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 …

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2162 23

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 mobileStorm.com

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.

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23 comments

  1.    Reply

    Jared
    Do you provide tier 1 international SMS to South America, or can you recommend a South American Aggragator. I understand delivering locally avoids customer roaming charges.
    Brandon

  2.    Reply

    Does anyone have a list of the major aggregators, or a link to a website that has additional info/pricing?

  3.    Reply

    Looking to buy a aggregator (sms gateway) if you know of one for sale. My growing business will bring a fair amount of work with it.

    Thanks

  4.    Reply

    Tum sab pagal ho

    Thankyou

  5.    Reply

    humko samajh me hi nahi aaya

    Thankyou

  6.    Reply

    email me your contact info Rikard. It’s jared[a]mobilestorm.com

  7.    Reply

    No but I will have someone reach out to you and make sure they give you a good deal.

  8.    Reply

    Thanks.

    Do you know about what payout I can get on up to 1 mill premium sms/month at 25 cent and 25 pence?

    Tnx
    Rikard

  9.    Reply

    Singlepoint.com is a great US based aggreagtor for premium SMS, but if you want someone to be in Europe and US mblox.com is going to be your best bet.

  10.    Reply

    Hi!
    Can you recommend any aggregator that is good and reliable.
    I will problebly send up to 1 mill premium sms/month at 25 cent and 25 pence.
    Would prefer someone who can support my business both in Europe and US.

    Please let me know a fair rev on 25 cent (included everything)

    Thanks
    Rikard

  11.    Reply

    Hi all,

    I work at a mobile company in Brazil called “Oi” (www.oi.com.br). Have you ever heard about? It is the biggest telecommunication company in Brazil (fixed, mobile, broadband and now IPTV).

    I completely agree with Daniel about the importance of an aggregator in the VAS business. Since the VAS market is not bigger (yet) than voice revenues, It is really hard to have huge investment in people and hardware. So the aggregators are welcome… they help us to attend all VAS partners.

    Although I understand people that dont agree, they are really important to develop the VAS market.

    rgds,
    Rod.

  12.    Reply

    Thanks Iphone_Cases. Unfortunately, it has been many years of making mistakes.

  13.    Reply

    thats a nice post with very good information..i got to knew this after reading this

  14.    Reply

    You couldn’t! BTW, probably good decision, Sprint is not doing too well right now. They have a good CEO, I wonder if he can turn it around or get it sold for a good amount. The Nextel deal was the killer, nobody likes push-to-talk anymore, it’s annoying, why not just send a text?

  15.    Reply

    Jared, I spent around 7 years with Sprint on the CDMA side but have moved out of telephony and back into more general systems integration. It was interesting for a while but I’m flexible and they were willing to pay me to leave durings layoffs, so how could I turn that down?

  16.    Reply

    Ryan, building out a bank of GSM modems is not a scalable and reliable solution. I could be wrong, but I believe you get around 3 messages a second, which is 10,800 messages per hour. Even with a bank of 5, you are still only reaching 60,000 + numbers. It depends on what you want to build but if you are doing a lot of traffic or you want to build a real business around traffic, this won’t cut it. Plus you have to worry about things like server load and clustering. Also with GSM modems you have to use a long code or full phone number. For things like texting in, this is more tedious for the subscriber. All in all it is an expensive and clunky proposition. The alternative is connecting to an API that is going through a real gateway giving you fast speeds and a service that has guaranteed uptime. You don’t have to spend a lot of money if you work with a micro aggregator.

  17.    Reply

    Daniel, seems like you work for a carrier huh? I can only image having to work with them from your point of view. It’s a tough business to be in either way you look at it but SMS is exploading right now and everyone wants a peice.

  18.    Reply

    What you’re proposing is feasible, but you may consider implementing geographical diversity in your design. I’m hoping you’ll run more than one physical setup like this, because it’s possible you’ll over run the tower you’ll attach to, unless you implement logic to trickle the messages out over time. There was a bit of research done about it in 2005, you can read more about here: http://www.smsanalysis.org/ Basically, what this boils down to is that text messaging is, in some ways, not built upon a strong OSI model and so bursts of text messaging can impede actual attempts to make phone calls. That doesn’t sound like a huge deal, but the hardware involved knows that it should do it’s best to allow phone calls and so it will panic and reset itself if it thinks customers can’t make calls. This is really due to the fact that phones are a regulated industry and phone systems have an obligation to allow people to dial 911 or whatever it’s equivalent is in other nations.

    Anyhow, I think I’m bordering on hijacking this article, so I’ll shut up now. Good luck on your project/business.

  19.    Reply

    Hi Daniel,

    Sorry, I meant GSM modem. Too many acronyms.

    My plan is to build my own bank of GSM modems and send SMS messages direct to my customers using business mobile accounts with various wireless carriers that support GSM. If I am processing 1,000,000 messages per month, the cost of supporting that would be a fraction of the cost of an aggregator (assuming $0.03/message sent).

    Thanks for the help in flushing this out.

    Ryan

  20.    Reply

    Well, I’m not sure what you mean by a GPS modem, but the advantage of direct connectivity is that the carrier or aggregator will work with you to make sure you’re behaving in a way the carrier considers to be good. And by working with them, you’re assured that they will contact you if they’re having problems as opposed to just blocking all the traffic you’re trying to send. Also, if you claim that you sent a message to a customer, but the customer claims they never received the message, you will probably have an option to examine the return code from the handset to know if the message was ever received.

    I’m guessing that you’re considering sending messages to networks via their SMTP interface or through their anonymous interface at their websites. Most networks will locate traffic that is being sent in a large scale via these interfaces and will eventually disable them, so if you’re trying to run a business, it’s easier to just follow the rules, share a bit in the profits and know that most of your messages will make it to the end users. Or you can try to run it directly, but basically you’ll never really have any assurance that any messages were sent or blocked.

  21.    Reply

    Maybe I am naive, but what is the value of having direct connectivity to the carrier? A bank of gps modems can surely handle the load.

  22.    Reply

    Jared,

    If it makes you feel any better, it is just as frustrating for the carriers to work with aggregators. They’d incorrectly request provisioning and take a week to get back to you with the corrections. or frequently they would mistakenly tell you to end a campaign at a pre-determined date only to freak out when suddenly the campaign would stop working at that date.

    But they weren’t without value. When even large companies would approach and request a direct connection to the network, they would repeat the same errors again and again. They wouldn’t understand how to set up the packets correctly or they wouldn’t trust us when we explained that, No, your burst of 5k messages did not overwhelm our system as we’ve been supporting huge aggregators for years now.

    Finally, thanks for sharing some of the numbers that they’re being charged. It’s so hard sometimes to analyze the market without real figures.

    Dan

  23.    Reply

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