A2P Best Practice for Operators

 In News, Operator News

It feels that mobile operators are still largely fumbling in the dark to find the way forward in relation to A2P SMS. This is as one can expect from a business that is not yet fully matured, and not one that has been around since 1992.

One structure we see requested from operators (several!) is a tender for a package of SMS firewall and a revenue commit, in exchange for exclusivity. This breaks my heart as this is clear proof that operators picked bad advice and not one that serves their best interest.

The pro of this setup is that the operator will get a filter in place where the provider is dedicated to perfecting the filtering, eliminating the spam. And the operator revenue has a predictable minimum.

It might seem like a great deal, but the cons are more significant: the operator places the provider in a monopoly position, and this has several knock-on effects:

Technically

  • It’s a single point of failure. If the connection breaks, the A2P service dies. Yes, this has happened on more than one occasion.
  • It’s also limiting the share of the volume of the global traffic that can reach the subscriber with zero hops, and this will inevitably risk deteriorating the quality of the message delivery. More messages will reach the recipient with faulty code pages (characters outside 7 bit ASCII not properly supported), delayed delivery and concatenation not working.

Commercially

  • The provider owns the market price. In combination with the commitment there is a significant risk that the provider raises the price to the market significantly to achieve short term profit, which significantly harms the service mid and long term. Possibly the negative effect will not kick in before the exclusivity contract is renewed, so it’s a clear case of where the best interest of the provider is not be aligned with the best interest of the operator.
  • There is the traffic there is. We can stimulate the market to send more by having operators’ own B2B teams and aggregators work with enterprises to establish SMS services. An exclusive partner cannot provide traffic that is not there, so a commitment is a significant business risk for the aggregator as they do not have access to the real number of messages sent to the operator. Even if they did, it would still not be numbers after filtering grey and having spam go away. If the committed level is above the real revenue, we have a situation where the aggregator bleeds to provide the service, and any business that is not good for both parties is never sustainable.

Let’s get back to the roots of what we want to achieve, and how to best achieve it:

What?

  • We want the SMS business to thrive. We want more messages, but we also want a spam free environment. If we have this, we will have significant, and growing, revenues.

How will that happen?

  • The market price must be inside a bracket, where it’s high enough to kill spam and low enough to attract all sorts of legit traffic.

Missing out on grey routes gives a rock bottom market price and giving exclusivity to a third party will skyrocket the market rate, killing the industry. So this parameter is controlled by operators having a filter, maintaining the filter properly and setting a reasonable market rate. Also connecting several providers, so none of them will apply unhealthy margins.

  • We want quality messages. Text being unchanged from as it was sent, prompt delivery, reliable acknowledgments provided to the sender and full feature support.

This is best provided by multiple providers, so that one that cannot provide quality can be discarded when selecting a path to the destination.

Conclusions

So, for the operator, the list worth repeating is still:

  • Install a filter
    • Today. Every day you wait is revenues lost
  • Maintain the filter properly
    • Internally or find a partner to do it, and with a commercial model so they are incentivised to do the job well
  • Set a market rate that is relevant for your market
    • Balance the short term revenue needs with the long term profitability of the service
  • Connect a few aggregators
    • Select some local and a few internationals to optimise the chance of good global quality delivery

Exclusivity and commitment are not the relevant way forward. However tempting, avoid this path at all cost!