Tom Sheahan:
We're going to talk about SMS 101 from a public policy perspective, from a technology perspective, and an anthropology perspective because, we all know, in technology not always the best technology wins or is implemented. 

SMS 101; the first SMS was Merry Christmas back in 1992 on Vodafone and SMS was designed to deliver voicemail notifications on the GSM network. GSM was Group Systems Mobile, right, and it took off because it was SIM-based not device-based so most of the U.S. carriers all sold TDMA, CDMA, Iden devices and GSM took off because it was a SIM. So, if you are a migrant worker in India or Africa I could sell you that SIM for 10 cents and you could buy a used phone and so forth. So GSM took off. 

Another problem that the U.S. had was there’s no differentiator between a landline and a mobile number, right, which caused users to not pass out their cell phone number, right, because you're like ‘hey, I get only 500 minutes for Sprint’ back in the day ‘I'm not giving you my cell phone number and rack up my phone bill’. 

Another thing that was going on during the 2000s and so forth where a lot of these countries like Europe and Asia were selling off their government assets like Telstra and SwissCom and in order for them to track investment they had to have strong telecommunications governing bodies which said ‘hey the dominant government-owned carrier is not going to eat your lunch’ and I do remember France Telecom was charging seven Euros cents per message as an intercarrier fee, (I've been in this space for over 23 years) but but they wanted to track foreign investment. It also affected pricing, so a lot of the world deployed different types of technologies you know from CDMA, TDMA and and even iMode in Japan those never really took off and GSM became the dominant provider and now CDMA and GSM are merged, right, but there was always an intercarrier fee around the globe, right, so Carrier A sends to Carrier B you have to pay me some money, right, and that was standard protocol. 

So, in November 18, 2011 there was a lawsuit against the FCC saying ‘hey carriers, you guys have all this short code traffic regulations and you're charging people to receive text messages or to receive a call or to place a call, to receive a text, to place a text, you can't double dip, no way’, and they won. So the carriers couldn't charge intercarrier fees, right, well, the U.S. carriers wanted a piece of the action. 

This isn't person to person, they want to differentiate it between the person to person versus an application to person, right, so this isn't Susie sending to Janet, this is an application that you guys are writing, that you guys are spending your time developing, and that your customers and your end users are going to require to send SMS, right, well, enter the 10-digit long code or 10 DLC, which is the number of digits in the U.S. phone numbers. Well, they wanted to be smooth sailing but it ended up being more like this, right… so, what's happening in the space is completely disruptive. 

What is 10 DLC, right, and if you guys don't know 10 DLC is and you're not registering your applications bad stuff is going to happen, because your traffic is going to get blocked and the costs are going to go through the roof. So what is it? Well the way they marketed this is, and I'm all for digital regulation, the pros are they promote it as less spam. So if we know who's using these applications, know who these end users are, so, if you've written a veterinary software or you've written any type of software, you need to register with The Campaign Registry. They did it to reduce the number of spam, more transparency, so you know who's sending this through and and they promise higher throughputs, right. 

So the cons are: the registration process is a pain in the butt, so let's say your vet office software, I don't know or dentist office software, or a gym membership software, well you have to register all of your end users and they're so backed up because this is a new. The Campaign Registry is not FCC approved, it is Carrier endorsed, right, (we are promoting um to get the FCC to take this off take this on) but there's long approval process before your customers are vetted and then there's fees and fines in addition to that, where if you're going to send a text message on AT&T you might have been paying a quarter of a cent or a third of a cent that costs are going to triple, this is not including the cost to Signal Wire, it's the cost to the carriers and then and furthermore you might get your messages blocked. 

We had one of our customers, Harvard University, they're pretty credible, they were getting blocked. So if they're going to block Harvard they will block you. Imagine if you've written an application, right? What if your child's school texted you ‘hey Mr Rosen, Mindy's running a high fever we need someone to pick her up as soon as possible’ but you didn't get it and what if you know you're at the office or you're here right now and maybe you've got a home health care provider that just sent you a text, and you didn't get this message because you're here ‘I had car trouble running an hour late can you make sure your mom takes her insulin before you leave for work’, but you didn't get it. 

