The Problem With SMS Aggregators

The following is a guest column by Jared Reitzin, CEO and founder of mobileStorm.

What’s the difference between an aggregator and a lottery winner? In one sense, not much.
Most lottery winners don’t have the life skills to be able to manage winning a hundred million dollars—and so, the drinking and spending ensue. Eventually they end up with nothing but 30 brilliant minutes on E’s True Hollywood Story.

For those of you who don’t know what an SMS aggregator is, here’s the 10-second version: They provide connectivity with cell phone carriers. They offer a gateway to send and receive messages and content like ringtones. They also offer a premium SMS gateway so marketers can make money with text messaging. Aggregators charge a per-message fee if the traffic is non-premium, or take a share of your content revenue if you are using premium SMS.  Aggregators, like lottery winners, were in the right place at the right time.

They weren’t sophisticated web companies who knew how to build a scalable technology company. They basically had two development fronts: Hardware/software at the carriers and software with their customers. In order to make their services work, they needed to have what’s called a “bind” at the carrier. The more binds, the more throughput, or faster speeds. Nowadays a bind with a top tier carrier costs $2.5 million per month. Of course, it wasn’t always this expensive. Prices increased in order to get rid of the riff-raff. Carriers don’t have the bandwidth to deal with thousands upon thousands of companies trying to get SMS connectivity. Instead they rely on aggregators to provide this service. I wouldn’t have such a problem with this model if the majority of aggregators provided a good clean service. But they don’t.

Here are my three biggest issues with aggregators, and what you can do to ensure you don’t end up on True Hollywood Story:

  1. Support: It would be nice if all you do is integrate and never speak to someone again, but you need to have an ongoing dialogue. The biggest issue with aggregators is time. They don’t have enough of it and everyone needs something from them. Typically their support turnaround times are below par, and getting your short codes approved is even worse. There are two things you need from your aggregators (get their promises in writing). Make sure they give you a pretty solid timeframe for getting your code and services approved, and have them give you references of clients who can vouch for this. Also, customer service needs to be one of your main focuses, so get them to give you an SLA that outlines the support escalation process and guaranteed response times.
  2. Billing: Aggregators are Excel masters! It’s sad but true. If you do any premium SMS, you’re most likely going to get an Excel file detailing how much money you have made from your various services. Is a Web service too much to ask for? I know, I know, they have to deal with carriers, but damn it, an aggregator’s job is to make this very expensive and resource-intensive process is easy. Why can’t they take all of the data the carriers give to them, put it into a database, then create an API and make it available as an HTTP post or Web service? The way around this issue is to see if you can get your aggregator to send you the data in a CSV file. Have that file automatically posted to an FTP site and then parse the file, pull out the data, and place it in your database so you can do with the information as you please.
  3. Reporting: Lack of reporting, and reporting on the reporting, has always been an issue. The top-tier aggregators now have Web services for reporting information like bad phone numbers and delivery confirmations. But believe it or not, there are still those that like to FTP this file. It doesn’t help that there isn’t much data to begin with. It’s not like email in which you can see opens, click-throughs, and detailed bounce-back data. You might want to check out an article I wrote about this on

The fact is, most of these guys hit the lottery and got in before it was too late, or before carriers started charging $2.5 million per month. Imagine if you only supported AT&T, Verizon, Sprint and T-mobile. That would be $10 million a month or $120 million a year. What we have witnessed in this space over the last few years is consolidation. This is due to the fact that a lot of the larger companies are buying up these lucky aggregators who have the direct carrier connections. A few notables are Motricity’s purchase of Gold Pocket, VeriSign’s purchase of MQube, Wireless Services Corporation purchase of Mobile Media North America and Qpass’s acquisition of Simple Wire. There has even been talk that the largest aggregator, Mblox, is up for sale.

In their defense, I will say that it is not easy dealing with carriers. At the end of the day, they can only provide what the carriers give them. That’s a whole other ball of wax. Check out this episode of my video series “Outside the Inbox,” in which I rant about carriers and what their future holds.

I really hope these new acquirers start focusing more on the customer, their processes, reporting, and features. It’s totally up to them how good or bad this service can be.  After all, they are the only ones who can make a difference, unless you have an extra hundred mil you want to spend this year.

Jared Reitzin is the CEO of mobileStorm Inc. a provider of mobile marketing products and services.