Monday, August 11, 2008

Indian VAS Revenues badly hit after Short Code Change

According to Economic Times,the VAS industry has actually shrunk in India, thanks to a TRAI order banning four digit short codes, despite high monthly mobile subscriber additions. The government policy had mandated that the digit 5 be added as a prefix for all short codes (for example, 8888 would become 58888).
Companies are reporting almost 50-70% drop in revenues and claim the order has hit them hard.
All players in the chain — content providers, aggregators, developers and mobile operators are affected. Even the government is losing revenues as it levies a service tax on each SMS sent of about 12.5%. It has taken the industry back by at least 6-12 months depending on company to company.
The only way out, to avoid the revenue bleed is to allow the four digit short codes for at least six to eight months so that new SIM cards are able to reach the market while older ones get phased out.
According to operators, the issue has completely marred user experience and it will take time to hook him back to the service.



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