Next-Generation Messaging: Moving Beyond Legacy Short Message Service Centers (SMSCs)

Carriers are taking control of their SMS networks, replacing or fronting their legacy SMSCs with more robust nextgeneration solutions. Next-gen SMS solutions are modular, which enables advanced messaging services without costly network over-engineering or overhaul. With this approach, carriers can grow capacity and capabilities incrementally or create a complete, endto-end SMS system.

June 2006

This material is for informational purposes only and subject to change without notice. It describes Tekelec's present plans to develop and make available to its customers certain products, features and functionality. Tekelec is only obligated to provide those deliverables specifically included in a written agreement signed by Tekelec and the customer. The Tekelec logo, EAGLE, G-Flex, G-Port, and IP7 are registered trademarks of Tekelec. Sentinel, TekCore, TekMedia, TekWare and TekServer are trademarks of Tekelec. All other trademarks are the property of their respective owners. Any export of Tekelec products is subject to the export controls of the United States and the other countries where Tekelec does business. Tekelec, 2006. All rights reserved.

Introduction
The last several years have seen a worldwide surge in short message service (SMS) traffic. Some of that surge is attributable to the steady growth of person-to-person messaging, but a substantial amount of it comes from other uses of SMS. SMS voting, such as is done on the popular American Idol show, has become increasingly common. During the shows 2005 season, audience members sent 41.5 million text messages, three times more than they did in the previous season. Even more important is the use of SMS for other mobile commerce (M-commerce) applications, such as sports scores updates, weather reports, and similar services. Carriers are encouraging U.S. consumers to adopt text messaging by offering bundled packages, promoting content like music, pictures and videos, and billing via SMS. According to John Delaney, principal analyst in Ovums Consumer Group and leading expert on the global market for multimedia services on mobile networks, SMS texting traffic growth is projected to increase nearly 40 percent in North America during 2006. There is also the rise of multimedia SMS applications such as mobile instant messaging (MM-IM) and services that link text messaging with voice services. These newer forms of messaging create additional revenue opportunities for operators, but not without pitfalls. The opportunity is clear. It is a way for operators to gain a new revenue stream that will grow steadily into the foreseeable future. But, there is a related pitfall it can be an expensive proposition to provide adequate SMS service as messaging traffic grows. The potential problems relate to short message service centers (SMSCs), which perform the job of handling mobileto-mobile traffic. Today, SMS network architectures are built on store-and-forward SMSCs designed to handle relatively predictable traffic created by simple person-to-person text messaging. Unlike simple texting, applications such as tele-voting create large spikes in signaling traffic, which can strain the capacity of legacy SMSCs and create network bottlenecks. As network SMS traffic increases, SMSCs are being forced to perform SMS-related tasks for which they are not well suited, most notably handling routing tasks. Possible solutions are to deploy additional message centers or to expand signaling bandwidth to add extra capacity to support new SMS applications. However, neither approach is economically viable in todays fiercely competitive market. Instead, carriers are looking to take control of their SMS networks, replacing or fronting their legacy SMSCs with a more robust next-generation (next-gen) SMS solution. Next-gen SMS solutions are modular, which enables advanced messaging services without costly network over-engineering or overhaul. With this approach, carriers can grow capacity and capabilities incrementally or create a complete, end-to-end SMS solution.

