It is over a decade since the GSMA first recognised that relying on simple bilateral agreements between mobile operators was limiting the development of text messaging. It laid down a framework for SMS hubbing in 2006, paving the way for the modern SMS hub.
Its development since has mirrored that of hubbing in voice services, where IPX has grown to prominence.
The advantages are essentially the same. Hubs remove the requirement for smaller operators to negotiate hundreds of agreements with other operators to achieve worldwide coverage for their roaming customers. It also simplifies the management of interconnection, by only having to connect with one partner who already has the agreements in place with other operators.
“It makes sense to offer a similar platform for messaging, and means that carriers can help protect against losses from fraud and spam too,” says Catherine Haslam, analyst for the Telecoms Wholesale team at consulting firm Ovum.
Targeting MNOs
Major Tier 1 carriers such as Vodafone Carrier Services, Tata Communications and Orange Business Services are spearheading the latest incarnation of SMS hubs. Driven by demand for better and more dependable ways to manage SMS traffic on a worldwide basis, such hubs offer carrier-grade interconnects and aim to tap into the growing volume of application-to-person (A2P) SMS traffic.
With growing demand from banks, health services and delivery firms, A2P SMS is a cheap and effective way to reach out to individuals with a simple text alert. Presently representing just under a quarter of all SMS volumes, A2P plainly has an important future. And while person-to-person (P2P) traffic is predominantly a non-essential social activity, A2P is a mission critical business tool for many and requires appropriate hubbing to match.
“MNOs have wanted to seize control of ingress and egress traffic of all types with their networks,” says John Wick, senior vice president and general manager, mobile transaction services, with hub operator Syniverse. “Several of the large global MNO groups have built A2P and P2P messaging hubs for just this reason. They will be able to also interconnect all of their global properties to drive new revenue and start to close grey routes – the low-quality messaging routes that cost operators millions of dollars in lost revenues each year.”
The development of a new generation of hubs by major carrier names is a belated recognition that SMS deserves investment if it is to remain an income generator in a much changed market: “From observation this seems to have been a rather overlooked subject which is only now becoming a commercial talking point,” wryly observes Leigh Smith, MD of World Telecom Labs.
His company has developed SMS Easy Hub, which enables operators in emerging markets to set up their own SMS hubs. “It may be that the squeeze on margins for both voice and SMS has forced attention onto this area and the value of a rich set of carrier-quality interconnects for SMS delivery is being recognised as an asset,” he adds.
Improvements in the way SMS traffic is handled are certainly long overdue, argues Andrew McGrath, SVP commercial with Vodafone Carrier Services, one of a number of large carrier names that has launched a new hubbing offer to match hot demand: “The emergence and success of SMS was something of an accident rather than a matter of design,” he says. “It’s hugely more popular than was ever envisaged, with some eight trillion messages now sent each year. Our new hub is our way of investing in the product as should have been done at launch, giving SMS the robust platform and QoS which it deserves.”
The new Vodafone Messaging Hub will serve the company’s customers on a worldwide basis: “It’s about controlling the way that messages reach the whole Vodafone footprint,” explains McGrath. “It offers a single route to 446 million Vodafone devices around the globe. It provides a storage and forward mechanism, which checks if the message has been received and resends if not. If it falls, the sender is advised. It’s a lot different from the unreliable pre-hub method.”
The platform will be offered as a service to other MNOs and aggregators, looking to transit SMS traffic and benefit from Vodafone’s experience of uniting its own estate of subsidiaries: “We’re experts in providing firewalls and connections to hubs, with experience of connecting our own 25 operating companies, and now we are extending that expertise to others,” adds McGrath. “We can connect them as if they were part of our group.”
Aggregating and innovating
Global wholesale carrier BICS is also tapping into the need for better SMS management with a new messaging solution. Called EasyConnect SMS, it is aimed at smaller service providers, aggregators, SMS gateways, OTT start-ups, A2P providers and application developers, giving them a way to launch international SMS services at low cost. All aspects of an SMS business can be managed through the cloud, including pricing, invoicing and pre-payment balance monitoring, whilst reaching over 800 destinations on the BICS network.
