Performance and Leadership in A2P SMS
One of our proudest moments so far has been when Beepsend was awarded a Tier 1 position in the Roaming Consulting Company report on performance and leadership amongst A2P SMS vendors in 2016. Given that the 2017 report is coming up soon, we would like to take the opportunity to address a few of the topics raised in last year..
Looking at the feedback provided by MNOs, pricing model was the most important topic. We would like to give our guidance on the topic here.
We advise operators to use a model where they charge one fee for messages up to a threshold, and then a lower rate for messages above that threshold.
A staircase model (with multiple steps) has the risk that all messages are filled via only one provider, and then this provider has a disproportionately strong position.
A totally flat model would give the incentive to even very small providers to chase for operator access, which would risk being a severe administrative burden.
Hence, a two tier model is the perfect balance.
First, messages are sold from the operators via several interfaces. VAS team sells large account access to the SMSC directly, roaming team signs interworking agreements on the back of the roaming agreement (AA.19), interconnect team signs national interconnect. All these must have a consistent pricing model or traffic will find the cheapest one.
If there are grey routes, SIM box access and other means to access the network for free, this is the cheapest way.
Second, there is no right level, but there is a correct principle for the level. The rate must be high enough to deter SPAM traffic but it shall be low enough to ensure that marketing traffic still finds their way to A2P SMS. And this level is different from country to country. A baseline for low GDP countries could be 1 eurocent and for high GDP countries 2 eurocent.
As we have maintained in previous blog posts, we do not believe in volume commitments. If the operator signs up with several aggregators with levels of commitment with each, then what can happen is that a new way to terminate to the country emerges and the partners that subscribed to commitments are forced to buy termination to a price level above the going market rate. The committing party has no way to control the market and without a competitive price, there is no way one can attract the traffic to fill the obligation.
So commitment is a highly unhealthy way of running the operator business.
In short, please don’t.
See Operator blog post A2P Best Practice for Operators for more information.
In general, if you differentiate the rates, it’s a must that you have a technical criterion tied to it. Differentiating P2P SMS from A2P SMS, how do you define which is which in a language that can be implemented in code? Differentiating national from international, how do you define that in a language that can be implemented in code?
The general recommendation:
- A2P is anything where the SenderId is shortcode and alphanumeric. Also numeric SenderId where this is in agreed ranges only.
- Do not try to enforce a differentiation between national and international. Low GDP countries try to have a high international and a low domestic rate. This almost always ends with local aggregators earning money by selling to international players.
So the overall conclusion on how to set your wholesale SMS price:
- P2P SMS: you charge national interconnect to your national partners, apply the mutual forgiveness with your roaming partners and then use a P2P hub for the rest.
- For A2P SMS: up to a level (example: your subscriber base divided by say 5) you charge €0,020, and above this you charge €0,015. This goes for all partners – national and international aggregators.
- The A2P criteria is where the SenderId is alfa, short code or one of the agreed numeric ranges.
- Block A2P coming in over P2P SMS routes – especially the roaming links.