America Needs a New Approach to SMS – Learning from India

February 5, 2009

in india, Mobility

Indian rates for SMS are now at 8 paise. 100 paise to the Rupee. about 47 rupees to the dollar. So $.003 per SMS locally in India today. Guess what, use is exploding! That doesn’t compare very well with the US where we are paying a posted rate of 20 cents per SMS. Now I can also calculate the cost of my personal SMS via my family which is probably a good view on the “discount” one can get. We pay $30 per month as a family which covers between 7000 and 12000 SMS messages tracing primarily to two people on the four person plan. At 10000 that happens to work out to the same $.003 per SMS.

In India, sending a few hundred or maybe even a 1000 SMS’s is less and less uncommon. In India most of these customers are prepaid. Thus when you bring the rates down whether a student or young professional they still just SMS to their budget. However the more SMS’s that are sent the more messages in circulation and the more the total SMS market grows.

In America we have the wrong SMS pricing model. High prices and inbound charges kill SMS as a really useful “text” service for the future. At one end we have unlimited plans where number is no object and friction is when sending to others where it may “cost” them.

It’s a big call if you are the carrier but America needs a price war rather than price gouging on SMS. Dropping inbound charges would be a great step — “in network” and then rapidly cutting the cost per SMS. I’d cut it to 10 cents per SMS straight away… and then start selling the bundles and the options. Basically change the metrics to velocity and growth. It does seem weird that we can have 100% unlimited free in-network calling and yet SMS messages are brutally costly. Keeping a cost on SMS keeps away the spammers. That’s important.

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