May 22, 2012

Short Story of the Long Code: Long Code Pioneer TSG Global Fights for What's Right

This article originally appeared in the May 2012 issue of Next Gen Mobility magazine.

The wireless telephone companies have made a lot of money with short-code SMS, but now the long code has arrived, and wireless operators should stop clinging to the past and allow the future of messaging to move forward. That way, service providers of all stripes, and their customers, will be able to benefit from the goodness and rewards of the long code.

That’s the word from Noah Rafalko, CEO of TSG Global Inc., who’s been beating the drum for adoption of long code technology since its inception. A long code is simply a text-enabled telephone number not provided by a wireless operator.

Long code messaging is preferable to short code because of its affordability, flexibility and its unique ability to support rich media including voice and fax, explains Rafalko of TSG, an SMS enabler and long code pioneer that empowers telcos, the web development community and enterprises with the tools, service and guidance they need to enable long code SMS applications.

Cost Comparison

While short codes are leased from a handful of major players at a cost of $500 to $1,000 per month (costs depend upon whether standard or vanity codes are involved), the long code is just a telephone number enabled to carry SMS, owned by the customer and only costing a couple of dollars a month. Both the short code and long code have per-message fees, according to TSG Global, which indicates that if the correct telecommunications provider is selected, the long code per-message fee should be far less.

Also, as noted in a TSG blog, the short code is just a number, and it’s not associated with any location. “It is cost prohibitive to own multiple short codes to localize or regionalize a product, service or campaign,” according to TSG. “In the case a local presence is important, the only cost is an additional phone number to have that presence, and it can be implemented immediately. The long code again provides flexibility and gives options for immediate presence and control.”

Rich Media

Another benefit of the long code is its ability to support voice, fax and text communications in a unified way. That means the long code can provide one point of contact for customers to interact with businesses and vice versa.

For example, it could enable a call center representative to receive communications from customers via text and voice. A pharmacy could leverage long code technology by offering interaction through the current pharmacy telephone number, to which users could now call or text prescription refill requests or otherwise interact with.

“Long code technology also could be used to invite customers to comment about the quality of their experiences with a business,” says Rafalko. “For example, a restaurant could offer a long code phone number to enable diners to offer feedback easily and quickly before they leave the restaurant. This is how a carrier or enterprise can monetize and enter this social media revolution through enabling text messaging.”

When you look at the evolution of telecom as a whole and then look at long code interaction technology, you’re looking at the future of communications,” adds Rafalko

New Revenue Potential

The above is just a small sampling of what long code technology can enable. Indeed, the possibilities for marketers to leverage long codes, and for service providers to build new revenue streams from selling long code-related services, seem to be limitless, Rafalko says, particularly when you consider the drastic increases that are forecast for messaging and mobile marketing.

U.S. mobile ad spending, which was estimated at $790 million last year, is expected to grow to $4 billion by 2015, according to BIA/Kelsey. Meanwhile, ABI Research (News - Alert) forecasts that enterprise text and messaging will grow at a compound annual growth rate of 36.9 percent between 2011 and 2015, reaching 53.8 billion communications by the end of that period. And Prosper Mobile Insights a year ago this month issued a report indicating that texting is smartphone users’ No. 1 communications medium of choice, another testament to the power of messaging.

Open and Closed

That helps explain why short codes, which are used by many businesses today for marketing, have been so successful. Indeed, SMS is the fastest growing mobile segment in the U.S. today.

“The performance of SMS over the last five years has been staggering and remains so mainly because it is cheap, easy to use, convenient, discreet and universally acceptable to some 4 billion consumers worldwide,” according to a recent report by Portio Research. “During 2009 SMS continued to grow in all markets and the report confidently predicts that it will continue to do so for several more years. In 2009, worldwide SMS traffic topped 5 trillion messages, and that figure is set to exceed 10 trillion in 2013.”

What you may not have heard, however, is that the short code version of SMS falls short compared to the long code one because the short code is closely controlled by the CTIA (News - Alert) and the wireless carrriers, which have, in effect, a monopoly on the short code, Rafalko says.

In fact, according to Rafalko, wireless carriers are creating barriers to market entry. But that is something TSG has solved for its carrier customers, he adds.

As reported in the last issue of Next Gen Mobility, Rafalko believes that the large wireless service providers that are CTIA members are trying to limit long code technology with guidelines that treat short codes one way and long codes another. And he’s troubled by the fact that the CTIA wireless association recently set the new guidelines around long codes in a closed meeting.

“If you’re not invited to your voting booth, what voice do you have?” Rafalko said following the CTIA’s move on that front. “It’s not like because McDonald’s sells the most hamburgers in the world, they have the right to dictate how all hamburgers are made.”

In this comment, Rafalko was referring to the significant market power of the nation’s big cellular providers. On the second page of the CTIA guidelines are the logos of AT&T, Cellcom, Cricket, nTelos, Sprint, T-Mobile (News - Alert), U.S. Cellular and Verizon Wireless. Following the passage of the new guidelines, the CTIA indicated this would be a living document, but Rafalko tells Next Gen Mobility that there has been no further movement on this front by the CTIA since the initial guidelines were passed last year.

“The small guy deserves a chance too,” Rafalko says, adding that keeping newcomers out of the market hurts not only those companies but consumers as well.

Taking Control

Giving the customer more control is a large part of what the long code is all about, Rafalko adds.

Customers can instantly activate new campaigns using long code technology.

“With the long code, there is no lengthy process necessary to get projects approved,” according to TSG. “The customer is in complete control, but they still have to follow ethical business practices.”

The long code also offers better reach than does the short code, which only provides access to cellular carriers in the U.S. Meanwhile, the long code offers access to all carriers – wireless or land-based. 

That’s why, in the end, Rafalko believes long codes eventually will replace short codes, as short codes are arbitrary numbers not connected to a brand, while a long code enables a business or organization to make its current phone number text-enabled.   

To help ensure that outcome, Rafalko is calling on service providers to join the long code cause.

“Become a part – not a spectator – of text messaging,” says Rafalko. “Why not put the revenue in your pocket instead of your competitor’s.”

Edited by Stefania Viscusi

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