India SMS Ban Handicaps Massive Social Net

GupShup Estimates 30% Revenue Loss This Month

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NEW YORK ( -- An unprecedented government ban on text messaging in India -- enacted in the hopes of curbing religious riots -- is chipping away at revenue for the country's biggest social network, GupShup, and a number of mobile-based businesses.

GupShup uses text messaging to connect its 35 million users in a country where more Indians have text-message-ready mobile phones than access to the internet. The service ground to a halt earlier this week when the country's government banned bulk SMS (text messages) and MMS (picture or video messages).

The move does not include one-to-one messages between mobile subscribers.

Indian news outlets have reported that the ban -- a highly unusual and bold move for the world's largest democracy -- was called to prevent groups from using mobile messages to organize riots or provoke violence ahead of a controversial court ruling that pits Muslims against Hindus.

As a result, GupShup is on track to lose 30% of it's monthly revenue, a "significant" sum, said Vishal Nongbet, the company's senior director and head of marketing. One telecom executive says the industry will lose Rs30 million, which is less than $1 million, according to The Economic Times.

"It's affected a lot of different parts of life," Mr. Nongbet said. "There are people who misuse bulk SMS, but the good uses of bulk SMS far outweigh the bad."

For now, GupShup has more monthly users in India than Facebook, which had 22 million unique visitors in India in August and is the country's fastest growing social network, according to ComScore. Part of that growth, though, is fueled by GupShup, which powers Facebook's mobile status updates. By comparison, Google's Orkut had 19 million users in India last month and Twitter had 3 million uniques.

In addition to GupShup, a number of telecom businesses have also been caught in the crossfire of the SMS ban; in many parts of India, mobile is often the most accessible and widespread form of digital communication. Indians use text messaging for services ranging from banking to obtaining scores on school exams.

On Wednesday, the Indian Ministry of Communications and Information Technology banned bulk mobile messaging for 72 hours. The government contacted wireless carriers to cut the pipes for companies like GupShup that purchase bandwidth for bulk messages. Today, the ministry extended the ban until Sept. 30, according to statements on the country's Press Information Bureau website.

The ban came days before the Indian court was expected to rule on a decades-old case that has embodied religious tensions in India. The city of Ayodhya, hundreds of miles east of New Dehli, is home to a government-owned site claimed by both Hindu and Muslim groups. Hindus maintain the site, where the ancient Babri Mosque once stood, is also the birthplace of god Rama. Both groups have petitioned the court to build their own house of worship. The decision has since been delayed.

When Hindu groups demolished the mosque in 1992, religious riots ensued that some news outlets have deemed the worst since the partition of India and Pakistan in 1947.

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