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Beware of “Trojan” Gifts from Aggregators this Holiday Season

by Cathal Fitzpatrick | 14th December 2017

 

This is the time of year when it is traditional to give and receive gifts and presents. It is normally polite to welcome all the presents we are given, but the question is are there times when we should be suspicious of a gift that we are offered? The people of Troy happily accepted the wooden horse presented to them by the Greeks, but that did not turn out to be the best long-term option for them!

One gift that mobile operators need to be highly suspicious of is the offer of a free SMS Firewall from an SMS Aggregator. This is a strategy many Aggregators are now employing to build a monopoly position for themselves in different markets. The offer of a free SMS Firewall is attractive to mobile operators – it frees them from the expense of installing and running a new system. But the offer has a sting in the tail – in return for the free Firewall, the operator needs to hand over control of their A2P SMS business to the Aggregator. The question is – who stands to benefit most from this gift? Is it in the best long term interest of the Aggregator or the Operator?

We all know that A2P is the future of mobile messaging revenues for operators – A2P is dominated by SMS today, but will soon expand into RCS, push notifications and OTT channels. SMS Aggregators are competing with each other to win business from enterprises and to take control of delivery routes into mobile networks. Aggregators have shown in the past they will happily use Grey Routes and other techniques to deprive mobile operators from their rightful share of this business. Only when mobile operators use SMS Firewalls correctly to block Grey Routes are Aggregators forced into paying the appropriate charges.

This is why the offer of a free Firewall from an Aggregator nees to be treated with extreme caution. When an Operator has control of the Firewall, the Operator determines which Aggregators to use and what the appropriate termination fees should be. They can create competition between Aggregators to ensure the best rates are available to Enterprises and that they command a substantial revenue share for themselves. The Operator can also ensure that the Firewall is set up properly to eliminate spam, fraud and other undesirable traffic.

On the other hand, if an Aggregator controls the Firewall their only interest is in shutting other Aggregators out of the market and forcing all Enterprises to connect via their service. They have an effective monopoly in the A2P market, and determine what rate to charge and what they pay to the operator. Issues like spam and fraud that may impact mobile subscribers are irrelevant to them.

At Openmind, we believe that is damaging for operators to accept a free SMS Firewall gift and to appoint a single SMS Aggregator as a monopoly provider. We recommend that Carriers deploy an independent Firewall from a company like Openmind so that they can freely manage all A2P and P2P messages coming into the network. We also work with our customers using products and services that enable direct, managed access from Enterprises and Aggregators to mobile messaging services. In this way, the operator retains control over the A2P market and can drive growth via attractive pricing and developer-friendly APIs and GUIs.

So, be wary of Aggregators that come to you bearing gifts for 2018 and keep the destiny of your A2P business in your own hands!

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