So what is a grey route?
It’s an SMS route that manages to offer an extraordinarily cheap price by making arrangements outside of the licensed international telecoms companies. It’s a shady part of the industry, lurking out there offering tempting and apparently innocent deals on SMS pricing.
But remember you only ever get what you pay for. If you’re not getting a deal through volume, how are you getting it?
You may be offered a cheap route and find that your traffic is going via India, Russia or the Far East and getting clogged up on an overloaded connection anywhere in the world!
Beware of the 1p SMS. You know the old adage if a deal sounds too good to be true it probably is.
The standard interconnect fee between networks is circa 3p, so you do the maths. If it’s 1p then you can be fairly certain something not entirely legal is going on.
How do they do it?
Grey routes manage to offer cost cuts in a number of ways, a couple are outlined below:
Arbitrage:
Routing traffic via an intermediate country to take advantage of the differences in settlement rates
Re-origination:
Giving a call a different originator disguise at some point in its international journey to make it appear it is coming from the country it terminates in, so making it appear to be national rather than international
‘Special’ Carrier Arrangement
Carriers agree to terminate a certain amount of text messages from each other. Excess is charged at a higher rate. So what happens if a carrier has too much or too little traffic?
There is a wholesale market trading in this area. However, the quality of routes can vary, so traded traffic can go down a grey route, especially as the exchanges allow carriers to buy and sell anonymously.
In reality goodwill between carriers can be exploited.
If I’ve made an agreement to accept up to 10 sms in exchange for sending 10 sms to a network and they send me 5 of their own plus 5 of someone else’s, then have they stolen 5 SMS from me? My agreement wasn’t with that other person. If I find out about it, I’m probably going to at the least change my arrangements with the network, at worst cancel my agreement totally.
In Summary
In answer to our question, yes grey routes do seem to exist, however use them at your peril. They may be cheap but they frequently just disappear without notice due to a telco realising what’s happening and blocking the route.
A Grey route can’t guarantee it’s a quality route, it can’t even guarantee it will be there tomorrow.
At mediaburst we believe in using quality routes for ourselves and our customers.
We wouldn’t touch a grey route with a barge pole and we wouldn’t advise you to either.
Interesting post Dawn, keep them coming. I used this dirt cheap supplier once. And only once. Thought it was a bargain, half the people I sent to didn’t get the sms. Complete waste of money, don’t know how they get away with it.
Don’t knock what you don’t entirely understand. You need industry experience to understand the telco grey market. One bad secondhand car dealer doesn’t mean you should always buy a brand new car.
It depends on the quality of the operator….. Grey market can be totally solid and reliable. Obviously the lack of oversight leads to some less than business like operators and even people from developing countries trying to run hardware they don’t have proper technical understanding of or budget to maintain etc. etc. There is also the odd get rich quick operator that hasn’t learned enough about what he is doing and makes alot of mistakes.
HOWEVER !…. you should be thankful of the grey market for several reasons…
First they have systematically forced down the price of telephone calls, by rerouting and cutting prices, eventually the official rates and the regulators have to follow suit.
Calling cards, VOIP companies, even the beloved Skype, have been built using cut price grey routes. Some grey market operators have millions of dollars of hardware and large operations with technical staff that are highly trained etc. etc.
The SIP voice call format for VOIP (clients like Skype) was forced in mainly by grey operators, the telcos way over invested in older technologies in the late 90s, and were intent on trying to ignore SIP protocol to route telephone calls over the internet for a fraction of the price.
And finally ….. do you really think that your monster corporate profit hungry national telecom company, that has the customer service from hell, and the billing from the devil, would be letting you make unlimited landline calls, or giving you free weekends etc. etc. if some grey operator hadn’t moved into the arbitrage opportunity and exposed the massive rip off, almost out right fraud that the corporate was playing with his virtual monopoly and made up pricing ?
It wasn’t long ago that it cost 20-30 cents a minute for an international call… who brought those prices down was mainly grey operators, routing traffic on the internet and using local calling prices.
It wasn’t long ago that an international cell phone call cost upwards of $1 a minute. Who brought those prices down ? Grey operators using local sims and an internet connection to dial cell phones as if they were national not international calls.
Grey operators broke the telcos monopoly.
Its a part of market forces…. and the next time you get your phone bill… remember its at least 50% cheaper because grey operators forced the big telcos to drop their prices.
@Liam
Thanks very much for your post, it’s good to hear an opposing viewpoint. You didn’t mention which company you work for, can you share that with us?
And you’re correct we probably don’t understand grey routes as much as some will, but that’s because we don’t use them, and don’t want to.
You seem very much in favour of grey routes purely for the way they can bring market prices down. That doesn’t sit well with us, as an organisation we’d rather SMS prices held up. When prices erode the total amount of revenue and profit available in a market place decreases, companies suffer, people lose jobs. Eventually to try and make up for the lost revenue quality starts to suffer. It’s a slippery slope.
We believe in good solid stable long term business, we focus our attention introducing new customers to the advantages of SMS, we focus on growing the marketplace as a whole, we’re not bothered about driving down cost, that’s why we don’t use grey routes.
How about voice termination?? I would want to learn how grey route is actualised for making long distance calls