John Linton ....when all is said and done - they are more than happy to maintain the highest possble levels of of end user pricing, legally and without collusion, by not really competing with each other. Why else are all mobile carrier's SMS prices the same, absurdly high price? Don't tell me - its a uniformly high inter-carrier charge?
A lot of Exetel customers use our 5 cent SMS function and a steadily increasing number of businesses (from Leagues Clubs to car dealers and medical practices) use it for advising their customers and clients of 'events'. Exetel uses it for a wide variety of purposes within our own business operations. We have been providing this service for 18 months and it has been both a popular 'value add' for our residential users and a slight profit contributor to our monthly bottom line. All in all a good thing for a wide variety of customers and for us.
In broad terms there are, at least currently, two types of SMS messaging wholesale arrangements.
The first, and overwhelmingly most popular type, and the type Exetel currently uses, is based in an 'overseas' country and uses an 'overseas' carrier's sms service that has a reciprocal arrangement with dozens of other mobile carrier around the world including the Australian mobile carriers.
The second, and far more expensive, type is an 'authorised' Australian SMS wholesaler that has a direct gateway to one of the Australian mobile carriers (which in turn have reciprocal arrangements with other mobile carriers around the world) and is 3 to 4 times more expensive - because the oligopoly 'inter-Australian carrier' rate is set ten times higher than the Australian carrier - International carrier" rate.
Why is this? Telstra (gratefuly followed by Optus and Vodafone) make it so. The gigantic mark ups the Australian mobile carriers make from SMS is by far the highest in the world (so much for the value of competition). I may have mentioned getting on for two years ago that I met with a UK/EU SMS wholesaler whose pricing for wholesale SMS STARTED at approximately 1 cent per SMS at a volume of 5 million a month and was discounted from there.
So, unsurprisingly, as the number of SMS messages being sent via wholesale 'overseas' mobile carriers has continued to increase there has been, obviously, some reduction in the SMS revenue being generated by Telstra who has now started to move to prevent this happening which will, in the not far distant future, result in very low cost SMS messages becoming unavailable - at least fom Exetel.
Personally, I can fully understand why any company would do everything possible to protect its revenue and profit streams - I have no problem with Telstra's reported actions. I also fully understand that all end user pricing is based on a mix of many elements and it's a complex balancing act that needs constant attention. Having said that, and realising that wire line revenue and profit falls are being balanced in Telstra (and other full service carriers) by the huge profits they make on mobile services, it still appears to me that marking up an element of mobile services by over 2,000% seems like price gouging.
Oh well, this is Australia and there really isn't any real competition in telecommunications. Perhaps the ACCC should look at how Telstra manipulate SMS rates in Australia but 'gives away' the service to an international carrier - I'd be interested in seeing how that would be justified.
So, we will grudgingly have to find a new wholesale provider if we wish to continue to offer sensibly low cost SMS services as we have already had to raise our general offer prices but have kept the free SMS allowance for the current broadband plans. Our early enquiries to 'authorised' Australian gateway wholesalers don't encourage me to think we can continue with the SMS offer for much longer but then we haven't yet put any real effort in to addressing the issue.
Exetel's problem, like the small wholesalers that supply to us, is that we are too tiny to really be able to sensibly operate in the Australian communications business. We have got as far as we have (not very far) by being incredibly efficient and by having a small number of highly dedicated people working very long hours to eliminate the dead weight of a management infrastructure and also a ruthless attitude to expenses and troublesome customers.
While that has been OK to date we are still a long way away from generating the buying power that will allow us to provide the lowest cost services in Australia and cope with the silly personnel and operating expenses of advertising and marketing and HR and etc, etc that a company large enough to generate the volumes to buy at sensible discounts needs. We have had to overcome the high prices we have to pay with blood, sweat and tears personal sacrifices to date with no end in sight to that method of operating.
It has never been any different and I'm not 'complaining', it is something we are going to have to find a solution to - and in the very near future. If we don't then the current SMS scenario will continue to be repeated across the whole current product/service range.