Bart Vandekerckhove, head of mobile messaging at BICS, says that A2P has driven a lot of the thought behind EastConnect SMS: “In the old P2P days, operators would do deals with each other over roaming arrangements, with no charge being made because the benefits were pretty balanced,” he says. “It’s different with A2P. The bank send you an SMS, you read it – and that’s it. If you wanted to create bilateral agreements for that, you’d need maybe 600 of them and an army to manage it. Operators are moving instead to a hub model where there’s one relationship, one bill, one settlement. You’ve got trouble shooting and tech support too.”
A more granular and complex mobile operator landscape, says Vandekerckhove, is also making hubs the logical way forward: “A market like, say, France is fragmented with lots of operators and MVNOs,” he says. “With a hub those MVNOs can connect to any other operator in France and elsewhere. The old model has moved on.”
It’s a model that embraces a lot more than the mobile operator community. Orange’s SMS Global eXchange is a recognition that service providers of many hues need a globe-straddling solution that solves the needs of a range of potential customers.
“For MNOs, they connect to us and make sure the SMS arrives cleanly and fight fraud at the same time,” says Frederic Dufal, marketing director for international carriers with Orange. “For aggregators, we take them into places where they don’t already go, like Africa and Myanmar. They get the routes, and the assurance of high quality. Both types of customer get the benefits they need. It’s good value for OTTs too, allowing them to extend beyond their closed group.”
The universality of SMS
Thought leadership in the SMS market is not just the preserve of the Tier 1 carrier clique. Stefan Kuehne is director of carrier management at messaging operator tyntec, a developer of proprietary, operator-level infrastructure that enables SMS to be integrated with other services: “The starting point for the carriers to rethink their SMS strategy came when the first apps moved their SMS traffic to app-based data traffic,” he believes.
“They needed to consider both the rising importance of A2P traffic and the centralisation of SMS infrastructure. To address the changing landscape and the high operational costs of their legacy SMS infrastructure, they looked to develop SMS hubs with a dual purpose. Global SMS hubs can handle a carrier’s own SMS requirements as well as open their access to traffic from aggregators.”
But when it comes to finding new way to monetise the SMS opportunity, like aspirant operator should consider a partnership with somebody like tyntec, believes Kuehne: “This model starts to make sense as it ensures massive, legitimate SMS traffic to the hub,” he adds. “If partnership is the best route forward, carriers should look for a partner who is fully embedded into carrier ecosystem, in other words GSMA and ITU affiliated, and understands the processes they need to follow. To effectively support an A2P growth strategy, partners must handle sufficient traffic and have access to A2P messaging or content. In addition, both carrier and partner should have a compatible partnership approach, ensuring they build a mutually-beneficial, sustainable relationship.”
The new generation of hubs being created by carriers can also be seen as a reflection of their aspirations to be a truly global brand: “Global hubs are a key part in ensuring quality and user experience, in particular where used for roaming,” says Larry Deignan, head of product management with mobile platform vendor Openmind Networks. “Global hubs play a key role in achieving global ubiquity of such services by providing global connectivity to reach mobile operators globally. Global hubs improve quality and security through delivery and user experience reporting. Global hubs will deliver messaging volumes to their customer base via the most direct, cost effective routes with the greatest level of transparency of confirmed delivery.”
The benefits of operators developing their own global hubs are, he says, manifold: “It can lead to cost savings, because the global hub becomes an internal cost centre, versus payment to the commercial intercarrier market. The global hub will also achieve better rates in the commercial intercarrier market. The hub improves efficiency, representing a single point of contact for both the intercarrier market and its own mobile operators.”
This universality is arguably SMS’s major strength, and that factor that accounts for its success and endurance years after market watchers started speculating on its demise. People appreciate Viber and WhatsApp, but they can never provide an exactly equivalent experience to SMS and so are unlikely to fully supplant it: “SMS is ubiquitous, unlike IM,” says Ovum’s Haslam. “It’s not pretty, but it’s understood by everybody and it’s not going to disappear overnight.”
