Bulk SMS price debacle laid bare
The minimum wholesale price for A2P SMSs from Vodacom, MTN and Cell C differs by up to 1.67c per SMS. This price difference is what is behind most of the squabbling in the South African bulk SMS market.
It is currently free for operators to send SMSs to other networks. To keep the bulk SMS market profitable (and to limit spam) the mobile operators have agreed to not send bulk SMSs to other operators.
What this “gentleman’s agreement” between Vodacom, MTN and Cell C means is that Wireless Application Service Providers (WASPs), who provided bulk SMS message sending services, had to send all their Vodacom messages via Vodacom, MTN messages via MTN, and Cell C messages via Cell C.
Cell C has now broken this agreement by allowing WASPs to send bulk SMSs to Vodacom and MTN through Cell C’s platform.
The obvious question is what benefit it holds for bulk SMS providers to go through Cell C rather than Vodacom and MTN. The answer: price.
Bulk SMS prices in South Africa
Here is what a typical WASP can expect to pay (VAT exclusive) for bulk SMSs through Vodacom, MTN and Cell C:
- MTN has a fixed price of 16.67c per SMS
- Vodacom has a volume and growth based pricing model, where prices range between 15.17c and 17.54c per SMS
- Cell C has a volume based pricing model for all WASPs, with the lowest price at 14c per SMS.
These prices may look very similar to consumers, but with WASPs dealing in millions of SMSs per month a single cent per SMS makes a significant difference.
With Cell C allowing WASPs to send SMSs to all the operators it is not difficult to see why their bulk SMS volumes skyrocketed.
Uneven playing field for WASPs
However, there is more to the story. According to industry players Cell C is only offering one WASP (Cellfind) the ability to receive replies to their bulk SMS messages sent via Cell C.
“Other WASPs are able to use Cell C for cross network messages, but replies are dropped by Cell C,” explains one WASP owner.
“By allowing only Cellfind the ability to send via Cell C to Vodacom and MTN phones, and also receive replies, Cellfind is the only WASP with access to a pricing of 14c per SMS for messaging to MTN and Vodacom phones,” he said.
“All other WASPs have to pay 16.67c for MTN and between 15.17 and 17.54c for Vodacom. Cellfind can also more easily get to the required volume for the highest discount, as it is sending messages destined to all networks via Cell C.”
This alleged unfair advantage which Cell C is giving Cellfind, as well as unhappiness from Vodacom and MTN that Cell C has reneged on the gentleman’s agreement, means that new bulk SMS pricing models are being investigated.
A regulated set rate for bulk SMSs and the potential introduction of an SMS termination rate is currently under discussion.
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