Sinch comments on global SMS pricing

The CPaaS industry has recently gained an unusual amount of publicity following some perceived-disruptive statements from a regional Sinch competitor. We are concerned that recent comments about SMS pricing are consciously misleading and fail to relay the fundamental economics behind the global pricing of SMS. They also undermine the importance of security, data sovereignty, data privacy, and compliance.

CPaaS, or Communications-Platform-as-a-Service, enables businesses to leverage communication channels like voice calling, email and SMS messaging to communicate with their customers. It enables worldwide reach with minimal upfront investment and abstracts away the many technical and commercial complexities inherent in global telecoms.

What’s harder to overcome, however, are the termination fees charged by mobile operators. Mobile operators are gatekeepers to the SMS inbox of the mobile subscribers on their network. They each set their own price and prices can vary widely between networks and countries.

Third-party industry analysts estimate that for every 100 dollars that a business spends on messaging, more than 80 dollars are passed on from their CPaaS vendor to mobile operators. This is where the competitor claims look both unrealistic and unreasonable – there is no way to reduce pricing by 90 percent unless you are using clandestine grey routes to circumvent operator charges, or using tactics such as SMS trashing, SIM farms, and/or sender ID faking.

There have always been vendors offering very low prices for SMS messaging, but a well-informed buyer will know that pricing below cost raises several concerns related to security, data sovereignty, data privacy, and compliance. Moreover, per-message prices only tell half the story. Low prices are often capped to a limited volume, and attaining the advertised rates often requires significant spend on software licenses or services.

With this in mind, Sinch has always recognised that customers will demand competitive pricing. That is why we’ve set out to gain scale – organically and through acquisitions – so that we can distribute the costs of running our cloud service across as many messages as possible. We’re now one of the largest companies in our industry and process several hundred billion messages each year.

Although our scale ensures that we can offer competitive prices, there’s much more to consider in choosing a CPaaS vendor. Businesses who choose Sinch to power their communications see a number of advantages that sets us apart from the competition. They benefit from:

• An unrivalled technical infrastructure with a proven capability to handle outsized loads that effortlessly scales into the billions;
• A commitment to clean business practices and the highest ethical standards;
• A Super Network for messaging with direct connections to more than 600 mobile operators – avoiding unnecessary middlemen that add cost and jeopardize quality;
• An industry-leading service level with highly knowledgeable account managers to help navigate any technical or regulatory hurdles;
• Advanced APIs like Sinch’s AI-enabled Conversation API, which supports a broad range of OTT messaging apps, and the Sinch Verification API, which offers a range of innovative and cost-efficient methods to programmatically verify phone numbers;
• Turnkey software solutions for conversational marketing and conversational care, alongside industry-leading products for voice calling and email sending.

We operate in a highly competitive industry that’s sometimes hard for both customers and competitors to navigate. As a leader in our space, we recognise the value of honesty and integrity.

Our foremost commitment is to our customers – delivering an unrivalled digital customer experience, through our secure and scalable communications cloud, with compliance and security at the forefront.