Background

The next chapter of our messaging monopolies series is about as typical as any story of unchecked greed and power can be.

Unlike the tragedy of the small business victim in the Messaging Monopolies post, Jenny’s Construction & Design Services (Jenny’s), who’d successfully led a business category for one decade. But couldn’t compete with a new startup (Home Depok Home Design Services (HDS)) within a well-known Wall Street brand (Home Depok) to get the same SMS throughput.

Even though consent was established and scrutinized far beyond Jenny’s larger competitors, that business was unfairly rate limited and therefore effectively censored and hampered in competing by the messaging monopolies.

The overarching theme of Jenny’s and this next tale is not the FCC or FTC, nor the messaging monopolies, they are merely stooges. Rather the wireless operators: Verizon, ATT, and T-Mobile;  we refer to them as The Telecom Triopoly.

The Telecom Triopoly installed proxies to distract the industry and made them effective monopolies for control: NetNumber, The Campaign Registry, Aegis Mobile, Syniverse, and others to mask he Telecom Triopoly’s true intentions: to make much more money out of SMS, and to completely control who does that on their behalf.

Why does Syniverse have to review and charge campaigns $15, while Sinch does not? Ask Syniverse and they will tell you that’s not true. While Sinch touts differently.  There are other rumored special deals Syniverse has access to, else why did Twilio invest $750 million in them for a minority stake? But none of those deals are made public, only the lingering suspicion the playing field is not level.

In this post we’ll examine how The Telecom Triopoly has gamed the FCC for decades. We’ll review the evolution of A2P SMS, through fixed line SMS, 10DLC, 800SMS, to the unfair practices being imposed on UCaaS (Unified Communications as a Service) today. How The Telecom Triopoly has honed their craft in gaming the FCC and abusing their position in the market. It’s important to remember through most of the existence of SMS, carriers considered it a loss leader. The majority of money was made on voice and data, not SMS. That is, until Twilio and others showed carriers how A2P SMS can make loads of money.

Gaming the FCC

The Telecom Triopoly tested different tactics to ensure the FCC would come to them to stop Spam and Robo-texting. Repeating what was done on robocalling with the 40% adopted (only VoIP gateways not PSTN gateways) and hence failure to stop unwanted calls, STIR/SHAKEN. This failure is both epic and belies the broken situation in US telecoms.

The game is surprisingly easy.  If you know that the government will come to only you to fix an issue you have absolute control over, you can game it.

The game was not created overnight, it is a multi-decade, carefully calculated, if occasionally clumsily executed process. Every price, compliance requirement, and financial penalty has turned into a well-oiled machine. With levers that can increase revenues at will, combined with unchecked discriminatory processes, and topped off with sanctioned predatory behavior (see the later UCaaS discussion, and TCR messaging its competitors’ customers using the data it requires CSP’s (Campaign Service Provider) provide) all permitted under the FTC/FCC’s watch. 

Livelihoods of those impacted by this behavior should not be joked about.  Families and businesses depend on communications. This is a cry for help. Witnessed by the current CSP (Campaign Service Provider) meeting with the FCC in January. Businesses are hurting by the actions of The Telecom Triopoly.

The Telecom Triopoly continues to deliver unwanted voice and text messages in exchange for money. And at the same time they store and analyze your A2P SMS conversations to protect you from fraud and scams. Note, promises the wireless operators made in the past of only using your location to provide emergency services proved false. They were caught selling your location data to bounty hunters and anyone else with a credit card.  Their data mining is the equivalent of wiretapping. It’s the equivalent of having Amazon Alexa or Google Home listening all the time, building up data on you.

Here is an example of how effectively the Telecom Triopoly games the FCC:

1. Carriers see Voice/SMS revenues drop
2. Wireless operators allow spam/robocalls to increase revenues from known bad actors
3. The Government hears from consumers.
4. The Government runs to carriers.
5. Carriers commit to lowering stats and kick bad actors they know are the offenders and keep deposits etc.
6. Carriers increase fees, rates, and increase complexity that is intentionally flawed to justify ‘rinse and repeat’.
7. Carriers sometimes add fake technology and get the government to approve adding fees at scale to help filter out spam or robocalls, e.g. call filtering.
8. Carriers turn knob up on filters for a while and still collect from the senders until they get wise of the blocking.
9. Carriers provide before/after stats in broad strokes. For example, “We successfully lowered the total amount of robo calls after stir/shaken by the government’s mandate of X %.”
10. Then politically spinning this perceived victory from the truth that total fraud loss to consumers increased in excess of billions.
11. Carriers see revenues dropping.
12. Carriers turn knob down on filters.
13. Rinse and repeat.