The Benefits and Challenges of Text Messaging for Mobile Operators

During the past several years, telecom operators have seen a surge in SMS traffic. In some markets, such as EMEA and Asia, SMS messaging has evolved into a cultural habit, as familiar as talking on the phone or sending e-mail. In other markets, such as North America, CALA, and India, promotional events have driven spikes in SMS usage, while increasing the popularity of SMS messaging. SMS messaging is expected to see further growth in the next several years and will continue to be an important revenue source for operators, as they look for new revenue streams. Some of the biggest growth is expected to be fueled by M-commerce applications, such as sports score updates, weather reports and similar services. Multimedia messaging, although still in its earliest stages, will become increasingly popular and lucrative for operators as well. Cell phones have become multimedia devices, including the built-in ability to play music and take 2
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photographs. Users will increasingly share music and photographs (and eventually, video) with each other using multimedia messaging, and operators will charge for that use. Basic text messaging is expected to grow significantly between now and 2010. The following two charts (Source: Ovum Messaging Forecast, March 2006) show estimated basic text messaging traffic by region through 2010. The first chart details the number of messages expected to be sent, while the second estimates the total amount of revenue. The same Ovum Report forecasts worldwide multimedia messaging - picture, audio and video - traffic to more than double from 20.2 billion to 44.8 billion messages from 2006 to 2008. During this same timeframe, the associated worldwide multimedia messaging revenue is expected to grow from $7.1 billion to $11.4 billion. The skyrocketing growth in multimedia messaging will more than compensate for the drop in pricing, resulting in a significant increase in multimedia messaging revenues for carriers.

Short Text Message Traffic

1,400,000

Millions of Messages

1,200,000

1,000,000

800,000 600,000

400,000 200,000

0 North America Latin America Western Europe Eastern Europe China-India Asia-Pacific Middle East and Africa

2006 98,893 116,416 195,393 46,416 612,889 456,692 106,293

2007 117,035 181,807 199,708 50,327 841,573 512,358 147,848

2008 128,098 240,373 194,207 48,701 1,025,102 551,850 181,900

2009 134,980 302,987 182,134 42,164 1,215,988 586,686 223,267

2010 142,360 333,833 172,094 32,427 1,299,606 609,267 247,149

Source: Ovum Messaging Forecasts, March 2006

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Short Text Messaging Revenues

25,000

Revenue in US $ (Millions)

20,000

15,000

10,000

5,000

0 North America Latin America Western Europe Eastern Europe China-India Asia-Pacific Middle East and Africa

2006 7,060 4,102 20,408 2,422 8,167 9,163 3,541

2007 7,915 6,066 19,815 2,480 10,754 9,950 4,625

2008 8,231 7,604 18,316 2,303 12,524 10,342 5,364

2009 8,266 9,095 16,325 1,945 14,150 10,559 6,222

2010 8,316 9,499 14,629 1,503 14,436 10,469 6,537

Source: Ovum, Messaging Forecast, March 2006

How SMSCs Work

As the previous section shows, there are significant revenue opportunities for operators. But there are significant challenges as well, which will be covered in the remainder of this section. But before detailing those challenges, its worthwhile to have a basic understanding of how SMSCs deliver SMS traffic. When an SMS message is sent from a cell phone, the message is routed from the phone to an operators mobile switching center (MSC). The MSC, in turn, routes the message to an SMSC. The SMSC is designed as a store-andforward mechanism. First, it stores the message, and then it queries the operators home location register (HLR) to find out the location of the recipient on the operators network. Once it finds the location, it sends the message to the recipient. If the recipient has his cell phone turned off or is in a location where cell phone service is unavailable, the message stays stored on the SMSC. The SMSC then makes periodic attempts to deliver the message. Once the recipient is available, the message is delivered.

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Typical SMSC Deployment: Mobile Originated (MO) Message Routing

If the message is meant for delivery to a recipient on another network or to an application (for example, an SMS query to a Web-based weather information application), things get more complicated. The message must be sent either to another network or to an intermediary that will then deliver the message to the network. Approximately 85 percent of traffic gets through on first delivery attempt (FDA). That means that all of the initial processing that the SMSC does to store, query and forward messages is to a certain extent a waste of processing power. It would be much more cost-effective for an operator if a less expensive piece of equipment could first attempt to deliver the message. That way, SMSCs would only have to handle those 15 percent of messages that truly need their store-and-forward capabilities. The other 85 percent could be delivered by less-expensive hardware. (Tekelecs TekMedia SMS Solution is capable of providing this functionality and is discussed in more detail at the end of this paper.).

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Operator Challenges Handling SMS Traffic

The nature of SMS traffic and the way that SMSCs deliver that traffic can cause problems for operators, leading to additional costs and eating into profits. Following are the major challenges operators face when handling SMS traffic.

