SMS, Premium SMS and Mobile Content Explained

The facility to charge mobile phone users for content has seen a new market spring up over the last few years. So far, the greatest use has been by media companies - TV and newspapers - as well as sellers of ringtones, backgrounds and games. Some ringtones have even had multi-million pound advertising budgets. So what is the future for mobile content? What do users want and who makes the money from it?

What is Mobile Content

The term mobile content refers to anything that is available to mobile phone users - ringtones, backgrounds and games were the starting point, but the content is becoming more diverse. With the latest generation of phones, any type of media (test, pictures, music or video) can be delivered to a mobile phones and a charge made for it.

Perhaps content is not the best term for it. Something like Mobile Media or Mobile Information Services is more relevant to most people.

Mobile Payment Systems

The most common way to charge users for content/media/information received on their mobile is through reverse charge SMS. The user makes a request by SMS and the message that is sent back to them, and a fixed charge is deducted from their phone.

Shortcodes

Reverse charge billings are made on 'shortcode numbers' - these are five or six digit numbers eg 81234. In order for a shortcode to work, there needs to be an agreement by all of the networks to accept this number (except where it is a number specifically for one networks users). To own a shortcode number generally costs £1000+ to set up and around £750 each month. For larger organisations such as TV companies this is a small cost and its common to have a dedicated shortcode for a specific TV programme.

For someone just starting out, or for smaller content providers this may not be viable, so shortcodes may be shared across a variety of services.

Keywords

In order to distinguish different services on a shared code, keywords are used. So a number such as 81404 may have many different users whose particular content is identified by their keyword: ringtones, backgrounds. There are no limits to the keywords for a shortcode number - its simply method of identifying which content the user wants.

Reverse SMS Billing or Premium SMS (PSMS)

Each shortcode has one price attached to it - these prices can be 10p, 25p, 50p, 75p £1, £1.50, £3 and £5. This price is set when the number is initially set up. It is possible to charge multiples of the shortcode price by sending more than one message. So if the content provider wants to charge £2, for example, then the user would receive 2 £1 messages.

Using PSMS

The mobile user must first make a request by text from their phone to the charging number. A reverse charge SMS is sent back -- it is this action which actually deducts the fee from the users phone.

Both the price and process limits how mobile content may be charged - it cannot operate in the same way as credit cards on a website, where a user selects items into a shopping cart and the sum is billed at the end. It also means that charging an existing customer for further content is more complex. For example if you want to charge for access to more content which is accessed from a web or wapsite the user will have to send a new text message.

On the plus side for providers (but not necessarily for the user), reverse charge billing does have a recurring options - so the content provider could, for example, charge a user £1 daily. This starts from a single message requested by the user and ends when they request it to stop.

Inevitably this type of billing system dictates the pricing model for mobile content. In other words, you need to think about how you charge for things. Subscription models lend themselves well to mobile content - the ideal type of application is content that regularly changes.

Although some mobile content is clearly successful - ringtones is now a larger market that CD single sales - there are still massive opportunities for developing new content that will catch the imagination of mobile users.

Delivering Content/Media/Information

There are a number of options for getting information/media onto phones: SMS, MMS, WAP, WAP push or HTML.

Although much maligned after its first introduction, WAP is a very useful tool for delivering content to phones. Most modern phones have WAP/GPRS which it makes it easy to access any type of content: text, pictures, video or music. The increase in 3g phones should make this easier.

Building and hosting a WAP site is relatively straight forward and there are even content management systems available that can manage it. The only downside is that it may be a pain for users to access a bookmark through GPRS.

Once you have your content then its simply a case of sending the URL of the WAP site with the SMS billing message.

Alternatively for text content, it can be sent as an SMS - either with the billing message or as a separate SMS. If it is a small bit of information then this is the easiest method.

MMS has the advantage of being able to deliver any type of content directly to the users phone. The problems with MMS are cost - 30p per message - and compatibility.

Increasingly, HTML - a website - is a an option for many content providers. Many phones can now browse HTML and can provide information in a stripped-down form. Still, HTML (or compact HTML) are really only useful for users with larger screens and PDA-style phones.

