1

The company started 1989 and has been active in the telecommuncations,

primarily messaging and charging, since the turn of the century

The company has been profitable since its inception with the exception of one

year, and is today one of the few profitable suppliers in the messaging

industry

CEO of Symsoft is Kjell Arvidsson

2

Spending on A2P messaging is on the increase as companies in different

industries realize the potential of text messaging for customer interaction.

While P2P messaging sees challenges from OTT players, the unrivaled reach

and instant connection that SMS offers fits very well into the needs of

enterprises.

3

While P2P revenues are flattening out and even diminishing, particularly on a

per-subscriber level, Enterprise messaging is less affected by competitive

pressure from OTT services and still attracts new actors.

It is not surprising that Portio Research estimates that Enterprise messaging

will become as big as P2P messaging in terms of revenue in the next few

years.

4

For a single subscriber with an average of 5 incoming enterprise messages

per month (delivery notifications, appointment reminders, marketing

messages etc) and a potential revenue of €0.05 for each message that comes

in from foreign networks, operators can add €3 per subscriber and year in

revenue if they receive proper compensation for terminating messages.

(5 enterprise messages per subscriber is an average number on a global

scale. We know that the figure is close to twice as high for some mature

markets.)

5

In a network with with 1 million subscribers, this translates to revenues of €3m

per year.

6

Enterprise messaging also has significant value for the subscribers. As long

as they get valuable, relevant information, incoming text messages will

continue to attract the immediate interest of subscribers. However, if we let

the channel fill up with low-quality messages, there is a risk that subscribers

will start to ignore incoming SMS. This will lead to a devaluation of SMS as a

channel, which in turn will ruin the Enterprise messaging revenue opportunity

and further hurt P2P revenues. In contrast to the P2P SMS business, where

competing technology is the main threat to revenues, Enterprise messaging

revenues are only threatened by lack of action by MNOs to protect their

network.

7

Enterprise messages can arrive over different channels to a subscriber:

1) Via foreign operators that do not pay termination fees to the operator that

has the receiving subscriber (red line via external operator in the figure)

2) From SIM farms, ie. specialized installations for delivering large numbers

of text messages from SIM cards registered in the operator network (red

line via multi-SIM terminal)

3) Via foreign operators that do pay termination fees and direct connections

to the operator (the green line)

All would be good *if* all Enterprise messaging via the operator’s cash

register (A2P Gateway/SMPP Gateway/Messaging Gateway etc.).

However, in most networks today, Enterprise messaging arrive via ”gray

routes” facilitated by roaming agreements that lack corresponding AA.19

agreements (case 1 above). Once those routes are closed, SIM farms

may take over the delivery of Enterprise messaging traffic (case 2), still

bypassing the cash register. Only a proper SMS Firewall will be able to

close both gray routes and SIM farms, forcing the traffic back to the cash

register (case 3).

8

SIM-farms work by using legitimate SIM-cards with subscriptions that allow for

high volumes of SMS. While often technically legal, they still exploit service

packages oriented towards consumers to send massive amounts of

Enterprise messaging traffic. The high-intensity traffic emanating from SIM-

farms can also affect service quality in the area where they operate.

Identifying and blocking SIM-farms require advanced Firewall functionality.

9

Certain enterprise messaging customers may already pay for the traffic they

send, but for a large fraction of the enterprise messaging traffic, the receiving

operator is not compensated in any way for delivering the message to the

subscriber.

10

In a simple business case, based on the estimates presented in slide 6 and a

conservative estimate of 50% effectiveness, an operator with 1 million

subscribers can increase their profit with €1.5M yearly if they are properly

reimbursed for enterprise messaging traffic with the introduction of an SMS

firewall.

11

With a properly updated firewall, an operator can ensure that all Enterprise

traffic reaches the network through channels that provide proper

compensation for message delivery, while allowing for P2P traffic over any

channel; signing AA.19 agreement with every single operator would be

prohibitively time-consuming for most operators and it is of interest to allow

P2P messages from all networks. Therefore, it is important to implement

firewall solutions that can properly distinguish between P2P and Enterprise

messaging traffic.

12

Beyond companies that simple seek to lower their price for delivery of

legitimate messages, there are also actors that use SMS as a channel to

commit fraud against operators and subscribers.

13

Illicit messages primarily arrive from channels where the receiving operator is

not compensated; senders of illicit messages generally have a low margin,

are very price conscious and therefore avoid more expensive channels that

compensate the receiving operator. This means that messages will arrive from

external operators that do not pay termination fees and from SIM farms within

the operator network. For traffic arriving via compensated channels, an

operator also has a much better ability to track down offenders. Therefore,

using a firewall to close down uncompensated channels for incoming text

messages will also drastically reduce fraud. An efficient firewall will also

enable proactive protection against threats through advanced message

filtering.

14

Threats come in many forms, some directed at subscribers directly and others

at operators involved in the delivery of text messages. When choosing an

SMS Firewall, it is important select a solution that can safe-guard against a

large range of threats, rather than having to rely on specialized solutions for

each category of threats.

15

After closing down uncompensated channels for incoming messages, the next

challenge is to sell text messaging to enterprise customers. Managing an

enterprise messaging business can be resource intensive for a single

operator. There are literally millions of enterprise messaging customers

globally today, and enterprises sending messages in a specific country can

run into the tens or hundreds of thousands. Apart from being a major

challenge to handle for the operator, many customers are not interested in

dealing with operators individually; rather, they want to be able to send

messages to subscribers in various operators, preferably buying SMS

capacity from a central actor rather than from each operator individually. To

facilitate exchange in this market, enterprises use SMS aggregators that

enable them to send messages to practically every operator world-wide.

Operators that want to reach out to enterprise messaging customers world-

wide after closing down uncompensated channels for enterprise messaging

stand much to gain from working together with SMS aggregators such as CLX

Networks.

16

For every operator, it is important to understand the potential that enterprise

messaging presents given its specific circumstances. Understanding this

requires expertise and experience of working with enterprise messaging.

17

Symsoft offers the Enterprise Messaging Business Audit service to give

operators a good understanding of their potential in the enterprise messaging

business. The service consists of four main steps:

1) Enterprise Messaging Market Sizing: Estimate the size of the enterprise

messaging market for the operator based on operator size and traffic

intensity

2) Network Potential Audit: Produce an overview of existing and planned

interconnection agreements and roaming partner footprint that can support

enterprise messaging

3) Traffic Analysis: Use quantitative and qualitative traffic data to analyze

current messaging flows and identify least cost routes, or gray routes,

used to send messages to subscribers without compensating the

operators

4) Driving Revenues Into Reach: Finally, based on data from the previous

three steps, recommendations are made on how best to capture

enterprise messaging revenues

18

Symsoft delivers advanced mobile solutions for messaging and online charging, all based on

the Symsoft Telecommunications Platform. Symsoft also delivers professional services such

as product deployment, support and business consulting to help operators make the most of

their mobile business.

19

In Messaging, Symsoft offers a wide range of products that help operators target different messaging markets and provide added value to customers, be them customers or enterprises. Beyond the platforms, Symsoft also offers services to help operators identify their enterprise messaging potential (Symsoft Enterprise Messaging Business Audit) and to continuously secure the network and drive Enterprise messaging revenue to the operator (Symsoft Firewall Update Service).

20

21