The Indian telecom regulator TRAI has imposed an additional charge of Rs 0.05, known as an interconnect charge, which an ‘originating access provider’ access provider may collect from the registered telemarketer, and give to a terminating access provider. (Hat tip: Naresh M Ganwani)

What this means is that if you are a telemarketer, you need to pay Rs 0.05 extra per SMS to the telecom operator using whose network you are sending SMS’ to the customer. That telecom operator will have to make a payment to the telecom operator whose customer the recipient is. This is reminiscent of an ‘interconnect charge/ which was proposed/set up in early 2010 between Tata Teleservices and Bharti Airtel, wherein Airtel was believed to have imposed a 0.15 interconnect fee to deliver messages originating from Tata Teleservices’ network to Airtel customers. Some thoughts on the interconnect fee:

1. Airtel stands to benefit the most: it has the largest number of customers (as well as active customers), and more marketing and promotional messages – it is likely- will be directed at its base. We’ve heard that Airtel’s pipe isn’t as open to sending promotional messages as that of other operators is – Airtel has spoken out against SMS Spam in the past – so it’s likely that the company will make more money from this policy than it will have to spend. In comparison, Tata Teleservices, Loop Mobile and Aircel (where most of the messages I received were coming from), will have to make payouts.

2. Promotional Messages? Is there a difference between ‘promotional messages’ and ‘commercial communication’? All commercial communication need not be promotional in nature, so who determines what is a promotional SMS and what isn’t? If someone has actively subscribed to promotional content and SMS, or to daily deal updates on SMS – is that promotional content, or is it e-commerce info?

3. Wouldn’t this have been enough? The TRAI press release states that “However, in order to further deter the sending of promotional SMSs,the Authority has now prescribed‘a promotional SMS charge’ of Re. 0.05 (five paisa only)”. A couple of things – weren’t the SMS Spam regulations sufficient? Why increase the cost for those sending SMS, if the six strike policy isn’t enough of a deterrent?

On the other hand, wouldn’t mandating a Rs 0.05 interconnect charge have been sufficient in the first place? As we had explained earlier, it was a change in business model that led to the increase in SMS spam in India, which substantially brought down the cost of sending SMS to lower than Rs 0.01. So an additional charge of Rs 0.05 would deter mass targeting. Isn’t the TRAI overreacting by imposing interconnect charges and restrictive and regressive SMS Spam guidelines? In our opinion, it really shouldn’t get into price determination.

In addition, Bulk SMS companies have found a way out. Riyaaz Sheikh of Xtech Infocom Pvt Ltd writes in:

“Aggregators have chosen an escape route by choosing international telecom operators gateway which facilitates sms delivery on DO NOT DISTURB numbers without any trace of the Indian telecom operator involvement. The rates for international routing is around 5 times higer than the prevalent Indian operator rates which would eventually decrease as the Indian operators contribute to the revenue of international operators by using the International gateway consistently due to increasing demand from the end customers.

Hence,the sms spam to the Indian mobile subscriber would be same as before the TRAI regulation implemented since September 27th.”