SMS Gateways

So youve worked out how youre going to deliver the content, the next thing is to get that from the internet to the mobile phone network. For this youll need an SMS gateway. These are provided by the reverse SMS billing provider and is essentially a gateway through which http requests can be sent and received. The gateway will consist of a series of servers with gsm modems which deliver the information to the networks and then each user.

Although its not necessary to need to know about the way that the gateway talks to the networks, there will be an issue with how you integrate your content with the SMS gateway.

This varies depending on the provider - some only give a raw communications package. They simply deliver the request on to your server and you need to set up your server to with the appropriate response.

Other gateway providers will take a more user-friendly approach whereby you provide them with a simple URL and they will manage the integration to ensure it gets delivered to the user.

Protecting your content from non-paying users is another complexity that providers of wap-based content will need to deal with. There are a number of methods of doing this such as issuing each user with a name and password (time consuming for the user) to generate an individual URL for the user sent as a bookmark.

This is where delivering content by SMS (or MMS) may be easier. The gateway will still need to collect the content from a place on your server (usually with a simple password protection) and sent it directly to the mobile customer.

PSMS Payouts

The advantage of reverse SMS billing is its simplicity. That and the fact that mobile users accept the principle of premium rate charges on their phones.

The disadvantage for the content provider is the amount taken by the networks. For a start all billings are including VAT, so the government will take 17.5% for starters. The networks also take a much higher percentage than, say a credit card processor. Then the billing providing company will also take a small share. The revenues offered by each network varies and many processors average this out across all of them. So after everyone has taken their wedge the most a content provider can expect to receive is 55%. Where the billing provider provides a lower set-up and monthly cost along with easy integration then the share of the revenue will be lower.

Other payment options

It is possible to use premium rate voice calls as a method of charging for mobile content. IVR, as it is known, can operate whereby so that the customer phones the premium rate number and will be given a reference code to log-in to a web or wapsite. The problem is that this method of billing is not popular with customers - the extra problems with making the call and then noting a reference number is off-putting. If IVR was a successful method for charging for content then it would have been successfully used on the internet.

The most obvious alternative to Reverse SMS billing is credit cards. Whilst this it is entirely possible to process credit card details by a secure WAP connection it is fairly cumbersome to the mobile phone user. Generally most mobile phone content is relatively cheap - pretty much a micro-payment - credit cards are a complicated and expensive way to handle these. Although a number of providers outside the network operators are looking at electronic wallets that will enable micro payments to be made quickly and cheaply these are far from a reality for most users.

One great advantage of reverse SMS billing by a shortcode is that it has a built-in marketing function. Typically advertising will state text KEYWORD to SHORTCODE and thats it - both the payment and content can be taken care of through one simple point of entry. With mobile content directories still in their infancy, asking users to type in a URL is probably too complex to be effective.

Paypal Mobile

One system that could become the killer application for mobile payments is Paypal Mobile. They now allow users to attach a mobile number as well as an email address to make payments to and from their account. However, the biggest problem with this, is that Paypal are not interested in SMS or mobile based billing systems. The latest word is that it wont be for some time to come!

Regulations

The telecoms business and phone billing in particular is a tightly regulated area and content providers need to be prepared to abide by these.

Already mentioned is that you can only send a reverse charge to the same number that the users request has come from.

Certain shortcodes must be used for adult content. Last year the networks agreed to restrict certain content to ensure that it could not be viewed by minors. These numbers are the ones that begin with 89. In order for a mobile user to get content from these numbers they must first register their phone as belonging to someone over the age of 18.

Reverse charge billing can only be used to charge for content that is delivered to the users phone or available on the web. You could not use it for mail order items, for example.

The price and frequency of the numbers must be correctly advertised. There are certain statements that must clearly be made on any publicity material, and where this includes recurring charges, the stop keyword must also be stated. ICTIS the telecoms regulatory body has more details covering this on their website.

Written By: Paul Norman (First Tutors)