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The Indian SMS ban: lessons for South Africa

PRESS RELEASE
SOUTH AFRICA BULKSMS.COM
30 November 2011

By Dr Pieter Streicher, MD of BulkSMS.com

When Spanco, a power provider to the city of Nagpur in central India, was forced to start load shedding in October 2011 it was unable to send SMS notifications to the 225,000 customers who had provided their mobile numbers. According to an official from Spanco speaking to the Times of India, despite publicity about the load shedding many customers were still unaware of it and the company was inundated with calls from angry customers complaining about power cuts. In addition, the company was no longer able to send customers acknowledgements of bill payments or complaint reference numbers by SMS.

Similarly, the traffic police in the city of Chennai, on India’s east coast, were unable to alert residents about traffic jams, diversions and road closures by SMS anymore. At the tail end of monsoon season, people relied on the service to find out where the rain had closed roads and plan their journeys accordingly. The newly launched service had been sending people up to 20 free SMSs per day notifying them of traffic issues. It was so popular that within the first two weeks 12,000 people had registered to receive these SMS alerts.

Both these SMS services have been forced to a halt, to the detriment of the organisations and the recipients, as a result of a ruling by the Telecom Regulatory Authority of India (TRAI) limiting SMS sending to 100 SMSs per SIM per day. The ruling was passed in late September and was subsequently relaxed at the start of November to allow 200 SMSs per SIM per day.

The ruling was put in place with good intentions: to limit the large number of spam SMSs some 850 million Indian cell phone users receive every day. Unfortunately the impact of the ruling has also been to halt a number of useful and legitimate SMS alert services such as those mentioned above as well as alerts from schools, taxi operators and car rental agencies.

Registered telemarketers can continue sending SMSs via a specific prefix, and there are a number of types of SMS messages that have been exempted from the ban including directory services and transactional services. However, the state of affairs seems confusing, for example the Chennai City Traffic Police told the newspaper, The Hindu, it would need to apply to the TRAI for an exemption for its traffic.

As well as these consequences, enforcing the 200 SMS limit per SIM per day is problematic for mobile operators. Mechanisms had to be put in place by operators to monitor volumes and stop messages being sent once the daily limit was reached. It also meant that existing unlimited messaging contracts would be reneged on.

The way TRAI has approached tackling unwanted direct marketing communications via SMS has not only had unintended consequences for people sending and receiving legitimate messages, it also unfortunately is not tackling the underlying reason for India having so much SMS spam.

The reason SMS spam has reached the same volumes in India that email spam has for the rest of us is because the country’s SMS rates are the lowest in the world. Before the ban, unlimited SMS packages cost Indian cellphone customers as little as 100 Rupees (around R16). In addition, companies can buy direct connection to the operators on a fixed cost basis – so the more messages they send, the cheaper the individual message cost.

A better approach

A preferable solution to the problem of SMS spam in India would firstly have been to move from an opt-out scenario to an opt-in scenario. Then the regulator should have raised the price of sending SMSs in India. One of the ways this could have been done is by introducing a termination charge to the SMS cost structure. This means that the operator that delivers the SMS to the end recipient is allowed to charge for terminating the message, and so the overall cost of sending an SMS would go up. To be effective as a deterrent against spam, the cost of SMS needs to increase enough to disrupt the economies and returns that make sending unwanted marketing messages worthwhile for the sender.

Another benefit of introducing a termination charge is that it would be possible to trace spam messages back to their source, and then levy the hefty fines that TRAI has already introduced for unsolicited communications.

This highlights just how essential it is to regulate SMS messaging for the benefits of both businesses and the general public, especially when it comes to transactional and emergency notifications. What the India case shows is how the increase in unwanted commercial messages can undermine legitimate business communications, especially for those entities sending emergency and transactional alerts to their customers. However, the way spam is tackled by the regulator should be carefully considered to avoid unnecessary fallout.

But this is also food for thought when it comes to how we are tackling SMS spam in South Africa. Here, we are currently grappling with issues such as how to set up a do-not-contact registry under the Consumer Protection Act; how strong to make the Protection of Personal Information Bill when it comes to people opting into marketing communications from companies; and whether allowing cross-network application-to-person SMS between incumbent and new operators will increase or reduce SMS spam. In considering these points, South African regulators and the WASP industry can draw lessons from India and the way in which TRAI tried to regulate the sending of commercial SMS messages.