Congestion Due to M-commerce

M-commerce has not yet caught on in a significant way, and so in normal operations, it does not cause congestion. But voting applications, such as when TV viewers vote on a show like American Idol, can cause significant traffic spikes and congestion. And, it is not just blockbuster TV shows that cause this traffic. Increasingly, local television and radio stations sponsor contests which use SMS for voting or sending messages, and they cause significant spikes as well. Typically, a voting application will cause a traffic spike of from four to five times customary traffic. An operators normal array of SMSCs cant handle this spike; the network becomes congested, and messages cant be delivered. This puts the operator in a quandary. If it buys additional, expensive SMSCs capable of handling the spike, it is spending a significant amount of money for rare, one-time occurrences. If it doesnt buy the additional SMSCs, it will not be capable of meeting its customers needs or gaining the additional revenue generated by the increased SMS usage.

Lack of advanced network security

In todays modern SMS networks, protection from hostile spam attacks is getting increasingly difficult as spam techniques become more advanced. For example, by changing the SMSC signaling connection control part (SCCP) address (spoofing) in the SMS message, spammers make it very difficult to distinguish a spam message from a legitimate message from a partner network.

No support for real-time network performance or quality of service (QoS)

In most SMS networks, SMS statistics are retrieved from call detail records (CDRs), often a long time after the message itself was sent. Unfortunately, CDRs do not allow easy correlation with SS7 errors and QoS details, leaving the operator in the dark on how to improve network quality and customer satisfaction. Additionally, legacy SMSCs can get bogged down during peak message traffic periods, creating bottlenecks that impact message delivery performance, subscriber satisfaction and ultimately revenues.

Legacy architecture results in increasing operations costs

Architectural design and lack of modularity limits scalability, complicates redundancy efforts and negatively impacts the upgrade process.

ANSI-41 and GSM Interoperability Issues

Some operators operate hybrid networks. They own two separate networks, one that uses the ANSI-41 protocol, and the other that uses GSM. To deliver a message between the networks, the message format must be converted from one protocol to the other. A related problem is when someone from an ANSI-41 network sends a text message to someone on a separate GSM network, owned by a different operator, and vice versa. For the message to be delivered, a conversion has to take place. Operators have devised a solution, but it requires expensive SMSCs and drives up costs for operators.

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Short Code Routing

Mobile operators can gain extra revenue by selling a kind of "vanity" SMS address called a short code. Short codes allow subscribers to personalize or customize their addresses with unique names or words such as BigBoss. Potentially, this can be a lucrative revenue stream. The ability to send messages to a short code address is called short code routing, and there can be significant operator costs associated with doing this. The SMSC does the job of routing messages. Each time a new short code is added to the system or an old one deleted, every SMSC on the entire networks needs to be manually provisioned, which is time-consuming and expensive.

Message Delivery Costs

When SMS messages need to be delivered to another operators network, many operators have to pay message delivery access (MDA) fees to a hub provider to handle the routing. These extra fees make SMS services less profitable for operators.

Proliferation of SMSCs within the Mobile Network

In order to meet SMS demand, operators feel that they have only one choice to buy additional SMSCs. SMSCs are expensive devices and are costly to install and maintain. They also require significant management and provisioning time. Additionally, if an SMSC fails, it can generate a substantial number of management messages, which potentially can cause serious network congestion, and even a network failure.

Bolt-on Billing Systems

Legacy SMSCs were not designed with integrated billing systems, forcing operators to purchase and integrate thirdparty billing platforms. These costly bolt-on systems offer limited billing options and require additional upgrades and integration work every time the SMSC gets a new feature for which the operator wants to bill. Next-generation SMS solutions solve these problems and others for operators. A next-gen SMS takes all of the SMS routing decisions away from SMSCs and allows SMSCs to perform the tasks they were designed to perform, handling mobile-to-mobile SMS traffic. SMSCs are not designed to handle the loads caused by mobile-to-machine traffic, such as in voting applications and ring-tone servers. Next-gen SMS offload this traffic so that it never reaches SMSCs. They can cut costs for operators, because they allow operators to handle increasing SMS traffic, without having to buy additional SMSCs. They also solve a variety of other SMS problems, including helping hybrid network operators, increasing reliability, stopping spam and phishing attempts, providing improved network routing and enhancing network performance and QoS, handling short code routing, and cutting down on message delivery costs.

