Should Governments Force Providers to Lower SMS Prices?

Earlier this week, Google, Grameen Foundation and MTN Uganda launched a premium SMS service aimed at delivering health tips and critical agriculture tips to the poor. A debate erupted when it was mistakenly thought that MTN was charging users 220UGX to use this service.

nota bene: In Uganda, sending a person-to-person SMS costs 110UGX. Sending a premium SMS (primarily when businesses target potential customers) costs at least 220UGX.

When it was clarified that the service costs only 110Ugx, the debate turned to whether network providers are fixing prices artificially high, and if so, whether the government should set a price ceiling in order to both stimulate innovation and lower the prices for the poor.

Two thoughts:

(i) This is the lowest price ever for a premium SMS service in Uganda.

I was talking about this debate to a director of one of most prominent software companies in Uganda. He reminded me that this is the first time in the industry's history that a premium service has gone for less than 220UGX. This is a good first step, but most likely not a deal that anyone besides Google could get immediately. Many of the premium SMS services [usually targeting the rich] are adding their own fee (usually around 60UGX) onto the 220UGX base and making a killing

(ii) What kind of pressure would it take to get network providers to lower SMS rates voluntarily?

In Uganda, the best things are done without government intervention. Think about how amazing it is that an NGO, an Internet company and mobile company got together to launch this program without government intervention (contra programs run by, say, USAID or UNDP). Often when the public pressures an industry to reform, the industry comes together to create voluntary restrictions. This recently happened when the Internet industry came under fire for violating human rights in China. Is this concievable with the mobile industry in Uganda? If so, it would have to start with pressure from companies that are innovating in the SMS information space.