To maintain SMS growth, operators will need to continue adding different messaging services and expand the realm of senders and receivers to other clients, such as PCs and PDAs. The industry has a long way to go, but the providers have passed the significant hurdle of defining a means to enable intercarrier messaging.
Unable to follow Europe's intercarrier example and unwilling to attempt Canada's option (see "Canadian Quintet Eases Into National SMS Messaging"), the U.S. operators chose to outsource their carrier-to-carrier SMS requirements.
"Operators realized that it made more sense to have peering between the carriers through an independent third party," says Mark Kelley, CTO at Leap Wireless. Using this model, operators wouldn't have to face the headache of maintaining a nationwide MIN (Mobile Identifier Number) directory-or supporting interoperability between diverse wireless network technologies, SMS protocols or SMSC (SMS center) interfaces.
Seizing the Market
After a year of jockeying for inside positions, the SMS market has narrowed to two major players. Newcomer InphoMatch and the established IN/SS7 service bureau Illuminet, aided by application developer MobileSpring, now dominate the SMS intercarrier market. InphoMatch has snagged AT&T Wireless, Verizon and VoiceStream as customers, and Illuminet has signed Sprint PCS and Cingular.
When the competitors are asked to compare their own services to their rival's, they voice the standard contrasts between nimble, quick-to-respond start-up and reliable, proven, established player.
MobileSpring's Paul Hanna, vice president of marketing and product management, emphasizes the importance of Illuminet's tested hosting facility and his own company's software development strengths. "InphoMatch has an inferior hosting strategy and is spending lots of time bringing its hosting solution up to carrier-grade standards. Their repurposed solution was created for an overseas market, unlike our product, which was created from the ground up to meet the demands of U.S. carriers."
InphoMatch tries to paint Illuminet's services as being so diversified that it can't focus on the potential of SMS or respond to its demands quickly. "Unlike Illuminet, we are exclusively concentrating on the SMS environment. We deal with everything-the hosting and the applications," says Colin Matthews, president and CEO at InphoMatch. "We want to help vendors and carriers use the SMS transport layer to maximize their revenue potential. And we're fast. We've been successful over the last 18 months because we could turn on the service so quickly."
Both bureaus offer similar SMS services. They take on the burden of translating the different wireless technologies, the multiple SMS protocols and the various SMSC interfaces. Since the United States doesn't have the inherent interoperability benefits of a single wireless standard, the service bureaus translate the messages arriving from GSM, TDMA, CDMA and iDEN, and transfer them to the recipient based on the criteria of the terminating network's technology. The bureaus also accept the different SMS protocols, which include SMPP (Short Message Peer to Peer), SNPP (Standard Network Paging Protocol), UCP (Universal Computer Protocol), SMTP (Simple Mail Transfer Protocol), CIMD (Computer Interface to Message Distribution), HTTP (Hypertext Transfer Protocol) and WCTP (Wireless Communication Transfer Protocol). And lastly, the service bureaus manage the different SMSC vendors' interfaces.
"We work with carriers to define message protocols, customer contact information, network latency and uptime requirements, and the specific technical interfaces for delivering and receiving messages," says Paul Florack, vice president of network services at Illuminet.
"We provide routing, translating and reformatting for air interfaces and protocols," says MobileSpring's Hanna. "We create the interface and routing mechanism across the different technologies and the different SMSC protocols."
To set up the intercarrier service, a mobile operator must have an IP connection to the service bureau's network, configure its SMSC routing, and choose format and transfer methods for billing records. The connection can be through TCP/IP over a T1 line, frame relay, leased line or a VPN over TCP/IP.
The service bureaus' responsibilities begin when the mobile operator's SMSC doesn't recognize a recipient's MIN. "SMSCs can't route a message to a recipient that isn't in its directory," says Leap's Kelley. "The SMSC has a range of numbers, and if the number is not within the directory, the message has to go somewhere else. Unlike the voice architecture, SMS doesn't have the complicated tandem switch hierarchy that would recognize all MINs. They pass it to the intercarrier gateway, which acts similar to a tandem switch."
Within the mobile operator's network, a local SMSC maintains a list of wireless subscribers' MINs. When the SMSC encounters an unfamiliar MIN, it passes the message to the service bureau. The service bureau maintains a directory of all subscriber MINs, which is updated by the carriers. The directory contains customer profiles, including the MIN, the mobile operator and the operator's wireless technology. The directory locates the MIN, and the message is passed to the intended recipient.
"We get everything," says InphoMatch's Matthews. "We handle wrong numbers, numbers missing area codes, all the possible errors. We have created default solutions that will fix the errors."
Another key bureau responsibility is to manage the interfaces among the different SMSC providers. SchlumbergerSema, Comverse, Logica, CMG and other providers encrypt the messages differently. SMPP has become the predominant protocol among the SMSC makers, but the service bureaus must maintain all active protocols.
The operators' costs for intercarrier SMS include a set-up fee and a monthly fee based on the number of messages sent through the service bureau's gateway.
"We charge on a revenue-sharing basis, which was highly appealing to our customers," says Matthews. "We get a fraction of a penny, and we don't require operators to spend millions to upgrade their infrastructure."