How Next-Gen SMS Solutions Work

Next-generation SMS solutions can solve these problems and others for operators and can offer substantial financial benefits. In order to understand the benefits, one first needs to understand how a next-gen SMS works. The core function of a next-gen SMS is to take all of the SMS routing decisions away from SMSCs and leave SMSCs with the task they were originally designed to perform handling mobile-to-mobile SMS traffic. Normally, mobile traffic is routed by signal transfer points (STPs) to SMSCs. With a next-gen SMS solution, however, all of the mobile-originated traffic and the majority of mobile-terminated traffic is off-loaded from the SMSC . The next-gen SMS solution is designed to be integrated with and deployed alongside an STP via a high bandwidth Sigtran (SS7 over IP) interface. The next-gen SMS router directly transfers signaling system 7 (SS7)based SMS messages over IP-based short message point-to-point (SMPP) networks to an SMPP gateway or external short message entity (ESME). From the mobile-originated SMS SS7 viewpoint, the next-gen SMS router functions 7
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like an SMSC, accepting SMS messages from the serving mobile switching center. After the SMS message is received, the next-gen SMS router authenticates the sender and performs a prepaid dip, if required. Then, using configurable routing rules, the router identifies the destination route based on the SMS message content, such as destination address.

Typical Next-Generation SMS Solution Deployment

The next-gen SMS solution offloads mobile terminated traffic (person to person or application server to person) from the SMSC via the FDA feature. The next-gen SMS queries the recipients location and attempts to deliver the message to the serving MSC. If the recipient is unavailable or delivery to the serving MSC fails, the next-gen SMS sends the message to the SMSC. Since FDA is successful for at least 85 percent of mobile-terminated traffic, the next-gen SMS can significantly free up the SMSCs processing capacity by offloading this traffic.

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First Delivery Attempt (FDA) The next-gen SMS solution can also be deployed with prepaid rating for accurately rating prepaid senders and recipients. The next-gen SMS router contacts the prepaid rating engine via a DIAMETER interface to rate a prepaid sender and/or recipient. In turn, the prepaid rating engine checks the prepaid subscribers balance and debits his/her account if sufficient funds exist. Additionally, an optional session initiation protocol (SIP) interface on the next-gen SMS router provides the bridge to next-generation messaging and services. With the interface, the next-gen SMS router acts as a 2G proxy and enables the interworking between 2G, 2.5G and 3G networks. 3G subscribers can receive messages from 2G subscribers and vice versa. 3G subscribers who are roaming in a 2G network can send and receive messages. The feature also enables TDM networks to access advanced IMS services.

The Benefits of the Next-Gen SMS Solution

The next-gen SMS solution offers substantial benefits to operators, most notably the following:

Stops the Proliferation of Legacy SMSCs

By offloading mobile-originated traffic from existing SMSCs and only using the existing SMSCs for mobileterminated traffic, the next-gen SMS solution takes over the responsibility of SMS routing from the SMSC and frees it up to perform its designed task mobile-to-mobile SMS delivery. In a network where the mobile-to-machine 9
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traffic percentage is high, the next-gen SMS enables the operator to handle higher SMS traffic without increasing the number of SMSCs.

Improves Scalability and Lower Operating Costs

A modular design enables advanced messaging services without costly network over-engineering or overhaul. With this approach, carriers can grow capacity and capabilities incrementally or create a complete, end-to-end SMS solution.

