Navigating the Complexity of ILDO SMS in India: Perspectives and Solutions

Why is sending ILDO SMS to India more expensive? This is a common inquiry from many of our clients. Can we ensure that our SMS is categorized as ‘Domestic SMS’ rather than ‘ILDO SMS’ to reduce costs?

On a broader scale, regulatory bodies across various countries are primarily focused on combating SPAM and fraud, as well as safeguarding consumer interests. This involves implementing content regulations, brand registration requirements, local address regulations, maintaining ‘Do Not Disturb’ databases, privacy, data protection measures, as well as enforcing penalties. Furthermore, they must address challenges related to interoperability guidelines, roaming agreements, network congestion, and support for local languages. Consequently, what seems like a simple and ubiquitous form of communication—sending a text SMS—becomes increasingly complex.”

Customer’s perspective:

Customers who are operating within India with a valid local address and established entity are presented with a challenge on classification of their SMS. Telco operators often classify these brands as ineligible for “Domestic” status, thus subjecting them to international pricing.

In India, the disparity in rates is significant, with international SMS costing approximately 35-40 times more than domestic SMS. (International SMS rates are around $0.06, whereas domestic rates range from $0.002 to $0.0015 based on volume.)

One common criterion cited by operators is that SMS should originate, transit, and terminate within India. Any deviation from this standard is deemed an international SMS. Many large customers have deployed their infrastructure across multiple geographies on hyperscalers, making it challenging to alter the existing architecture.

Consequently, customers raise a valid question: as entities serving Indian end consumers and contributing to India’s digital transformation, why are we burdened with additional costs?

Indeed, it’s a fair question!

Telco Operator’s perspective:

Toll bypass, whether in SMS or voice communication, poses a global challenge. It’s fair to recognize that operators make substantial investments in network infrastructure, technology, licensing fees, and revenue sharing with governments, particularly in regulated markets like India. Despite these investments, operators must remain vigilant against toll bypass and allocate additional resources to deploy systems like SMS firewalls and analytics to combat fraud.

In addition to financial pressures, operators have a responsibility to protect end consumers from fraud and spam. Undoubtedly, being a Telco entails a complex and demanding role. Furthermore, categorizing certain brands as “Domestic” creates opportunities for further toll bypass. 

For instance, when a subscriber in the US/UK sends an SMS to an Indian consumer, a local entity in India can exploit the “Domestic SMS” classification, diverting international traffic to India and reducing revenue for the Telco. What should rightfully be an “International SMS” is now charged at domestic rates.

Operators invest significant resources in establishing interoperability agreements across borders. Additionally, some brands seeking domestic classification are also Over-The-Top (OTT) players, competing directly with Telcos in messaging, voice, and other areas, often with fewer regulatory constraints.

In summary, Telcos have valid reasons to protect consumers and prevent toll bypass.

Regulator’s perspective:

India has witnessed rapid digitization, mobile data usage growth, and the introduction of new technologies. Regulators have not only crafted policies to support this growth but have also modernized themselves with initiatives like Saral/Saras, prioritizing transparency and efficiency. Adoption of Blockchain technology for managing “Domestic SMS” content and consumer protection reflects infrastructure advancements benefiting consumers, licensed operators, and the government.

Regarding ILDO SMS guidelines, the regulator’s stance has been one of “Forbearance,” acknowledging the complexity of SMS routing and nuances involved. Despite efforts, including consultation papers for defining ILDO SMS more clearly, “Forbearance” on ILDO SMS had to be maintained, considering pressing needs like the New Telecom Policy aimed at enhancing India’s telecommunications landscape. 

Shouldn’t businesses be encouraged to collaborate in problem-solving rather than enforcing a totalitarian approach?

Is it not reasonable for regulators to expect self-regulation?

OTT perspective:

As discussions on ILDO SMS continue, a new trend emerges. Previously, OTT apps treated both domestic and international traffic at the same rates. Advocates of net neutrality now recognize the revenue potential in the ongoing ILDO SMS debate.

We may witness more OTT apps revising prices to differentiate between “Domestic” and “International” traffic further. Though the exact classification basis remains unclear, it’s likely to follow Telco interpretations or based on partners engaged in the transactions.

This landscape is still evolving as discussions continue, potentially introducing more variations in the coming months.

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In Summary

This is not an India specific problem – As we debate more, almost all the countries are trying to work on consumer protection, ease of use, better technology in the interest of all the stakeholders leading to some stakeholders being dissatisfied with the approach.

In some countries we see, the brand name + Country code suffix will be treated as domestic SMS – This dilutes the brand recall while providing cost benefits to businesses / brands. An approach debatable again.

SMS – Short messaging service with its ubiquitous ability to reach all types of handsets and wide acceptance has now become complex. Synonyms like – Simple Messaging Service – may not be true for some brands!!

We generally propose most of the brands for country specific optimization plans based on a multi channel approach – however it still involves user experience change from one country to another.

There is certainly no one-size-fits-all Solution / Regulation that will be widely accepted in the near future. 

However, by considering clients’ use-case, gaining a thorough understanding of our clients’ architecture, Telco discussions & relationships, we occasionally establish a ‘Domestic SMS status,’. In almost all cases we are able to help improve the total cost of ownership for our customers. 

The most satisfying outcome after all the efforts is witnessing a smile and another happy client.

Discover more about Exotel’s ILDO SMS messaging solutions and how they can help you serve your customers #LikeAFriend by reaching out to us here.

Author:

Vivek Jathanna

VP – New Initiatives