Sometimes pricing moves can backfire spectacularly. Consider India’s experiment with ILD SMS pricing. India has two rate structures for SMS: ILD and domestic. ILD costs are thirty-five to forty times higher than domestic texting.
This structure quickly created challenges for brands. Not only was ILD extremely expensive, but Indian telecom operators also stubbornly resisted market pressures. Over the decade since ILD was introduced, domestic SMS and international voice prices fell sharply—but international SMS remained inexplicably high.
Operators hoped higher ILD pricing would provide reliable revenue streams. Instead, they sparked an irreversible migration toward WhatsApp and other OTT messaging platforms.
Facing steep cost increases, enterprises quickly shifted customer communications from traditional SMS to WhatsApp. A richer product experience at a cheaper price point? What’s there to complain about?
Telecom operators and aggregators initially fought back, even pressing regulators for relief. Eventually, though, aggregators pivoted and embraced WhatsApp themselves, reluctantly accelerating the migration they’d hoped to prevent.
India’s ILD pricing fiasco isn’t unique. France and Spain experienced similar scenarios. Aggressive SMS price hikes drove consumers in both markets directly into cheaper, richer OTT alternatives, causing permanent damage to traditional SMS volumes.
Of course, WhatsApp’s dominance in India has many reasons including being a rich, free, and pervasive product. But the story of ILD evolving from a cash cow to an albatross around the neck is a b-school case study, a tale of how a tone-deaf pricing strategy can create a blunder of Himalayan proportions.