Boosts Revenues and Opens New Markets with Integrated Billing

A next-gen SMS Prepaid solution is highly configurable, provides rule-based prepaid system triggering and enables database driven message routing. The flexible solution can gracefully handle challenges like migrating to another prepaid platform, multi-vendor network CAMEL implementation, and adding cost efficient refund functionality to a network. The modular approach to prepaid vendor specific protocols and configurable functionality makes the nextgen SMS Prepaid solution easy to adapt to a specific network environment, providing a rule driven, versatile and flexible prepaid solution.

Assists Hybrid (GSM/ANSI-41) Network Operators

The next-gen SMS supports both ANSI-41 and GSM interfaces simultaneously, and can be deployed in a hybrid GSM/ANSI-41 network, allowing the seamless transfer of SMS traffic. It also assists operators migrating from one network technology to the other (such as CDMA to GSM). The next-gen SMS analyzes the destination address and, based on the provisioning database, makes a decision on whether the SMS should be routed to the GSM SMSC or the ANSI-41 SMSC.

Performs Flexible Routing Analysis

The next-gen SMS has a very sophisticated routing program that determines where to send a message based on pattern matching on the sender address. It supports least-cost routing, and is therefore able to choose the leastexpensive route for sending messages more expensive routes are only chosen if there is an overflow in the leastexpensive routes. Additionally, it is able to handle short code routing, so that operators do not have to manually provision their SMSCs in order to handle short codes.

Delivers Scaleable Performance with Increased Reliability

The next-gen SMS is built on standards-compliant hardware, and is designed so that if one next-gen SMS goes down, another one can automatically handle its traffic. A next-gen SMS can be configured to handle SMS traffic rates of more than 5000 SMS submissions per deployment. Increased traffic handling capacity can be easily achieved by utilizing higher performance server hardware, or by adding a blade to a standards based ATCA platform messaging system.

Integrates Local Number Portability (LNP)

For U.S. operators, the next-gen SMS may provide built-in LNP support that permits the operator to route SMS traffic to ported subscribers without relying on third-party LNP databases and paying higher fees for LNP support from SMS hub providers.

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Increases Network Security

In todays modern SMS networks, protection from hostile spam attacks is getting increasingly difficult as spam techniques become more advanced. Besides the basic screening and filtering on SMS (MAP and SCCP) fields, advanced anti-spoofing and spoof-detection technology is required to beat the high-tech international SMS spammers. In order to be able to cope with the ever increasing resourcefulness of spammers from all over the world, operators need to be able to respond quickly to changing tactics and spam techniques. With the increasing threat of SMS spam, solid spam protection will be an essential customer care asset.

Implements SMS-Offloading as Part of Solution Deployment

The architecture of a next-gen SMS deployment automatically incorporates SMS offloading. The solution uses an efficient IP-based SMPP network for offloading mobile-originated SMS traffic from the TDM network. This means that the next-gen SMS provides an operator with an SMS pipe that will not be limited by the TDM network bandwidth. Additionally, the next-gen SMS offloads mobile terminated SMS traffic from the SMSC. The advantage is in reduced licensing fees and freed-up SMSC processing capacity. This offloading is particularly important because of a next-gen SMS feature called first-delivery attempt. Before the message is sent to the SMSC, the next-gen SMS first attempts to deliver the message itself. An estimated 85% of the time, the next-gen SMS will be able to deliver the message. This reduces the need for SMSCs, and also cuts out intermediary delivery fees.

Reduces Costs with Space and Power Savings

The next-gen SMS requires less power and space than do legacy SMSCs. Additionally, because the technology is simpler than SMSCs, they require less provisioning, and require less management and maintenance. They can also be installed and deployed at a lower cost.

