The high cost of providing an SMS-based service
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Short codes are special telephone numbers, usually 4-8 digits long that are used to provide SMS-based services to users.
There are many circumstances that might make one resort to sending or receiving text messages from customers.
For instance, you might want to promote a service or product, communicate with a certain group, or allow customers to access content or service.
You can use a regular phone number to send and receive these messages, but normal phone numbers are long, hence hard to remember.
Another limitation is traffic handling. Short codes are special telephone numbers, usually 4-8 digits long that are used to provide SMS-based services to users.
Texts based on such numbers are usually charged at a premium rate and the revenue obtained shared between the network service provider and the premium rate service provider from whom you obtain the short code.
How does one obtain a short code?
You can apply to the Communications Commission of Kenya for a licence to become a premium rate service provider which allows you to book short codes with the network service providers.
The licence fee is about Sh200,000, renewable yearly at about Sh100,000. There are two types of short codes: memorable ones and normal ones.
The memorable ones are for example, 6969, 1234, 4444, etc. An example of a normal code is 5371. Memorable short codes will cost about Sh200,000 on initial application and a monthly fee of about Sh10,000 per network.
The normal short codes will cost you a monthly fee of about Sh10,000 per network. This is simply too expensive for an ordinary business person.
An alternative is to go to someone who is already a premium rate service provider and ‘rent’ a short code. You then become a content provider.
This can cost you anything from Sh10,000 to Sh60,000 a month, depending on the short code pattern and other financial agreements with the provider.
The short code you will obtain might be shared or dedicated. A shared short code means you will not be the only one using it, hence to differentiate from the rest you are usually told to ask your customers to begin their texts with a keyword like NEWS.
A dedicated short code is more expensive but it belongs to you exclusively. Now the hard part of obtaining the short code is over, you need to let your customers know of it.
Advertising costs can be high, especially if you aim to reach a large audience. Media houses have an advantage because they already have outlets. However, for the ordinary person, you will need to factor in advertising costs.
If, for instance, you are producing/running a show on a local TV station, media houses are not likely to allow you to use your own short codes to collect views.
This is so as not to confuse their viewers, as well as lose revenue when users are charged to send their messages.
Now, you have the short code and your target market is sending you text. How do you make money from the text you send or receive?
Revenue obtained from a premium-charged SMS is shared between the network service provider, the premium rate service provider and yourself. At the end of it all, you will probably take home less than 50 per cent.
In conclusion, obtaining short codes is expensive the world over. Hopefully, the costs will become friendlier with time.
