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By Dr Pieter Streicher, MD of BulkSMS.com. Uploaded on: 16 January 2013.
2013 will be a pivotal year for the South African SMS industry as the issue of interconnect fees is resolved, and mobile networks charge each other for terminating application-to-person (A2P) SMS messages, doing away with the vagaries of the gentlemen’s agreement between the operators that maintain the status quo. Technically, we’re going to see SMS become a more dynamic communications medium incorporating rich media interactivity. Consumers using paid for mobile content subscription services are going to be better protected with double opt-in capabilities introduced by all the mobile operators.
The enforcement of interconnect fees had a false start in 2011 when the
incumbent mobile networks simply stopped Neotel and Telfree from terminating
A2P SMS traffic on the bigger networks without paying a cent. Last year a more
formidable opponent, Cell C, broke ranks and started allowing WASPs to
terminate messages on other networks, which could prove to be the straw that
breaks the camel’s back when it comes to the issue of interconnect fees. To
date, a gentlemen’s agreement existed between the operators that they would not
terminate A2P traffic on each other’s networks so that interconnect fees would
not be implemented.
The mobile networks have been loath to have interconnect fees enforced by the
Independent Communications Authority of South Africa (ICASA) as this would
involve them revealing just how much SMSs cost them (not a lot) and what their
margins are (a lot). However, although Vodacom specifically, as the largest
operator, stands to lose money if interconnect fees are introduced, on balance
it will be the winner as it has the most traffic terminating on its own
network, for which no interconnect fees will be payable. Cell C, ironically as
it is the one forcing the issue, has the most to lose as it is the smaller of
the networks and so terminates a large percentage of SMSs on other networks for
which it will have to pay interconnect fees.
I strongly support the introduction of a small interconnect fee provided it is
related to the actual cost of carrying SMS messages and is approved by ICASA.
In my view, the bulk pricing of SMS messages for WASPs or emergent operators
should be the same, regulated by ICASA and governed by the Electronic
Communications Act, to allowing healthy competition and a level playing field.
If an interconnect fee is introduced, mobile operators are likely to start
reducing A2P SMS prices in order to grab as much SMS traffic as they can. This
will put pressure on the local WASP industry to reduce their pricing in seeking
lower wholesale A2P SMS costs from the networks. This is good news for
businesses that use SMS to communicate with their customers and who, up until
now, have been paying artificially high rates for A2P SMS, irrespective of
purchasing from the mobile networks or from a WASP.
On the flipside, however, high SMS rates keep spam levels down as the return on
investment simply isn’t there for spammers. So falling SMS rates could lead to
an increase in unwanted marketing SMSs for consumers. Fortunately this could be
mitigated by the fact that things are hotting up significantly for spammers in
South Africa, thanks to the work that the Wireless Application Service
Providers’ Association (WASPA) is doing to bring spammers to task. The fines
WASPA levies against transgressors ramp up very quickly for repeat offenders.
Of course the spam complaints that WASPA receives are merely the tip of the
iceberg, and consumers are reminded to formalise and escalate their complaints
about unwanted commercial SMS messages they receive.
SMS’s supposed death knell has been tolled for years yet the technology
continues to go from strength to strength in the face of new Internet-based
messaging platforms stealing the limelight. This year we’ll see SMS evolve to
incorporate some of the interactivity of IP-based services while still
retaining its robustness as a targeted communication channel to send timeous
So, for example, we’ll see event notifications sent by SMS including the
ability to RSVP for an event via a link instead of a reply SMS. In this way,
rich content, such as maps, multimedia, and feedback capabilities can be
delivered via SMS but accessed over a mobile data connection at a very low cost
for the consumer. This rich messaging capability will enhance the basic
information provided by the SMS as well as reduce the costs of mobile
communications for consumers.
When Vodacom launched its double opt-in check on subscription services, Vodacom
related unsubscribe requests to WASPA reduced by 70%. Previously customers
could subscribe to a repeat-billed service with the click of a button and the
network would have no way of confirming this or tracing the transaction. The
lack of sufficient controls made it difficult for WASPA to determine which
mobile subscription sign-ups were the result of accidental or forgotten
subscriptions, and which were genuine cases of fraud.
Now, Vodacom consumers are given a chance to confirm or decline a subscription
at network level before they are billed. The other mobile operators are
developing similar opt-in systems and it is hoped they will come to the party
in the course of 2013. This will be good news for consumers and will go far in
further reducing the number of subscription billing complaints received by the
networks and WASPA.
So improvements in the way SMS is billed for, efficient spam deterrents,
evolving technology capabilities and better handling of subscriptions services
lay the foundation for another exciting year for SMS as a business