Meanwhile, for subscribers, mobile operators are bundling 100 sent messages for $4.99 or charging 10 cents to send and 2 cents to receive. Most SMS players don't expect that model to change dramatically anytime soon.
"Carriers want to keep the implementation very simple so they don't have to make substantive changes to their billing systems," says Gerry Christensen, director of business development at Illuminet. "In the future, we may see tweaks so they can offer differential billing, such as charging incrementally more to send messages to carriers outside the United States."
As SMS evolves into MMS (Multimedia Messaging Services) and content delivery, operators may have to consider billing system upgrades. "SMS as a bearer for content is a tremendous opportunity for billing providers to develop new levels of billing functionality," says Matthews. "Most operators have stayed away from the billing companies because it costs them an arm and a leg just to get a consultant to show up at the door. These companies will have to become much more flexible, or companies such as ourselves will provide those services."
Roaming Restrictions
For today's market, Tier 1 and Tier 2 operators have agreed not to charge each other for traffic terminating on their networks-but they haven't ruled out the possibility of charging in the future. For now, though, they are assuming that since the messages are two-way, each network will receive equal amounts.
"When two people are exchanging messages, you get an even number of messages being sent and received," says Matthews. "It makes for a bill-and-keep model and doesn't need settlement. This model is the simplest and easiest to get up and running."
The agreements break down, though, when subscribers roam. Smaller companies, affiliates with the Tier 1 providers, have not contracted to pass on SMS traffic. The affiliates have settlement equipment for voice, but they have nothing in place for data.
Recognizing this pent-up demand, InphoMatch, Coherent Networks and others have designed products that track originating and terminating messages so that the Tier 1 providers can pay their affiliates for the cost of relaying the SMS messages.
Illuminet also sees a future for itself in the settlement space. Christensen says changing the bill-and-keep model and adding settlement services would not be difficult.
"We could easily add this service," Christensen says. "We can capture information off the signaling network. We already capture, rate and feed MDRs [mobile detail records] into our clearing and settlement system. We can provide MDRs in industry standard formats for the operator's billing system, providing information about who is sending messages to whom, and create settlement so that they can pay each based on the back-and-forth activity."
The SMS companies often point to Cibernet's settlement model for voice as a possible solution for data settlement, if necessary. The industry is working toward a data clearinghouse, but the market is too competitive to support that model. For now, the larger operators seem satisfied with their business model.
A billing company's system is another possible solution for settlement. "Billing companies, SMSC providers or service bureaus could provide settlement," says Chuck Stormon, CTO at Coherent Networks. "The problem is that we don't need more players to offer solutions. We need the carriers to pick something. There are three ways to skin that cat, and each is viable with no real down side."
Reliable Service Delivery
Subscribers have raised some concerns about lost messages. For SMS' target market-teenagers and young adults-100 percent reliability is not a necessity. These subscribers seem willing to equate their SMS experiences with email. Most of the time the message will reach its destination, but sometimes the correspondence just gets lost in the Internet ether.
The service bureaus claim that rather than lost messages, subscribers are really entering incorrect MINs. "We're seeing tens of thousands of errors," says MobileSpring's Hanna. Subscribers may mistype a digit or put in a number for a landline or a mobile phone that doesn't support SMS. A missing area code also halts a message's transfer.
Messages may never be delivered for other reasons, too. When subscribers roam out of their service area, messages are dropped. When the message is transferred from the provider's network through the Internet to the service bureau's network, the message could be lost in transition. The message may also be delayed as it waits in a queue to be delivered. Some of these delayed messages are dropped if the bottleneck lasts too long.
"Most dropped messages are due to overloads," says Leap's Kelley. "When the servers are too heavily used, messages are not retrievable or may take an hour to be delivered. We generally overprovision the network to ensure performance."
The current SMS market may not require delivery confirmations, but other markets may demand more reliability. If SMS is destined for businesses or commercial transactions, customers will have to be assured that critical messages are delivered.
Some m-commerce transactions are already using SMS to confirm credit card numbers or for codes to authorize payments. These messages require return receipts from the receiver. SMS' most used protocol, SMPP, does allow receipts for deliveries in its 3.3 and 3.4 version, and MobileSpring has added the capability of delivery confirmation when the customer requests it.
Adding IM to the Mix
AT&T Wireless offers customers AOL Instant Messenger, one of the first offerings of instant messaging over a mobile handset. Yahoo and Microsoft are also partnering with mobile providers for similar services, but there has been some push back to the branded offerings. Rather than limiting an IM buddy list to a community, mobile operators may have the opportunity to let subscribers define their own directory of contacts.
"IM is PC-centric now, says McPhail Hunt, senior product marketing manager for mobile IM messaging at OpenWave. "The AOLs, MSNs and Yahoos look at it with the community at the core. Our approach is to let the end user be the core."
Steve Owen, solutions architect at Logica, also recognizes a user-centric impact. "AOL uses IM to get customers and keep them," he says. "Wireless carriers would rather own their own platforms than broker deals. Carriers would host the platform and interconnect with IM clients through SIP. This model lets carriers own their subscribers and lets subscribers maintain a single contact list."
