Study: Market Failures in Texting to Toll-Free Causing Consumer Harm

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Thu, 09/29/2016

 

Toll-Free numbers have been a staple of business and consumer communications for decades, but according to a new study, dysfunction in the growing texting to Toll-Free (TTF) market is harming consumers and businesses.

The study, conducted by QSI Consulting, Inc. and sponsored by Somos, found that although commercial relationships in the mobile-to-mobile texting market have been working well, many of the same monopoly characteristics that plagued traditional voice communications for years, requiring constant oversight by the FCC, are now affecting the TTF market and causing consumer harm.

The study found a market breakdown in three key areas:

Toll-Free numbers are being text-enabled without the knowledge or consent of the Toll-Free subscriber or carrier. New evidence shows that Toll-Free numbers are being text-enabled without the knowledge or agreement of the authorized subscriber or Toll-Free voice provider.

Aggregator monopoly is stifling innovation and hindering market development. A market monopoly by a single aggregator for text messages involving Toll-Free is harming competition and keeping innovative companies from entering the market.

Market disruption is being caused by a single aggregator’s revenue sharing agreements with the major mobile carriers. The lack of competition has allowed exponentially higher rates to be charged for using the aggregator when compared to carrier networks directly originating and terminating voice calls or mobile-to-mobile texting.

“Our study chronicles significant and demonstrable market failures in the texting to Toll-Free ecosystem. For example, with little effort, we were able to duplicate a scenario in which Toll-Free numbers could be text-enabled without the authorized subscriber’s knowledge or the supporting voice carrier’s concurrence,” said Jim Webber, senior vice president and partner at QSI. “Perhaps more importantly, we were also able to redirect incoming text messages on each of the ‘hijacked’ Toll-Free numbers away from the authorized subscriber and to the unauthorized analyst.”

QSI also found that because a single aggregator serves as the de facto gatekeeper for all Toll-Free texts, it occupies a position in the ecosystem that allows it to collect information about the customers of its competitors and use that information for marketing purposes. There are numerous examples where competing texting to Toll-Free providers have had their customers solicited by using sensitive information available simply as a result of the aggregator’s relationship with the five largest mobile carriers.

“It is our hope that this white paper paints a clearer picture of the market failure and result in meaningful discussions toward increased competition, innovation and consumer welfare in the TTF marketplace,” said Somos CEO Gina Perini. “Order and a level playing field are essential to ensuring the system remains dependable for all those who rely on it, which is why CTIA developed guidelines, leading to the creation of the TSS Registry.”

View and download full white paper here.

Learn more about text to Toll-Free here.

Key Takeaways:

  • Toll-Free numbers are being text-enabled without the knowledge or consent of the Toll-Free subscriber or carrier.
     
  • A market monopoly by a single aggregator for text messages involving Toll-Free is harming competition and keeping innovative companies from entering the market.