Nexmo logoIn a mobile-first world, SMS is proving to be one of the most essential tools for businesses. From its critical role in communicating with customers globally to providing top security, this series produced by Nexmo explores key aspects of SMS that many organizations may be unaware of. See all the posts here.

Imagine you send a text alert to a customer, but your ‘urgent’ alert doesn’t reach the customer until an hour after you send it. That sort of defeats the entire purpose of sending an SMS (which stands for Short Message Service). But it also underscores the importance of choosing the right bulk SMS provider.

If you want to send text messages through a Web service, you’ll need to work with an SMS provider, also known as an aggregator. Not all aggregators are created equal, however. To appreciate the difference between a good SMS aggregator and a not-so-good one, it helps to understand the history of SMS and to learn a thing or two about grey routes, which telcos are cracking down on.

History lesson: a two-decades-old technology

SMS is an old technology that originated in the 80s as a way to send messages to mobile phones that were off the network or otherwise unavailable. A few things to note about SMS: True to its name, SMS lets you send short messages of up to 160 characters. SMS uses a store and forward approach, meaning a network will store a message and then send it once it establishes a link with the mobile. Finally, because SMS uses a signaling channel, it does not interfere with voice calls. You can send or receive a text message even when you are talking on the phone.

When the first SMS was sent in 1992, nobody had any inkling of how popular the technology would one day become. Mainly, texting was simply thought of as a clever way for business people to page one another. Little did they know.

Back in the early days of texting, you could only send texts to a person on the same network as you. So if you were an AT&T subscriber, you could only send texts to another AT&T subscriber. This was known as person-to-person (P2P) SMS. Essentially, P2P means you have a SIM card and you are texting another individual who also has a SIM card.

When text messages finally crossed networks in 1999, the use of SMS exploded. Teenagers and young adults drove the popularity of SMS. They saw an opportunity to cut costs. At that time, text messages were 10x less expensive than mobile calls.

When people started traveling internationally with their phones, they needed a way to send SMS back home. This drove the telcos to set up international roaming networks and adopt SS7 (Signaling System #7) as a means for facilitating global P2P SMS.

Telcos did not — and still don’t — charge each other interconnect fees for sending P2P SMS across networks. This was because when a person sent a message, the other person generally replied, so the fees cancelled each other out.

The birth of the aggregator

But then some savvy entrepreneurs figured out a way to send SMS to huge numbers of mobile phones through a computer. All they needed to do this was a Global Title, which identified them as a network operator and enabled them to send traffic on these SS7 roaming networks. Global Titles were extremely easy to come by.

As a result, new companies claiming to allow businesses to send bulk SMS began cropping up all over. These companies were not telcos. They did not have individuals as customers, and they did not hand out SIM cards. They were called aggregators. Some of the aggregators began to cause trouble for the telcos by sending out huge volumes of SPAM.

Others began using illegal grey routes. Aggregators who use grey routes send messages to recipients in other countries without paying the networks for delivery of those messages. One type of grey route involves using SIM boxes equipped with dozens to hundreds of pre-paid SIM cards to send international messages that look like they are coming from actual human beings. Since P2P connections carry no fee, these grey routes are extremely profitable for the aggregator.

While not illegal, some aggregators also look to maximize profits by using the cheapest routes possible. Least cost routing (LCD) as it’s called, often involves passing messages through multiple aggregators or “hops.” Generally speaking, these routes, though cheap, are often unreliable.

Cracking down on grey routes

Grey routes interfere with legitimate SMS traffic. They also cost telcos millions of dollars in lost revenue every year. As a result, telcos have started aggressively cracking down on these grey routes. Telcos also are increasingly dealing only with aggregators they trust, ones they have a signed contract with or that have as few hops as possible.

The moral of the story? If an aggregator offers you an amazing deal that seems too good to be true, it probably is. Look for legitimate SMS suppliers who have direct relationships with telcos or who employ a one-hop strategy. You may end up paying more, but in the end, you will rest easy knowing your business-critical messages are getting to where they are going.

Dig deeper — Download the Nexmo whitepaper: Increase Security & Prevent Fraud by Overcoming the Top 7 Phone Verification Challenges.

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