Summary
The worldwide surge in SMS traffic represents a significant financial opportunity for operators. It is a way for them to create a new revenue stream that will grow steadily into the foreseeable future. Operators use SMSCs to perform the job of handling mobile-to-mobile traffic. But SMSCs are being forced to perform other SMS-related tasks for which they are not well suited, most notably handling routing tasks. The growth of SMS messaging and inherent shortcomings in SMSCs represent financial and technical pitfalls for operators, who face the possibility of SMS outages and increased costs as SMS traffic increases. Next-gen SMS solutions offload the work of SMSCs, allowing operators to handle increasing SMS traffic without having to buy additional SMSCs. Next-gen SMS costs less than SMSCs, are less expensive to install and maintain, and deliver higher performance and additional capabilities. Additionally, next-gen SMS solutions provide advanced network security, QoS for premium services and integrated-prepaid billing and the ability to bill for all of these services. Future messaging solutions will evolve beyond networked SMS to support networked multimedia (MM) and IM applications in SIP and IMS architectures. These networked MM-IM solutions will provide secure, access independent, end-to-end message delivery service that supports all types of media picture, text, audio and video. These solutions also will provide easier "conversational" instant messaging experiences for interactive environments such as chat rooms and conferencing.

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As SMS services continue to grow and evolve to incorporate next-generation, multimedia applications, operators need to look beyond legacy SMSCs to address the strain on network capacity and resources. A next-gen SMS solution allows mobile carriers to cost-effectively increase capacity and the support advanced capabilities consumers demand.

Tekelecs TekMedia Short Message Service (SMS) Solution

TekMedia SMS is an innovative, modular solution, which enables operators to deliver advanced messaging without costly network over-engineering or overhaul. Carriers can grow capacity and capabilities incrementally or create a complete, end-to-end SMS solution. Key Benefits Improved network routing. With advanced load balancing and throughput control features, routing rules in the TekMedia SMS solution intelligently deliver traffic to the intended destination. For example, during high-traffic periods, such as televoting, application traffic can be efficiently routed to the external short message entity (ESME), with any potential overload safely being queued in a TekMedia Message Store or an existing SMSC. Advanced network security. Using the solutions rules-based filtering and advanced anti-spoofing features, operators can virtually eliminate the delivery of unwanted messages to their subscribers. With the addition of modular filters, even the most advanced spam techniques such as message content and address randomizers, spoofing, flooding, viruses and phishing can be thwarted. Enhanced network performance and QoS. TekMedia SMS presents the actual SMS data visualized per source and destination application, network and country, including successful and erroneous messages. Operators can compare message rates with network performance, identifying bottlenecks and other problems before they become service affecting. Increased revenues. Tekelecs prepaid SMS solution enables operators to realize additional revenue by extending their SMS service to prepaid subscribers. It supports real-time billing, late billing and refunds for messages that cannot be delivered.

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Features Routing -- SMS Router (SMSR) -- identifies and eliminates SMS bottlenecks and wasted mobile switching center (MSC) capacity with advanced load balancing and throughput control techniques. -- SMS Hub (SMSH) -- flexibly and cost-effectively monitors and controls SMS application traffic. Security -- SMS Firewall (SMSF) -- protects networks from hostile spam attacks, including advanced techniques like spoofing. -- SMS Authorization Center (SMSA) -- provides an additional level of security with modular spam filters and advanced verification technology. The SMSA enables operators to screen and inspect all SMS message types, from any network or IP connection. Data Management -- SMS Statistics (SMST) -- generates real-time data on SMS usage and network performance, which can be delivered to the desktop. Billing -- Prepaid SMS Billing Controller (SMSP) -- enables real-time charging and optional refunds of SMS transactions. It uses transaction logging to provide a complete audit trail and interfaces to virtually any prepaid billing system.

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 Storage -- SMS Message Store (SMSS) -- functions as an active storage platform with flexible delivery options that exceed the capabilities of todays SMSCs. With adaptive delivery schemes, the SMSS maximizes the use of signaling resources during periods of heavy traffic.

3G Next-generation Messaging: TekMedia Multimedia Instant Messaging (MM-IM)

The TekMedia next-generation messaging architecture supports all types of messaging service methodologies and paradigms; from simple store-and-forward text messaging and Instant Messaging to MMS. The TekMedia next-generation messaging architecture provides a framework for messaging services that can horizontally integrate with themselves as well as other services. This architecture is based on open SIP standards defined by the standards bodies such as IETF, 3GPP, 3GPP2 and OMA. The architecture offers the same messaging service regardless of access methodologies or payload.

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