GSM players lose 15% VAS revenues

A recent order by the Telecom Regulatory Authority of India (Trai) has deprived GSM operators of 15-20 per cent of their revenue from value-added services (VAS).

Text messages from SIM Tool Kits (STKs), numbers pre-burned by operators on SIM cards, did not get delivered after September 1, 2007.

The problem occurred after service providers moved to five-digit SMS short codes from the earlier four-digits, as mandated by Trai. Service providers could not change STK numbers on cards that were already sold.

STKs have pre-recorded numbers of services such as astrology, live news, cricket scores, flowers, pizza and dating that can be accessed through SMS or phone calls.

"For most of these services such as cricket score and news, which are mainly set on interactive response mode, subscribers prefer to send SMSes. However, these don't get delivered at the operator's end as those numbers no longer exist," said Milind Pathak, country manager, Buongiorno, a Hong Kong-based VAS provider.

"Even though, the new STKs were burned with the five-digit SMS short codes, there was no way to replace it on those already sold," he said. The issue is only restricted to SIM cards sold prior to August 31.

As of August 31, there were around 200 million mobile users, of which over 75 per cent were GSM users. The present mobile VAS market is around Rs 5,000 crore, and according to Assocham, is expected to touch Rs 8,200 crore by March 2008.

All GSM operators such as Bharti Airtel, Vodafone, Idea Cellular, BPL Mobile, Aircel Communications, Reliance Telecom and Spice Communication provide SMS services with STKs.

Unlike normal SMSes, operators charge a premium for sending messages to these services. The costs vary from operator to operator, while in certain cases its depends on the arrangement with VAS provider.

S Subramanian, CEO, BPL Mobile said: "Some of the VAS revenues for operators was from STK services and this has resulted in a loss of around 15-18 per cent in revenues. For certain operators, this could be as high as 20 per cent."

To avoid further losses, GSM operators are setting up mechanisms that send alerts or reply messages to users, when they try to contact a service through a defunct STK. But this is not always successful, as most users don't bother to make another attempt.

A top executive with Bharti Airtel, on condition of anonymity, said that educating customers is the only way to tide over this. Even then, it would be a difficult proposal as there is no way to replace the numbers on SIM cards sold before August 31. "We have to live with it," he said.

In December 2006, Trai had asked all telecommunication companies to shift to the five-digit SMS code. The decision to standardise the codes was taken under the National Numbering Plan 2003 issued by the DoT.

---

TECH TROUBLE

Text messages from SIM Tool Kits (STKs), numbers pre-burned by operators on SIM cards, did not get delivered after September 1, 2007

The problem occurred after service providers moved to five-digit SMS short codes from the earlier four-digits, as mandated by Trai. Service providers could not change STK numbers on cards that were already sold