A new breed of fintech startups with an innovative business model are attempting to take advantage of customer’s unused, ‘limitless’ text message contracts, leveraging them as an integral part of blockchain ventures, allowing users to essentially resell messages that would be wasted.
From one perspective, such services make use of messages that would go otherwise unused to make some money for users, while providing useful services for other businesses and consumers.
From another, this is an unscrupulous and invasive manipulation of an individual’s mobile contract, damaging to MNOs and open to abuse and privacy pitfalls for consumers.
We asked MEF members for their thoughts on the business models and their effects on the A2P SMS market.
Renata Stefic, Director of Telecom Solutions, Infobip
At its core, this new and still exotic business model for enterprise messaging is little more than a new version of a SIM farm, where an account destined for personal consumption is being used for corporate purposes.
SIM farms are considered fraudulent and subject to national and international regulations and trade association guidelines, and using blockchain to resell unused SMS plans will doubtless be viewed in the same light.
Unlike SIM farms, where a SIM card is purchased and used only for this nefarious purpose, reselling your private SMS plan could land subscribers personally in trouble, as telecoms regulators, mobile operators and consumers’ rights advocated descend on them.
Additionally, as A2P SMS grows as a revenue generator for mobile operators, SMS firewalls are becoming more important in detecting and monetising traffic, including coming from SIM farms. Should this novel use of blockchain technology become more widespread, it will only lead to SMS firewall vendors investing efforts in developing new algorithms to detect and block this type of traffic.
Piet Streicher, Managing Director, BulkSMS.com
I foresee a number of problems, for both the subscribers as well as the A2P industry as a whole, which could potentially arise from these blockchain ventures.
• A subscriber that downloads a blockchain app, like SMSchain for example, would in theory open themselves up to a number of risks:
• The security and privacy of their own SMS messages will be compromised. The downloaded app has access to ALL their incoming messages, including sensitive messages like OTPs from banks.
• Phones receiving spam A2P SMS messages could block the originating MSISDNs, resulting in the subscriber’s MSISDN being blocked without their knowledge.
• MNOs could act against subscribers that allow this practice as these subscribers are not adhering to their contractual agreement. Many of the unlimited free text message contracts stipulate that these texts may not be used for business messaging.
• Illegal messages would be traced back to the subscriber from which the message originated, and not the actual sender of the message, opening the industry up to a flurry of fraudulent messaging.
• The sender could potentially send messages to Premium Rated Subscription Services via the app without the subscriber’s knowledge, resulting in the subscriber incurring unexpected costs.
• From an industry point of view, the credibility of A2P messaging relies largely on the traceability back to the sender, as well as efficient and effective measures that are in place to deal with unwanted or fraudulent messages.
For A2P SMS messaging to remain viable, all role players in the value chain must receive a fair remuneration. Practices that bypass or exploit key entities, such as MNOs, will not be sustainable. Unfortunately, these type of practices are inadvertently created by MNOs that offer SIM cards with unlimited SMS packages, which are then open to exploitation.
That being said, these blockchain ventures could also have a positive impact on the A2P industry, should the practice ultimately result in MNOs discontinuing unlimited SMS packages.
Robert Magembe, CEO, interVAS Ltd
Anything that helps people generate income is welcomed if it doesn’t contravene on laws and policies already in place. I believe this can be a welcomed service universally where people can make money off the “cheapest SMS bundle” from an MNO that they hardly use.
The way I see it in this case, is that the MNOs have made their money already or are going to make their money when their customer buys or pays for their SMS bundle. If anything, they could see an increase in purchases especially where their customers are making a decent margin.
The added security of blockchain technology, not only keeps the SMS re-seller safe, it keeps a trusted record of all transactions which I am sure will be a welcome addition to all involved in these transactions.
So there are some positive elements of this model but I feel a little more thought needs to be put in on how to best involve all parties in the chain so revenues are shared – this will help keep the peace and grow the market. It’s good to see SMS being “stretched”, “re-invented” and finding its way into blockchain technology!
Kristina Ristovska-Vidakovic, Product Manager, Cm.com
Taking advantage of subscribers’ SMS bundles to send bulk text messages is not a new concept in the industry.
From a commercial aspect, the benefit would be a drop in market prices of SMS volumes. Enterprises would begin to shift from using official direct connections to these cheaper dynamic pools of subscribers. However, if this shift occurs, revenues will start to drop and negatively affect the ROI’s (e.g. filtering solutions) of both aggregators and MNO’s.
This begs the question if this kind of practice conforms with the new General Data Protection Regulation (GDPR). Data would be stored on various user’s handsets before it reaches the recipient, which would not be secure.
Furthermore, a sophisticated filtering system is a necessity to block unsolicited content such as spam and phishing messages. With current solutions, this is covered on the side of an MNO or on an SMS aggregator.
This business model is illegal. Based on the terms and conditions that are a part of mobile phone subscriptions, subscribers are not allowed to resell their SMS bundles. Subscribers will end up getting admonished by their providers. Such an app would inevitably get banned from app stores.
This concept is a live SIM Farm. And as quickly as SIM farms appear on the market they are also blocked.
Excellent blog on this topical opportunity. I do share the concerns of Renata and Piet clearly set out entirely on the legal aspects. Whilst Kristina correctly points to a commercial benefit of the prices for bulk sms reducing, i would be concerned that the MNOs might consider increasing their sms bundle pricing for consumers, given that pricing is no doubt based upon careful calculations/estimate as to the volume offered that are unlikely to be used. Danny