Emergence of Fixed Line SMS

In the late naughties Verizon attempted to convince the others within The Telecom Triopoly to allow a plan to make money and control how text messaging, a fast-growing communications channel back then, could slow the declining revenues of landline services. 

When Verizon finalized the agreements between the carriers it defined all messaging between networks would be free and if the same wireless providers could enable non-wireless landlines to text to and from mobile networks would be at no cost. 

The original plan was to control the deployment and trickle the new products out.  Verizon was in the process of releasing the “Verizon Hub”. A tablet and docking station that became your new home phone service with messaging. It was a bit like i-mode in Japan, except the US internet was far more advanced than in Japan.  The Verizon Hub like many other carrier home hub deployments around the world failed. In the case of the Verizon hub the monthly charge was $35 per month in 2009, and included advertising before apps could be used. The web had already trained consumers that the weather app is free with banner ads.

Syniverse, a peer to peer (P2P) hub supported this deployment, and were now in a position to repurpose it. They convinced landline carriers to text enable their numbers to add value, and sell more telephone numbers. The voice carriers liked this proposition.  No work, just say they have an enhancement and to send all the companies that wanted to send text messaging to them and they would take care of the rest. The 10DLC business was about to appear.

The Emergence of 10DLC, Innovation Explosion

Initially A2P SMS on 10DLC was easy, numbers were provisioned in minutes, and developers could then send SMS. Innovation exploded, Twilio and many others showed the value creation SMS made possible.

Unfortunately, as most innovation stumbles with some level of security, take the internet as a perfect example, black-hat developers had access to the same tech white-hat innovators did.

With growing revenues and lack of regulatory involvement, the carriers threw the only thing they had left in their armory, the CTIA-Communications Trade Industry Association.

The CTIA, the first and only, telecom trade association sanctioned and assigned by The Telecom Triopoly. After the carriers found that the growing voice behind this now wide open Pandora’s box had somehow influenced the CTIA-Messaging Guidelines, all meetings were suspended and those who were not under their control were targeted and removed from future CTIA discussions or working groups.

The carriers intentionally went dark on any efforts to do anything but reverse the progress made to build a healthy A2P ecosystem and best practices. Instead, they would send their foot soldiers to do their dirty work, Syniverse and Sinch (SAP) at the time. They needed another plan.

Emergence of 800SMS, Learning how to Create a Monopoly

The Telecom Triopoly’s first attempt at creating a monopoly was ZipWhip.

The ZipWhip story is amazing, on my blog I’ve mentioned a few things. Check out this Columbia Law Review article. You can see Twilio referenced many times in trying to break this monopoly. The GSMA has a good paper on this: where it highlights with the introduction of Zipwhip, per-message fees rose by 3x, text providers required to pay to both send and receive toll-free messages, and tens to hundreds of millions of messages went missing.

Verizon exposed they’d secretly colluded with an industry participant (ZipWhip) most considered a competitor with a sub-par network uptime and positioned them as a monopoly.  Instantly shutting off working services to millions of toll free text numbers to text messaging to and from users, the ONLY access to 140m+ subscribers.

In doing this Verizon:

• Snubbed licensed toll free operators and denied rights.
• Snubbed Somos-the toll free administrator by raising the rights of those in this new circle of control.  Somehow knew where the FCC was going to land when a non-tariffed private company, holding communications to 100m+ consumers communications hostage until the provided agreement  is executed including a minimum financial commitment without any recourse for unreliable service which is not allowed in the voice world today.
• Snubbed the RESPORG-Responsible Organization Toll Free License holders- licensed and mandated to follow rules set by the government administrator Somos.
• Provided the carrier’s experiment cover using Zipwhip as a thinly veiled proxy monopoly.

The “monopoly set-up” playbook the carriers now have down is really simple:

• One of The Telecom Triopoly makes a deal that is never penned as exclusive but has the same outcome, you are forced to work with them or be threatened, chastised, shut down, and fined.
• Test fences of regulator reaction or inaction by installing a proxy business to distract the industry.
• Test with industry and now force them to adopt or shut them off.
• Pullback
• Second carrier joins the first in choosing a single proxy.
• Test
• Succeed
• Rinse and repeat until the majority of industry coverage is completed.

