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One issue that affects so many SMS aggregators and wholesalers on a daily basis is sudden and dramatic buy price increases. When that fantastic SMS buy price you've been enjoying for months comes to a halt, it can be extremely frustrating and damaging to profits margins. But what caused this?
In this issue, we're sharing our insight on the major issues hindering the success and growth of the wholesale bulk SMS market, underpinned by the lack of satisfactory agreements between sending (terminating) and receiving (destination) operators. The situation becomes more acute, with more enterprises reaching out to more customers (mobile subscribers). Bulk SMS service providers ultimately rely on such inter-operator agreements to deliver over 90% of the world's bulk SMS traffic today. Surprisingly, no mobile industry forum, membership or regulatory or regulatory body has come up with a solution. We have.
First of all, let's clarify which segment of the bulk SMS market this feature is relevant to. If you're the IT Manager from the HSBCs of this world, fortunate to be able to pay top whack SMS prices and don't fancy routing your SMS through more than one provider, then this article is likely to be of limited interest to you you! Do keep reading for valuable insight though. Conversely, if you're the routing or procurement contact for an SMS aggregator or any mobile messaging provider, focused on yielding the greatest margins by scouring the planet for the lowest cost routes of good quality, then this will help with the questions you never been to scared to ask.
So what actually are the key issues we're raising?
The core issue is instability, both on the wholesale market price of SMS termination (up and down) and routing availability (on and off) to destination operators. This results in service disruptions, which in turn lead to frustration for the customer who requires a consistently high quality SMS termination at competitive rates, whether they be resellers or using SMS for their own benefit.
What causes these issues to occur?
It's perfectly understandable that operators want to make some extra cash by offering commercial (bulk) SMS termination. So operators charge a fee to terminate your bulk SMS traffic to the destination operators with whom they have roaming agreements. Outlined in some of these agreements, is that termination of an SMS incurs an interworking fee (specified in the AA19 annex document) charged by the destination operator. The objective for the terminating operator therefore, is to minimize the risk of triggering an interworking fee, as this results in its commercial SMS customers to perhaps look at alternative routes through other terminating operators that do not incur interworking fees.
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However, when looking at it from the receiving / destination operator's point of view, the objective is then to do everything commercially and practically possible to redirect SMS to channels where they receive income for every sent SMS (interworking / AA19 fees). In addition, operators sometimes associate spam complaints with bulk SMS, something they are keen to avoid having to deal with. Now hopefully you're building an understanding of the SMS industry's dynamics!
When and where are these issues happening?
Typically, destination operators who have the larger percentage of subscribers in the country concerned or are gaining momentum towards this.
 
How does this affect SMS service provision?
- Blockage without any notice of SMS termination by the destination operator to its subscribers.
- Introduction of interworking fees causing a ripple effect of price increases through the supply chain.
- Daily SMS traffic volume caps set by the terminating operator to avoid interworking fees.
- Incremental price increases (as opposed to large jumps) from your SMS aggregator in order to manage incoming traffic versus capped volume quotas.
- Sender ID restrictions and alterations on the fly to ensure delivery characteristics are maintained.
How can I manage or fix this?
Choose from one or more of the following options:
- Continue to find new providers (operators or aggregators) that can route your SMS traffic free of interworking fees.
- Continue adapting your messages on the fly to avoid the filtering hurdles aimed at stopping and diverting bulk SMS traffic to fee earning channels.
- Contract locally for an official bulk SMS service with the destination operator concerned and pay set up fees, monthly service fees, plus messaging and / or signaling costs (SS7). Note that you may need a locally registered business, (for example in the U.A.E) which present another set of challenges, more time and more effort.
- Increase your customer's price to accommodate the interworking fee (although this could well risk your customer defecting elsewhere for a lower price)
- Educate your customer that the more they are prepared to pay, the more value they can expect in return. Specifically, this means pricing headroom to accommodate back up routes that are have a higher cost, albeit not high enough in some cases to accommodate newly introduced interworking fees.
- Talk to RoutoMessaging about its Mobile Messaging Network, the industry's new, unique and simple solution to the headaches described in this article.
If you would like more information about this article, our views and opinions, or indeed to debate by sharing yours, contact us.
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