SMS service providers want to close the gap between the payouts by network operators as they say this is hampering the growth of the local industry.
Piet Streicher, MD of BulkSMS, says the disparity between Vodacom, MTN and Cell C in what they pay out to the application service providers on premium SMSes is hampering growth in the industry, which has the potential to rival other forms of non-cash payment systems.
According to Streicher, Vodacom pays the most to the providers, followed by Cell C, and then MTN. On a R30 premium SMS, Vodacom pays out R21.53, Cell C R16.85, and MTN R13.45.
"Vodacom pays out the most as it seems to realise that the more people use its network, the better it is for it in the longer run. However, MTN`s payout hardly covers costs in some cases."
Streicher says this lack of uniformity in payouts means certain applications are not viable.
"In the case of cool drink vending machines, if a consumer was able to SMS it and buy a cool drink, there would be no reason for cash. However, these payouts don`t make that a reasonable proposition, because the minimum cost would be R10 and a can of cool drink does not cost that much," he says.
Streicher wants to see a uniform payout from all the vendors and even moots the possibility in the form of the regulator, the Independent Communications of SA, stepping in.
Negotiation vs regulation
Wireless Application Service Provider Association chairman Leon Perlman favours a more negotiated route in dealing with the network operators, rather than calling for regulation now.
"We are meeting with MTN next week to discuss the disparity," he says.
Perlman says the Convergence Bill has made provision for the regulation of facilities leasing, and since short codes (the SMS number provided by the network operators) do not belong to the application service providers, they are considered facilities.
He says the disparity in the payouts is also due to historical circumstance and is not an issue unique to this country.
"Reasons for the pricing disparity are multiple. Part of them is that Vodacom has bought up a lot of its service providers, while MTN is still working with a number of them. In Vodacom`s case this could have reduced the costs somewhat," he says.
According to Perlman, another factor is the prepaid distribution model used in this country as more than 80% of cellular users are on prepaid contracts.
"The network operators do not receive the entire R30 they sell a prepaid card for. Some of that money goes into the vendor`s pocket. However, there shouldn`t too much of a payout disparity as far as postpaid users of services are concerned," he says.
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