Why Are Telecom Operators Increasing SMS Rates Of Foreign Firms?

Foreign firms that are operating in India will have to pay more for the SMS services from July 16, 2021. The new rates are 20 times higher than the rates telecom operating charging to domestic players. These companies have to pay $0.030 per short message service, which might force some firms to look at other means for communication.

Analysts believe that foreign firms might start looking at options like emails, WhatsApp Business Messaging, and in-app notifications. However, telcos will get high revenue as critical messages need OTP and for that, they have to send messages.

Notably, the new rates will be applicable to firms like Google, Facebook, Uber, and Amazon. It includes banks like Citibank, Deutsche Bank, HSBC, and Standard Chartered.

Telecom Operators' Views On New SMS Rates

"The price increase will cause some reduction in traffic. For instance, most foreign banks have top-tier customers who are regular users of WhatsApp and email," an executive at a leading telemarketing company was quoted by ET.

"More than 40 billion SMSes are sent by domestic entities per month as compared to one billion by foreign companies, which is now expected to come down," he added.

However, an executive from the telecom company said that there will be no impact on the SMS traffic as these foreign firms can easily afford the new rates. He states that SMS rates in India are very less as compare to other countries as they are paying $0.060 there (in other countries).

Why Are Foreign Firms Not Happy With New SMS Rates?

On the other hand, the report claims that several firms are not happy with the changes and named as international despite they are having have full operations and offering services to Indian customers.

It is worth noting that any company whose cloud servers are not in the country and data has been processed by the third part centers are known as International, which is why Amazon and Uber come in that category.

However, international firms, such as Google, Facebook, Uber did not issue any statement on the same. Similarly, Reliance Jio, Airtel, and Vodafone-Idea did not mention it. It is worth noting that increasing competition in the sector has forced telecom operators to come up with new strategies, where they can increase tariffs on their services.