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Moving into a Texting 3.0 World

Tue, 11/22/2011 - 9:51am
Monica Alleven

U.S. wireless carriers are adapting to life in 2.0 times, complete with updating their own guidelines for working with third parties that offer cheaper text and voice services. On second thought, make that 3.0 times.

Last month, CTIA published revised guidelines for inter-carrier messaging. The first version, which started with a meeting of carriers in Las Vegas back in October of 2001, was all about allowing text messages to travel across U.S. carrier networks. Version 2.0 was created to expand inter-carrier messaging by enabling messaging traffic between wireless carriers and non-wireless carriers on SMS-capable devices. Version 3.0, which reflects the latest updates, is all about facilitating the entrance of non-CMRS devices and services that use 10-digit phone numbers to exchange SMS messages with CMRS-based wireless devices.

Just what does that mean? Well, there's another name for those "non-CMRS" service providers: NUVO. Coined by Sybase 365 group director of product management Bill Dudley, NUVO stands for "Network Unaffiliated Virtual Operator." They're similar to MVNOs, but they're not affiliated with a specific carrier. They do, however, need to intersect at some point with commercial operators.

The founders of GOGII, which offers the textPlus app, are happy to be known as a NUVO; it's a continuation of MVNO, and it's a lot easier to explain to people than "CMRS" and "non-CMRS." Commercial mobile radio services can be a mouthful.

One of the main things Version 3.0 of the CTIA guidelines addresses is the spam risks associated with expanded SMS interoperability. Both CTIA and NUVOs say spam is exactly what they both want to avoid. "Our focus has been making sure we keep the SMS environment as relatively free of spam as we can," says David Diggs, CTIA vice president, Wireless Internet Development.

Over at Pinger, if somebody sends X number of messages in a short time, it recognizes that and stops spammers in their tracks. "The carriers don't want bad citizens, that makes sense," says Joe Sipher, co-founder and chief product and marketing officer at Pinger. "We're one of the good citizens. We don't want our users to be harassed or spammed."

Offering the Textfree service, Pinger handles so much SMS traffic, it's now considered the seventh largest carrier of SMS in the U.S. The vast majority of Pinger's users are iPod touch users; the rest are iPhone and Android. Pinger also offers Textfree with Voice.

NUVO VS. NON-NUVO
Every now and again, headlines will question whether text messaging is dead or dying. In reality, what they're usually asking is whether the revenue stream for mobile carriers is dying when it comes to texting.

NUVOs consider their services much friendlier to carriers than something like Apple's iMessage, which is specific to the iOS ecosystem. NUVOs say they're generating more traffic for carriers because they're bringing all kinds of devices into the ecosystem – like iPod touches – that otherwise wouldn't be using SMS, and they're not causing bandwidth-hogging traffic. Every message to a phone number kicks off a tennis match, prompting more messaging. And it doesn't hurt that operators are getting paid by NUVOs through their aggregators.

Many wireless carriers understand immediately that HeyWire is helping to grow their texting revenue by bringing new devices onto their networks, says HeyWire CEO Meredith Flynn-Ripley. The company currently is in discussions with several carriers that are looking to use its platform to help deliver text-based services synchronized across multiple devices with features like auto-response or location-based messaging.

But Flynn-Ripley makes note that not all third-party texting/chart services are alike. "Wireless carriers need to understand how all of us are different," she says. "HeyWire is a service that has a platform built to work with multiple types of businesses – including wireless carriers," and it interoperates on a global scale.

Over at GOGII, CEO Scott Lahman and President Austin Murray give a lot of credit to the carriers and the PSTN that represents the largest social network of all. GOGII set out from Day One to work with carriers rather than around or against them. It invested heavily in carrier-grade infrastructure, for one thing, Lahman says. A significant advantage a traditional carrier has over anyone else is its ownership of the network and its five 9s reliability, he says.

It helps that GOGII has a history in wireless; Lahman and Murray founded entertainment publisher Jamdat Mobile with Zacahary Norman, and they're familiar with some of the inner-workings of operators, their standards and requirements.

OTHER APPS
NUVOs are one thing; what about the Kik, WhatsApp and myriad other apps that don't tie directly into the carrier's network? They use the data channel to deliver cheap or free texting; doesn't that take away from carriers' SMS revenue stream? Turns out there's – wait a minute – not exactly an app, but a strategy for that.

Brian Partridge, vice president at the Yankee Group, says the argument that free text apps will overtake operators' SMS is a hard one to make because that assumes that everyone has access to the app on a smartphone and is willing to switch to some other payment scheme. If the free services become a real threat to operators, they have options, such as lowering or otherwise changing their prices.

So far, iMessage has not made a big dent in Pinger's traffic, and the company certainly has been keeping an eye on it. Sybase's Dudley said it's early, but based on an assessment of network traffic over the two weeks or so after iOS 5 launched, he did not see iMessage having an impact on SMS volume at all.

Even with the myriad free apps, it's going to take a long time for anyone to replicate what SMS can do by operators around the world. Because it is a cheap delivery channel for carriers, Partridge says he expects to see carriers get more creative around pricing models before it becomes a situation where people leave in droves for alternatives. "I'm of the mindset that we're years away from that," he says. "Not everybody has a smartphone, and even when we have smartphones, we're all using different services."

Similarly, Alan Berrey, vice president of market development at SoundBite Communications, argues that text messaging is alive, well and not going anywhere. It remains powerful for a lot of reasons. Limiting a message to 160 characters keeps it to the point and pertinent. People can and do read texts during business meetings – and respond relatively discretely to them. Unlike a service like iMessage, SMS is embedded on pretty much every phone.

ALL FOR ONE, ONE FOR ALL
Messaging and voice, however, are two areas that represent the core competency of operators, so they can't risk letting those go. That's why Partridge applauds AT&T for going after the low-cost international calling market with a VoIP app of its own. Last month, AT&T introduced AT&T Call International, a free mobile VoIP app, and it acknowledged in a press release that the service was developed and operated by 8x8 Inc.

Attitudes definitely have changed at operators, not just AT&T, says Huw Rees, vice president of business development at 8x8. "You can't stop progress. Even they realized that IP communications is the wave of the future," he says. "This is not something they can block. There are people developing these independent apps and customers want to use them for convenience and it makes sense to have something that competes."

Still, while carriers are making moves, are they fast enough when it comes to over the top (OTT) players? David Sliter, vice president and general manager of Communications and Media Solutions at HP, believes carriers don't see the urgency, or at least they're not behaving as if they do. "The world is moving and it's up to the service providers to react or not." AT&T's decision to offer the free VoIP app is a good sign. "They don't need a big bang; they just need to acknowledge this is happening with them or without them and find ways to participate."

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