This is the last post in our series on SMS (short message service), one of the most popular methods of mobile communication. Nearly anyone around the globe can communicate through SMS on both pre-paid and subscription-based plans. The rise in popularity of SMS has created a new set of dynamics for mobile operators. In this short series, we explored the opportunities and challenges associated with SMS.

Mobile marketing, especially via SMS, is a growing business. Studies show that consumers are much more likely to read and respond to text messages than traditional electronic channels, such as email. As with any new market, there is still a certain amount of frontier lawlessness in the mobile marketing landscape. This especially takes place in the area of low-cost, bulk SMS delivery.

Before I go any further, I want to make it clear that there are many legitimate, low-cost SMS delivery service providers. Known as SMS aggregators, these companies partner with existing mobile operators to offer wholesale SMS services at a reduced price to customers. This is similar in some ways to how long-distance VoIP (Voice-over-IP) services are sold. In this model – mobile operators sell SMS aggregators bandwidth on their SS7 network and, in return, the SMS aggregators re-sell that bandwidth to their customers.

As anyone who has used a long-distance VoIP calling card knows, quality of service can vary considerably –usually in direct proportion to the price you pay. SMS services are no exception. SMS aggregators offer different levels of price/performance, depending on the type of connection and agreement they have with the mobile operator.

Behind SMS: a Technical Overview

To understand this ecosystem, we need to get into a few technical details – so please bear with me.

At the highest quality level, the SMS aggregator has what is referred to as a “direct connection” to the mobile operator’s SS7 network via a special signaling gateway. A direct connection to the SS7 network enables SMS aggregators to provide quality assurance for their customers.

At the other end of the spectrum are those SMS aggregators that have an “indirect connection” to the SS7 network via the mobile operator’s SMS Center. This kind of SMS service is typically cheaper but also provides less assurance that the SMS messages will have a good or fast delivery rate.

SMS Fraud: How Does it Happen?

SMS aggregators pay a price to mobile operators that is below the retail price. But how can some companies offer FREE SMS services? There are two answers and neither of them are good.

  1. Aggregators can steal SMS services from a mobile operator or a legitimate SMS aggregator by exploiting network vulnerabilities using fraud techniques like spoofing, or
  2. Aggregators may be using the SMS service as a lure to increase costs later or to use your marketing list for their own purposes via SMS spamming.

Fraudulent SMS service providers may use a combination of the above, stealing bandwidth on the one hand while spamming your customer list on the other. SMS marketers therefore should be wary of SMS service providers that advertise unusually low prices—for example, offers of 75 percent off, free unlimited SMS messages or free unlimited service to a specific country. Rest assured, you’ll be paying for the service in one way or another.

In addition to bargain prices, SMS marketers should be wary of newly established SMS service providers, as some of these may be fly-by-night companies. Many SMS service providers have been in business for years and have a proven track record. Try to stay away from choosing an inexperienced, possibly illegal SMS service provider because it could have serious consequences for your business:

  • Your service provider could be blocked for fraudulent activities, and you might not be able to recover the money you paid to send messages that were never sent;
  • Your service provider might not be able to guarantee the same rate from week to week, or even provide SMS delivery from week to week; or
  • Your customer list may be exposed to spamming.

Even in the case of legitimate SMS services, there are still traps to be avoided. SMS aggregators frequently re-sell their own services to each other. This can make the quality of service vary widely between SMS service providers, so be sure to ask your SMS service provider about:

  • Mobile Number Portability Correction: If an SMS provider doesn’t correct for number portability, SMS messages may cost you more than anticipated. Mobile operators often charge an extra fee for off-net messages or messages may be dropped by the network altogether.
  • SMS Anti-Spam Checking: Not every SMS provider checks their network for spam, and using these services can result in your SMS messages being blacklisted by certain mobile operators.
  • SIM Farms: Some SMS service companies offer something called a SIM farm, which involves plugging a Subscriber Identity Module (SIM) card that you’ve purchased into their servers for the purpose of sending and receiving text messages. SIM farms are not a direct connection service, and may result in slower SMS message delivery due to additional network hops between endpoints.

While the Wild West landscape of mobile marketing is beginning to settle down, don’t let your spirit of adventure overtake your common sense. Choose your partners wisely to avoid being swindled later on.

Special thanks goes to Lee Suker of Neustar Europe who writes his own blog on issues related to HLR Lookup and SMS. Lee spends a lot of time working with CSPs and aggregators around the globe to create solutions that work for today’s mobile landscape.