SMS-Messaging Market. 2015 Milestones.

In 2014, amendments to the Law “On Communication” were enacted which regulate the SMS-messaging market.

The Law made it obligatory for the operators to shift to direct contracts with end customers of bulk messages. In 2015, it was followed by the introduction of account-based billing by the operators.

Thus, starting from 2015, operators of the big three and TELE2 have been issuing separate invoices per each client (advertiser). Bulk messaging customers make settlements at the rates not below the rates established by the SMS-information providers. Before, the rates were determined depending on the total amount of general traffic of the SMS-messaging provider.

The new working model marked up SMS-messages but reduced the amount of SMS-spam and illegal ads. Given the dramatic price growth, sending bulk spam-messages to the many-million bases, acquired illegally (e.g. parsing) has become inefficient.

Customers of bulk messages get connected to mobile operators’ networks not directly but through technology platforms of service providers. Thus the client may distribute his/her bulk messages to subscribers of all operators simultaneously. And the operators get rid of the costs on platform operation, contractual work and client service.

Before, SMS-messaging operators used to derive their revenues from the difference between operators’ rates and their own prices to end-customers. In the current situation, setting the prices below the operators’ ones has become unprofitable, and only large traffic market players have been able to maintain their ROI. To retain their clients and increase traffic, service-providers launched certain value-added services for their clients. That is why Devino Telecom is now offering marketing- and CRM-consulting and legal consultancy to verify messaging compliance with the Law “On Advertising” and the Law “On Communication” etc.

The toughening of the work rules has led to the elimination of “shadow aggregators” which had failed to provide their clients with quality service. This also influenced the amount of SMS-spam.

Mobile communication operators noticed a remarkable shrinkage of spam-messages and subscribers’ complaints. According to “Beeline”, unwelcome messages to subscribers have gone down 30 times. “Megafon” registers a 5.5 times reduction in the number of fraudulent messages, a 3 times reduction of complaints on SMS from character numbers and short numbers, a 9 times reduction – from common numbers. “MTS” registered a 4 times’ shrinkage in the number of unwelcome messages over a quarter and a 3 times reduction – in the number of complaints.

Regardless of the price increase, SMS-messaging is still the most affordable traditional advertising format, which is especially important amid crisis and promotional budget cut downs. According to the tentative data by the Association of Communication Agencies of Russia, the volume of the Russian advertising market over the three quarters in 2015 is 14% less vs. similar period in 2014.