TRAI: SMSs losing their flavour

By Joji Thomas Philip, TNN (http://economictimes.indiatimes.com/TRAI_SMSs_losing_their_flavour/articleshow/2437987.cms)

Are text messages slowly losing their flavor with India’s growing cellular base?

Even as operators say it’s too early to take a call and make such a ‘sweeping statement’, the figures, however, suggest so. Data compiled by telecom regulator TRAI reveal that SMS use has steadily fallen from September 2006.

Consider this: GSM operators have witnessed close to 9% drop in the outgoing SMSs during the April – June quarter, as per the latest performance indicator report by TRAI. This implies, an average GSM user now sends about 35 SMSs per month as compared to 39 during the previous quarter.

Little wonder that GSM operators’ total revenue from SMS has now fallen below the 5% mark. Ditto on the CDMA front — the number of outgoing SMSs by customers using this technology platform has declined to 20 during the quarter-ended June against 24 SMSs during the January – March, 2007 quarter.

If one were to consider the earlier quarter (January – March, 2007), the fall in SMS usage is more dramatic – GSM operators saw a 19% decline in outgoing text messages during this period. Outgoing SMS per subscriber (for GSM) had declined by 18.75% from 48 in December 2006 to 39 in March 2007.

“This decline in usage could perhaps be linked to revision in SMS tariffs by several GSM service providers. During the quarter, there have been tariff reports indicating reduction in the number of free and discounted SMS under various packs and plans, increase in the rate for SMS, restriction on the usage of free/discounted SMS on festival/customary days. Thus, this could be a case of higher prices pushing down the usage,” TRAI had said. In this same period (Jan-March), the revenue from SMS for CDMA operators declined to 2% from 3% in December 2006.

Disputing TRAI’s figure of higher SMS tariffs, an executive with a leading GSM operator pointed that a possible explanation for the fall in text messages could be due to the steady increase in the minutes of cellular usage. “For GSM players, the average increase in outgoing minutes of usage (MOU) was 2.2% during the last quarter.

The actual figure can be much higher if one were to consider the fact that most of the new users are coming from semi-urban and rural India – a factor that can drag the MOU downwards,” the executive said. The executive also added that the average SMS usage was bound to fall as operators went rural as customers in non-urban areas were comparably less text savvy.

Another service provider pointed out that rationalization of tariff plans, where many players discontinued non-profitable SMS packages could have led to the small decline. The executive also said that despite the fractional dip in SMS usage, the overall revenues of all operators from value added services was increasing every quarter. “There is a substantial increase in revenues from VAS. SMS is no longer the single driving force behind VAS revenues — music, gaming and other applications contribute significantly,” he added.