on their business will not be as debilitating as it was on the first day of the ban. Their hope hinges on their clients (retailers, email services, websites or e-commerce sites) getting selective approvals from registered users to receive bulk SMSes.

Except for exempt categories such as banks, agents of telecom service providers for sending electronic recharge messages, e-ticketing agencies, certain social networking sites and some directory services, every other business that has a registered database of its users will have to ask for specific approvals to send SMSes or make marketing calls to mobile phone users who are registered under DNC. The process may take several months. "It is a well-drafted directive for consumers, but needs more clarity for operators," says V.V. Raju, founder and CEO of Way2SMS.com. "Why should a personal message — sent between friends, using our platform to those who want to get it — be gagged?" he asks.
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Change In Tactics
Bulk SMS companies are now exploring new ways of reaching out, including through e-mails. Raju of Way2SMS says Web-based advertising will grow to attract genuine target customers. Berrud Sheth, CEO of SMS gupshup, says, "This will be the new revenue source for those who can move to a new platform of sending communications digitally."

Innovation from the top SMS players will build alternate revenue sources. "The trend will change to newer and alternative messaging systems," says Raju. He feels the thrust will be towards pull-based services such as mobile Internet, click-to-call (the user clicks on the advertiser's link and a call is initiated), 5xxxx numbers (the user sends an SMS asking to be contacted), and even television and hoardings.

The next stop for these companies could also be precision targeting, says Sridhar Pai, a telecom analyst with Tonse Telecom, a research and analysis firm. There are only 130 million subscribers who are registered with the National Customer Preference Register, which was earlier known as Do Not Call Registry. But that leaves 700 million subscribers yet to be tapped.

Also, telemarketers could charge Rs 2-5 per SMS as against two paise per SMS now. But, they would be able to offer more details, such as financial data, health profile, purchase pattern and other such information on their database.

On the other hand, one such company tries to tread the thin line with ‘missed call'. "...please save our number in phone book if you want to sell, purchase, and rent property in Gurgaon in future or now," says a rogue SMS. It concluded by requesting for a missed call to a number. ‘Missed call' is an Indian innovation and it falls in the grey area of whether it amounts to an ‘approval to call'. The regulator is yet to announce its verdict on this. There is nothing that prevents a telemarketer from enticing a prospective customer to call back. However, Gautam Balakrishnan, telecom analyst with Optsoe Consultants, says, "We will see more compliance, which will push revenues, and it will be (driven by) quality and not quantity for the telemarketer."

Yet another sword hanging over the heads of the bulk SMS companies is termination charge. There is a proposal that telemarketers pay 5-10 paise per SMS to the network operator with whom the subscriber is registered. "This would ensure that one operator does not undercut another, and boosts unsolicited telemarketing," says  Rajan Mathews, director- general of Cellular Operators Association of India. "Newer players may face skewed competition if termination charges are levied since they already work on wafer-thin margins," says Shaily Shah, a research analyst at Gartner.

Telecom operators who are also telemarketers, in addition to leasing their network to other telemarketers, could benefit from the termination charge. According to a senior executive in Bharti Airtel, "We could restart the bulk SMS business now that two of the major issues have been addressed by Trai." The company had exited the business in July last year after many complaints from customers against unsolicited telemarketing calls.

So even as most bulk SMS firms scramble for new revenue streams and ways to reach out to mobile users, some may struggle to survive. One such company could be Delhi-based Hosting Villa Travels. It is not Trai-registered but has been providing software and hardware (USB dongles with SIMs) to send a minimum of 500,000 SMSes for just Rs 10,700. This service can easily be recharged with any telecom operator for as little as Rs 89 for 20,000 SMSes.

m(dot)rajendran(at)abp(dot)in

(This story was published in Businessworld Issue Dated 10-10-2011)