Comment by hn_throwaway_99
2 years ago
> they very early on established direct-connection infrastructure for sending SMS, meaning that they have a marginal cost of literally $0.00/message in most markets.
I am very, very interested to understand how that works, because without more detail or sources I'm calling bullshit. I definitely understand how Twitter could have greatly reduced their per-message fee with telecom providers, but at the end of the day Twitter is not a telecom and is still at the mercy of whoever is that "last mile" for actually delivering the SMS to your phone, so I don't understand how they have no marginal cost here. Happy to be proven wrong.
Carriers that run their own messaging infrastructure can allow for direct connections from 3rd parties, and set the price per message to whatever they want, including zero.
For something like Twitter where you could post by SMS, the balance of traffic might have been such that giving Twitter free outbound SMS was balanced by the charges incurred by customers sending to Twitter's shortcode. Or it might just be balanced by increased customer happiness when they can use the product more effectively.
If the carrier doesn't run their own messaging infra, they might be paying their IT provider on a per message basis, and might not be able or willing to set the messaging rate to zero.
For a use case where SMS is used to show control of a phone number, getting a zero cost direct route is a harder sell, but it can happen if the routing through aggregators is poor and the carrier is concerned about that, or if there's some other larger agreement in play.
If you require global connectivity, managing hundreds of carrier APIs, contracts, etc seems like major overhead. Also, there are companies whose only purpose for existing is providing messaging, like Twilio, are they just...not doing this or do the carriers just not play ball? In that case, why would the carriers agree to sell to you at a discount?
Aggregators do some of this, and they can negotiate pricing to some degree, but a carrier is unlikely to intentionally give them zero cost traffic, and even if they do, they're not going to pass that through at zero cost.
I ran the engineering side of carrier integrations at WhatsApp. Carriers wanted to sell data plans with special pricing for data with WA and use WA branding in advertising, because it attracted customers that might later convert to a bigger general purpose data plan. As part of that, we would ask for zero rated SMS to their customers for verification. When it was available, it was generally faster and higher success vs sending messages through an aggregator.
We also had some, usually small, carriers approach us asking us to set up direct routes to them for verification, because their customers would not always receive our messages when we sent through an aggregator. Early in my career at WA, we would just send these carriers to our aggregator contacts, and often things would get linked up and then we'd still pay $/message but it would work better. As we got a little bigger and built support for direct routes anyway, it was usually not too hard to set up a direct connection and then there'd be no cost for that carrier. Messing around with IPSEC VPNs and SMPP isn't fun and the GSMA SOAP messaging APIs are way worse, but once you get the first couple implementations done, it becomes cookie cutter (and FB had built way better tools for this, and a 24/7 support team, so I never had to be up, on the phone with telco peeps at 3 am kicking racoon or whatever ipsec daemon we were running until it finally connected)
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Not who you are responding to, but my guess is that it was all fixed costs. They spend $20mm (or whatever) to maintain access, and maintain infrastructure and they get to send as many SMS messages as they want.
So sending 1 costs the same as sending a 10 million. It isn't that they are free to send, its that they are charged for access to the system, but aren't charged per message.
> spend $20mm (or whatever) to maintain access, and maintain infrastructure and they get to send as many SMS messages as they want.
This is not how SMS pricing works in many, if not, most countries.
Is that true at scale? If I tell the telecoms that I want to send a billion messages per year it seems like they might be willing to take a lump sum instead of setting up the systems to bill based on usage.
I have no experience directly with foreign telecoms, so I was simply explaining how something with no marginal cost could still be a very expensive system.
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I don't know of countries that mandate a minimum price. If you are doing high volume you are free to work directly with carriers. If you are drawing as much billable traffic as you are sending, then that could even be a wash.
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