Interconnect fees - what's that about?

An interconnect fee is simply a charge that one network applies to another network for passing calls and SMS onto their subscribers (customers).

Whilst you might not think of it, and if you do you may assume that all networks are connected to every other network around the world, that's not quite true. in fact an example I've been using for years is Telecom NZ - where they typically have only had interconnection agreements with about 6 other networks around the world.

So what happens, generally speaking, is that network A has an agreement with network B, and these can differ from network to network, so whilst on one hand you might have two networks that agree to pass all SMS and calls to one another, you might have another network saying that the calls and SMS they pass must have numerical originators and not be generated from an application (phone only).

An example of this is in the US, in fact it's against US law to send SMS from an application to a US handset - it's pretty much due to the telco plans over there where users are charged for receiving SMS and not for sending, so in an application to handset model, typically generated by a business, that would be considered premium messaging, because the user is charged to receive the messages - which is why if you've ever signed up for an SMS service to use on your PC and tried to send to a US mobile, it's probably failed unless you've stamped the message with a numerical originator.

Is it a pain? For the sender, yes, for the person receiving the messages? Probably not, no - in fact it's designed to protect recipients from being bombarded with spam, so in all it's probably a good thing.

In the case of the US, then there are ways around it, like using vanity numbers at a zero tariff so the company pays to send, which is fair enough, though the cost of the vanity numbers can be cost prohibitive for the number itself.

Are you better to look for a service that uses grey or smart routing? Depending on where you're sending to, then it might be a good idea, the problem is that if you are trying to get through to major western or developed countries, then probably not, because there's a good chance that not all your messages will get through - and then that's a decision you need to take as to what percentage of messages you are happy to have be delivered successfully versus what percentage get failed.

Shortly I plan to write another blog on what is smart routing and what does it mean to those using services that use this method.

Enjoy,
C

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