Now, how to stop this blocking, well one, is the registration requirements and these are changing all the time. This is one of the reasons why I'm working with Cloud Communications Alliance to get some federal intervention. So you have to register all of your end users. What is their legal name? What is their DBA? Let's say it's a dentist office and he's doing the business all under his his social security number, his EIN, his address, etcetera, and then they are verified against the IRS Global database, right, and they’re declined if they don't match, right, so make sure you do this, right. And then they're going to look at your message content, what is the description of the campaign, who are you texting, did you have an opt-in message, right, and a sample of the message itself, um other message details include phone numbers, URLs included in the message, and which provider you're going with, okay? This is, this can be very expensive, right? So, if you've got a thousand customers or 10,000 customers, you're gonna have to pay a one-time fee of four dollars for a brand fee and then a mandatory vetting fee now, and you can be charged multiple times if you didn't get passed, right, and then the ongoing fees are the campaign fee can be you know anywhere from two to ten dollars a month. So if you have a thousand dentist offices well, you could be paying ten thousand dollars a month in campaign fees, and in addition to what you're paying Signal Wire for your message delivery. You're gonna have a carrier surcharge and initially in the next two to three months they're going to double and triple that cost and you might get blocked so this is something you may think ‘hey I've written some code, it worked it's fine, I'm golden. I gotta worry about some other stuff, right?’ I get that, right, because this is not your expertise and you may not have the resources to do this, right, you're not a Google, you're not a Facebook where they have SMS divisions. It adds up, not only from a time perspective but an actual monetary expense. So if you've got 3,000 customers, you know, you could be paying $45,000 for their vetting fees and $12,000 for their branding fee and then the carrier surcharges!

If you have not written telecommunications costings into your application what are you going to do? This could be devastating for a small business, so let's say you run some hair salon software and they send out 500 texts a month, well, and half of them are blocked and then half their appointments don't show up because Betty who goes on Tuesday didn't get the texts and she forgot to go. But, she doesn't know she didn't get the text because she doesn't work for the hair salon and the hair salon person doesn't know that their message was blocked, so all of a sudden the hair salon loses half their revenue. And, then theoretically the FCC chairman wrote to Senator Schatz for fine enforcement in March so, ‘hey, we want to be able to enforce this although this is not FCC’, we're hoping for some broader public policy. But you know, in theory they could get fined up to $10,000 per text message, right. 

This stuff is just kicking off, right, so it started in October 2021 and they said ‘hey, we're doing this’ and then March 2022 they said ‘hey, we're ready so we're gonna kick it off’ and T-Mobile,  which is the worst of the bunch, ‘hey we're going to charge you $50 for a campaign fee’ and then they had a low volume campaigns for two bucks a month, and then they want you to submit us a monthly report for sole proprietor for usage and like how many messages did T-Mobile send and did you send to T-Mobile? Oh, and then September, T-Mobile was getting a lot of heat said oh we're not doing that anymore.

And then the sole proprietor brand fee increased to two dollars, oh wait low campaign fees just switched to a dollar fifty now, you're not supposed to write campaigns, you're just write software to manage this. And then T-Mobile, and this is a brilliant one, ‘we'll charge you 250 dollars if you don't send a text message on their Network every 60 days’, ridiculous, yeah but this is the way it is now. And, carries requiring more information from sole proprietors even existing customers, or they’ll be suspending accounts. In February, they just checked on a $15 vetting fee right and and now in June they're going to start increasing the delivery rates.

So what is next? So you guys, the Developers, right, how do you want to handle this? Well, some of you guys may not have written any telecommunications accounting software into your application, or any error processing, you know, because it (texting) was so cheap it's almost like, you know, back in the 70s when the oil crisis happened, right? I remember sitting in my parents car, right, we drove these huge cars they probably got five miles a gallon, everyone's like ‘hey gas is cheap, who cares.’ All of a sudden, gas shot up and you had to get in lines and people started buying Hondas. I remember going to swim practice one day and I see this girl getting out of a Honda, I'm like ‘what the hell's that?’ But things are going to change so either you eat the cost which some of you might be doing already and factor in the cost of goods sold or you can build their own, right, to ‘hey, I'm going to take this on and manage this cost and appropriate it out.’ So, this end user sent this many messages and this is their cost, this user sent this many messages and so forth or I look for a managed service provider to say ‘hey, this is not my core business I want to write vet software or home healthcare software or school software, so I work with a managed service provider. 

So if anybody has any questions about this? I know I went over a lot, to TCR you know you guys all got anything?

Moderator:
Yeah they thought there would be some questions wouldn't you.

Q:
(not on microphone)

Sheahan:
Pardon, well I'm, all right this kind of gives me hope um there was a new uh regulation that came out it's called um um where if you buy a home health care product or like a home product for your house a device let's say a cyber security system or home uh baby monitoring system they're not and the Biden administration just announced a Trustmark program. This is the end user stuff, I'm hopeful that a broader bill will come out with digital regulation that one takes this over so it's not as arduous and changing. The problem with this is its self-regulation industry self-regulation well that's like asking the oil companies to say, ‘hey do you pollute?” ‘Oh no, we don't’, right?  You know and and that's a problem when you get industry self-regulation so I'm hopeful for a broader context. 

