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The Death Of The Short Code

December 9, 2010 3:31 pm by

The major wireless carriers came together in 2003 to create short codes to allow marketers to easily communicate with consumers. Since then text messaging has exploded in popularity. Short codes haven’t seen growth to match. Why? A long, opaque and expensive setup process prevents all but the largest brands from marketing to their customers with text messages. Enter the long code: instant setup, affordable transparent pricing, and no one standing between your company and your customers. Short codes were supposed to bring mobile marketing to the masses. Long codes, virtual mobile phone numbers that can send and receive text messages stand ready to finally fulfill that promise.

Long codes? Virtual mobile numbers? Let’s cut through the jargon and get to the facts. Long codes are plain old ten digit phone numbers. Once a long code is active and connected to a text messaging gateway it can be used to send and receive messages anywhere in the world. Short codes need to be approved and provisioned carrier network by carrier network – and there are many regional/pre-paid carriers who still do not support short codes. Are your customers using Google Voice or other popular VOIP providers? They cannot reach your short code and you cannot send text messages to them. Because long codes are regular phone numbers long codes just work.

Short Codes Are Vulnerable
The carriers’ short code platforms are notoriously unstable, going up and down, or delivering messages with multi-hour delays with troubling regularity. As long as the mobile networks themselves are up and running long codes will work. Further, the aggregators standing between the carriers and your SMS gateway provider are more than middlemen – they are another cog that can break down. If you’re providing emergency messaging services via short codes you’re relying on two critical chokepoints.

With short codes you live and die by the whims of the carriers. A quick search turns up cases of carriers blocking a number of prominent political text messaging campaigns. The laws are out of date and the FCC has been slow to act. The result? The expensive short code campaign that you spent three months to get going can be shut down on any carrier’s network at any time. Constantly changing ‘rules,’ ‘guidelines,’ and ‘best practices,’ while well intentioned, are often enforced arbitrarily.

So what do long codes bring to the table?

  • Instant setup: Get going in less than 24 hours instead of 8 to 12 weeks.
  • Cut out the middlemen and save money: No aggregator fees and contracts, and no passed along short code leasing costs mean your campaign can be run at a fraction of the price of a short code campaign.
  • The widest coverage: If a customer can send and receive text messages you can reach them with a long code.
  • The fastest messaging throughput available. Send 5 messages/second with a single long code. Pool multiple long codes for unlimited throughput.

Where We Stand Today
If you want to use a long code for your text message marketing campaigns you don’t have nearly as many service providers to choose from as you do if you go the short code route. We expect this to change in the near future. For now there are two ways to go about getting a long code. If you’re looking for a point-and-click platform, Group Texting offers a simple, affordable solution that is very similar to what you would expect on a leading short code platform. If you’re a developer looking to use your long code via API, companies like Twilio and Tropo are ideal solutions.

Short Codes aren’t without merit, and long codes aren’t a panacea to all of the problems affecting short codes. It’s undeniable that short codes are easy to remember for consumers. A long code is a ten digit phone number. Phone numbers can be memorable but nothing beats a good five digit short code. Consumers have also grown accustomed to short codes, voting for American Idol candidates, taking polls at stadiums, and responding to ads on the street. Short codes were designed as an ideal marketing platform, and in this regard they excel.

Short codes showed great promise. Just like a domain name, a company would register a short, easy to remember code and text with their customers. In the end it hasn’t worked out that way. The analogy to domain names is instructive. Until 1999, Network Solutions was the only place to buy a now ubiquitous dot.com domain name; it took public outcry over monopolistic pricing to get us the cheap domains from multiple registrars we now take for granted. So when it comes to short codes why does a single company, Neustar, have complete control over the leasing of short codes? And why does a short code cost $500 to $1000 per month when a long code costs $1/month? With a limited pool of short codes a lease of $1/month isn’t feasible; $500 to $1000/month is simply unreasonable.

Leasing a short code from Neustar doesn’t even guarantee that the various carriers will actually provision the short code on their network. Imagine a world where you purchased a domain name – a randomly assigned one at a cost of $6000/year or one of your choice at a cost of $12,000/year – and then had to ask all of the major ISPs to allow their customers to access your services at that domain name. This is where we are in the world of short codes at the end of 2010.

What About Premium Services
Premium campaigns are another example of short codes failing to live up to their potential. Premium short codes were designed to make it easy for consumers to purchase mobile content, and later to make mobile donations. They text a premium code, they confirm, and payments are automatically charged to their mobile phone bill. There are three problems with the actual implementation. First, the carriers typically keep 50% of the gross revenues. Compare that to the 30% cut in the major App Stores – platforms which are far more costly to maintain. Second, there is a 90-day delay on the payments your customers have made. And lastly there is the opaque approval process. The carriers claim they’re looking out for their customers but this argument is disingenuous. After turning a blind eye to unscrupulous ringtone vendors for many years the carriers had to spend millions of dollars settling class action lawsuits. Following these lawsuits the carriers overreacted by tightening the approval process for premium short codes to the point that legitimate businesses regularly see their applications denied.

Ironically, in the half decade since the ringtone debacles, the carriers created a way to cut them entirely out of the equation. The rise of the mobile web, smartphones, and mobile payment solutions from PayPal and others presents an increasingly viable alternative to premium short codes. Couple mobile payment services with long codes for the initiation and delivery of content via links to mobile websites and you no longer need to deal with the carriers’ arbitrary guidelines and excessive revenue splits.

This isn’t a far-fetched solution that should arrive in a couple of years; it’s already happening. PayPal is on track to process $700 million dollars of mobile payments this year. In October they rolled out a ‘two click’ mobile payment solution. In 2011 they’ll begin to process credit card transactions for non-members via mobile. And PayPal is just one player in the rapidly growing mobile payments industry.

A Realistic Take
Do you need to get going tomorrow, not twelve weeks from now? Do you have the patience to work through program briefs, reams of carrier regulations, and constantly changing MMA guidelines? Do you have $12,000 to spend over the next year? These are deal breakers for 99% of the businesses in America. The long code, a solution that has been with us since the beginning, is poised to kill the short code.

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