In the midst of the national debate on interconnect charges between cellular operators, Pieter Streicher, MD of BulkSMS.com, feels strongly that South African networks should introduce interconnect charges for SMS, without increasing the current pricing structure for sms messaging.

His reasons are simple: interconnect fees will protect consumers from spam originating from outside their home network, and stimulate healthy competition in the messaging industry.
“Currently, the SA network operators do not charge any interconnect fees for SMS locally and do not charge interconnect fees for SMS originating from many foreign networks,” says Streicher.  “This is historical: in the early days of GSM networks, no-one anticipated how popular SMS would become.  The operators thought that messaging would only be used to notify cellphone users of voicemails.”
However, SMS messaging as a communications tool both for consumers and businesses has exploded in recent years, and its use is only expected to increase.  Streicher says that a lack of a formal interconnect agreement between the operators could spell trouble for the industry and consumers.
One of the risks is that unscrupulous messaging service providers will find loopholes to send messages for free, opening consumers up to spam and even scams.
“For example, all business messaging—known as application-to-person (A2P) messaging—to an individual’s home network could potentially be routed via several foreign networks,” says Streicher.  “This could make it very difficult to trace the original sender and significantly lower the cost to the sender.  This is dangerous because it makes spam and scams economically viable.
“Whenever communication is available at a low cost for commercial purposes, there is a higher risk of abuse as has been seen with email.  Cellphone users are even more vulnerable as it is much easier for scamsters to spam a sequential combination of numbers, rather than a combination of letters for an email address.”
An example of the potential scale of SMS spam is the problems experienced in the UK in 2003.  These were largely solved by introducing SMS interconnect fees between the networks as it forced messaging services to send via official channels.
South Africa’s current lack of interconnect charges for SMS means that a home network would have to deliver spam messages without earning any revenue. In addition, operators would have to carry the financial burden of the complaints they would receive from customers. In extreme cases, with international premium-rate scams, it could pose a serious financial risk for the home network, and these costs could ultimately be passed on to the consumer.
On a local level, operators prevent this practice by not allowing cross network application-to-person messaging.  “While this solves the revenue challenge for operators to some extent, it still leaves loopholes wide open,” says Streicher. Businesses could bypass this by making their messaging appear to be person-to-person messaging by sending from GSM modems. This undermines the industry, as this route is less reliable, and falls outside the normal network contractual requirements for messaging providers.
In addition, messaging providers are at risk due to the networks not allowing cross-network A2P messaging. Messaging providers receiving poor service from one operator, are stuck with that operator, as each network has a monopoly on A2P traffic to its own subscribers.
According to Streicher, “Introducing an appropriate SMS interconnect charge will go far in addressing the issues. It will also allow for healthy competition and innovation in the messaging market.”