You sound like you're an Australian, um and and I love the Aussies, and I love the Aussies, we we started my company, so we've actually been in text messaging for over 23 years and we started in Australia and the Aussie approach is always they look at Europe they look in America and like oh they screwed it up we'll go this way they screwed it up we'll go this way and it's very pragmatic. So, I'm hopeful, and the Australian government just allocated 10 million dollars to something like this. 

Singapore has something similar to this. In those markets where there's GSM only you can specify the message header which is like you could put an alpha characters where that message is from in a mixed market like the U.S. or any in the Americas where you still have some CDMA and some other technologies you can't do that, and they're they're requiring any of those where you've got a message header to submit, you know, passports to verify your identification. So we're definitely seeing movement all over the globe around The Campaign Registry similar type of systems. 

I'm hopeful that when we go to Washington to educate them on this that the FCC takes this over and it's a streamlined process and more consistent against that. 

Q:
But I was gonna say do you see it be controlled by the cartels in the future or by the government instead because it seems a bit counter-intuitive, as you said, it's like the oil company saying let's control emissions.

Sheahan:
Yeah yeah yeah, I'm hopeful, I mean but but but with this with this Trustmark program they did that with the FCC under a separate unit, which I'm hopeful and because you look at AI and you look at um you know deep fakes and and since they regulated SMS as a digital service we literally can sue the FCC to say, ‘hey my data is being discriminated against and Facebook and Twitter isn't why right’. So I'm hopeful for a broader bill that includes more than just text messaging um but we'll see you know I mean you know you know the US is a very strong sense of anti-regulation anti-government telling them what to do but that's one of the reasons why the U.Ss was behind Africa for a decade with wireless because you know they let you know the carriers put whatever they wanted to and then we had this hodgepodge of technology. 

Moderator:
Okay, another one from Europe this time. It's wonderful being a European seeing what a mess the U.S. is in again. 

Q:
What effect do you think the shift of traffic from to traditional SMS onto alternative systems like what's happened Apple messaging, for example.

Sheanhan:
Yep, um, good question. Well, there's very specific, if you look at the WhatsApp data on why and where are their high penetration rates, there's a couple characteristics. One is they've got unreliable delivery, right, unreliable delivery in a certain countries where your SMS don't always go through. In that case, like Brazil, right, so, the Brazilians adopted the U.S. technology, they had IDEN, they had TDMA, they had CDMA, they had GSM, this whole mix of stuff right? Or you have high message costs, like Germany is another market, right, where a WhatsApp is a high penetration right or another market, another characteristic is authoritarian regimes like Saudi Arabia. Saudi Arabia is actually WhatsApp's number one market with phone penetration rates, and it's really because they're, they're, you know, they're like, ‘oh, we don't like what you guys and are saying we'll just shut it off, turn the off switch guys’, and they do so. 

But the problem with OTT, over the top, messaging is you don't know the characteristics of who those are, right? SMS is still the most ubiquitous form of communication known to mankind,  right? I can send a text message to theoretically eight billion devices, we don't even have eight billion PCS or 8 billion smartphones, and so, um, it's still, I am seeing more, you know. If you have a closed group let's say you're an accounting software company and everyone uses like Xero, right, as an example, um, they might push their users to do Google Authenticator or Microsoft authenticator, right, to do that, um, but that's a closed group. But if you're dealing with the public and you don't know what they're on, some traffic may move to short codes, um, so we'll see. I mean yeah, I mean if the carriers screw this up, you know they could screw up, you know the gifted horse, you know they could kill the Golden Goose, if you will, so we'll see but I think we'll see some intelligent regulation not at the EU.

Q:
Thank you James, go ahead Joe, do you see any movement on the P2P front or you know moving more to an individual texting get away from ATP and reducing those costs?

Sheahan:
Well P2P, it's if you're using a VoIP number which means you'd actually have to use a SIM-based solution, okay, all right, okay, all right, I'll tell you funny story, so we've been in this business for 23 years, we were in it before they actually had, uh, the carriers actually opened up their SMSCs and when we started we had basically, uh, we had, we had a bunch of Nokia 5110s that acted as as modems delivering the messages and we still do in certain markets, right, because you know, but you can't scale right, you can send one or two messages but there's only so many text messages and if you send a lot on that device, the carrier, like say ‘hey you just sent 50,000’ or what was it, it was um, there was a lawsuit against T-Mobile and these two friends they were actually, they tried to send like, I don't know, a million messages in a month, they said, ‘well, it's unlimited’ and then they got like a $9,000 phone bill or something they're like, screw this we're unlimited, tags and we just did it whatever, but it won't work from a technology perspective for scale, you could probably get by with it if you're not sending a lot of volume.

Moderator:
Thank you for that question Joe and thank you Tom let's give Tom a very big ClueCon Round of Applause.

Sheahan:
Thanks.