The Wireless Village (www.wireless-village.org), an initiative started by Ericsson, Motorola and Nokia, is working to create standards that will lead to IM over mobile handsets, PCs and PDAs. The key differential between IM and SMS is the ability to announce presence and availability. IM subscribers will be able to tell who on their contact list is available, whether they are using a PC, PDA or mobile phone, and potentially where the contact is located.
Presence, according to many in the industry, is the key for successful messaging. The theory is that knowing a friend is online will greatly increase the number of messages sent and delivered. A few in the messaging community, though, dismiss this belief.
"Presence is completely bogus in a mobile environment," says InphoMatch's Matthews. "The phone is always on or charging, so the recipient is almost always available. It's not like the PC environment."
OpenWave's Hunt regards this attitude as short-sighted. "To a certain degree this is true, but frankly that's a myopic way to look at presence, and it only considers network presence, extracting from the network whether the phone is on or off," he says. "Application presence is more valuable, where the application can indicate your presence and what kind of device you're on and what you're doing at that time-talking on the phone or on the PC. Subscribers will demand application presence."
Equal Messaging for PDAs
Many of the PDAs, Handspring's Treo, RIM's BlackBerry and other handsets already offer SMS messaging if they are voice-enabled. The PDA developers are putting a lot of R&D into making their devices more function-rich, but they are playing catch-up with the mobile handset manufacturers. Mobile handsets and PCs make up such a large percentage of the market that many of the messaging developers are waiting for the PDAs to gain market share before they begin creating services.
"From a practical perspective, we're focusing on cellular handsets," says Illuminet's Florack. "We're not ignoring PDAs from lack of interest or desire. It's just that fewer people have those devices."
InphoMatch's Matthews is in total agreement. "BlackBerrys represent less than one-half of 1 percent of the cellular handset market. These devices will be niche players in the business world, but messaging's primary growth will be from the average consumer."
Messaging Marches On
PDAs, new mobile handsets, PCs and IM will all help drive messaging traffic. The interoperability problems have not been solved, but the intercarrier messaging services are forcing operators to make decisions. Many are seeing SMS as the first successful wireless service, which will lead to many others.
"SMS is the bridge that will teach subscribers that they can use the handset for something besides making telephone calls," says Matthews. "MMS, m-commerce, all new services will benefit from SMS, because SMS is leading to a time when the phone becomes an extension of the subscriber."
| Canadian Quintet Eases Into National SMS Messaging Cooperation is slightly easier when only four operators sit at the bargaining table. When the CEOs of Bell Mobility, Telus Mobility, Microcell Connexions and Rogers AT&T Wireless met in March 2001, they quickly agreed that they wanted to offer intercarrier messaging. By May, the companies had finalized a charter document, and by the beginning of this year, the operators were ready to launch the new service. As in the United States, Canadian operators' networks use different wireless technologies. Bell Mobility's network is based on CDMA, Telus Mobility has iDEN and CDMA, Microcell uses GSM and GPRS, and Rogers AT&T transfers traffic over GSM, GPRS and TDMA networks. Rather than outsourcing their interconnection needs to a service bureau, the Canadian operators chose a single SMSC provider, CMG. CMG has a single, centrally located inter-SMSC router (ISR) that links to all the providers' SMSCs over T1 lines. The ISR translates the different technologies and various SMSC protocols, and routes the messages based on its national MIN directory. Each Canadian operator uses its own SMSC; for example, Bell Canada had deployed SchlumbergerSema. The carriers did run into some minor interoperability issues among the various SMSCs, says Jag Grewal, associate director at Bell Mobility. "We had to make adjustments to the SMSCs' character sets," he says. "Some SMSCs support 140 characters. Others support up to160 characters. We all had to agree on a maximum number of characters for each message, or if the characters exceeded the limit to let the message be cut off." The biggest challenge, though, was not technical, but proprietary: getting the operators to share subscriber information. "As we created our RFP and were trying to come up with basic traffic information, no one wanted to share the customer numbers and forecasts for future traffic," says Grewal. "Providing that information was the main challenge during the entire process." Canadian, U.S. and European operators are hungry to extend SMS globally. They expect their messaging traffic to soar with global interconnections. Now that U.S. operators are breaking down national barriers, worldwide connections could be next. Illuminet is already working on its peering capabilities with CMG so that its U.S. carrier customers can interoperate with Canada. SMSC provider Logica has deployed SS7 hubs around the world to connect operators. The operator's SMSC would be configured to pass international messages to Logica's Global Interconnect Network, which would analyze the digits and determine the final destination. "We have a series of nodes throughout the network that use best-cost and performance-routing algorithms to send the message to the destination carrier's network," says Steve Owen, solutions architect at Logica. "These algorithms route the message efficiently, eliminating 20-minute lag times." To prove its routing capabilities, Logica showcased its technology at the 3GSM show in Cannes, France, in February. The company sent an SMS message around the world, through six continents, in 197 seconds. |