Post the carrier experiment with Zipwhip, they repeated the process with NetNumber securing that monopoly. With ZipWhip The Telecom Triopoly had a partial success with proving texting cost increases the market could absorb each carrier adding 10-1000x to base cost messaging as pure profit. The Zipwhip experiment had been rough on the industry but acceptable to the carriers with a roadmap for their next folly…The Campaign Registry (TCR).

Then NetNumber, the CTIA, iConnectiv, and Somos were overlooked for a tiny pre-revenue start-up named The Campaign Registry (at that time Hook Mobile). 

The carriers had their plan in motion. The past price increase approaches with ZipWhip were labeled price gouging. This new option had to be cheap with little to no investment but offer the distraction needed to increase prices. Away it flew, with some cash invested from AT&T and a whole bunch of political leverage, the Telecom Triopoly colluded to use a systematic approach of how to increase rates:

• Increase “non-sanctioned” rates.  This means if you don’t fork over all the key information of your customers that may have taken years to compile, their legitimate communications are called what the carriers want you to now pay to change like, “Spam Likely, Unsanctioned, Unregistered, Non-Compliant”.
• Turn down spam filters to turn up the heat directed at the FCC.
• Get the pass from the FCC to increase power, tighten control, and provide less accountability and transparency. Brilliant really.
• Force your minions to be a firewall while providing plausible deniability.
• Behind the unregistered rates increasing have each carrier stagger and increase rates to stabilize at what the original above increase of 10-1000x has been accomplished.
• Don’t stop though, raise the unregistered to highest ever seen in texting in decades, 1c per message.
• Spam increased based on failures in choosing the right technology and partner but have an excuse for why it failed.  “It was them (TCR)”

The decade-long SMS cohort members of The Telecom Triopoly are: Kris Weterrings (AT&T),  Kara Lihosit (T-Mobile), and Susan Marion (Verizon). They have openly worked together under the disguise of “its to stop spam” but in practice they have enabled The Telecom Triopoly to add $10s of billions to their employer’s bottom lines.

The Squeeze on UCaaS

Carriers’ enterprise voice services have been in decline for almost a decade, thanks to UCaaS (Unified Communication as a Service). Beginning June 1, 2023, The Telecom Triopoly began imposing surcharges on UCaaS providers for any unregistered SMS/MMS that is sent to their mobile subscribers at 1c per message. This is an expansion of their previously announced Campaign Registry regulation, where enterprises must register their numbers.

Because of this surcharge, the unpredictability of the surcharge amounts, the variability of the participating MNOs and MVNOs, most UCaaS made the decision to no longer deliver any unregistered SMS/MMS to any US-based mobile subscribers. 

In order to continue sending SMS/MMS to mobile subscribers whose carriers are members of The Campaign Registry, UCaaS customers must register their brands and campaigns prior to this June 1 deadline.

Unless a UCaaS partners with a carrier for the phone numbers and service, for example AT&T and RingCentral, all SMS sent are charged through the TCR and require registration. In addition, employees must ensure their employee communications are compliant with the CTIA’s SHAFT (sex, hate, alcohol, firearms, and tobacco) rules and the ever growing list of carrier specific rules. While a carriers’ UC solution (owned or resell) remains zero rated, unlimited SMS is included within the monthly fee.

The Industry must now take control of this Story

What happens in the next chapter of this story? We can either choose to write a continuation of this tragedy that even Shakespeare would be proud of.  Or, we can start to look for, encourage, collaborate, and embrace technologies that may be the innovation that cracks the code of identity and trust.

Let’s not make the current situation the end of the story.  Let’s write an amazing story of hope and community that will be cherished and admired by those who may struggle with far more difficult challenges than robo texts or calls. It really is not that difficult to stop spam, most enterprises solved this for email over one decade ago.

Check out other articles in this series:

When Power goes Unchecked: The Telecom Triopoly

Original Messaging Monopolies Post – assumes a fair bit of industry knowledge

Messaging Monopolies Simplified

Major William Peters, Plaintiff, versus Kaleyra, Defendant. Part 1

Understanding TCR and Kaleyra Part 2

Understanding TCR and Kaleyra Part 1

The Campaign Registry and Foreign Ownership: A Matter of National Security