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04Nov2013

Subcribers Lose Million of Unsolicited SMS

KUALA LUMPUR (Nov 4): “RM0.0 Get unlimited ringtones FREE. Send to 36600 to activate now!”

Most people have received SMS like these from unidentified 5 digit number short code, starting with 6 or 3.

It was not until bills were unusually high that Krishnah Singh,70, decided to take a closer look. To his surprise, there are 16 items labeled as such “services”, adding up to RM75.10.

He has been receiving small amount of spam SMS for a few months, but it only caught his attention when the message came once every 2 days.

“I usually delete the SMS right away, but I might have accidentally clicked on the link once.”

Little did Krishna know, that click is equivalent to agreeing to pay for a subscription, costing RM5 per SMS.

He demanded DiGi for a refund, but the phone service provider passes the buck to a third party– the Mobile Content Provider (CP) before reluctantly facilitating the process.

Local CP outsourcing to Sub-CP
Content Providers (CP) are companies who sends out vast amount of SMS with content ranging from jokes, ringtones, horoscopes, wallpapers to 4D results, advertisement, bank notification and contest.

According to MCMC, as of October 2013, there are 533 licensed Mobile Content Providers in total, whereby 148 licensees are offering mobile content through messaging services.

Johary Mustapha, President of Malaysia Mobile Content Provider Association (MMCP) said that 50% of CP’s revenue are sneakily made from unsuspecting consumers.
“These consumers are mostly rural folks, children, elderly and those who are less tech-savvy, some CPs and Sub-CPs are violating ethical codes for profit.”

Not all CPs create their own content, some are outsourced to a sub-CPs and practice revenue sharing model with them. Telco companies too, gets a slice of the pie for broadcasting the SMS.

For example, Telco company first collects RM20 subscription fee from a user, 50% of it will be paid to the CP. From there, CP will retain 20% of the revenue and 80% goes to the Sub-CP. But should a dispute arise and users ask for refund, CP will bare the full cost.

Officially registered CPs are Application Service Provider (ASP) license holder and are regulated by the Malaysian Communication and Multimedia Commission (MCMC). In contrary, the Sub CPs who don’t, use CPs as a gateway or platform to disseminate content to its subscribers.

Due to rampant complaints of unsolicited SMS, MCMC has many times, called upon CPs to implement self-regulation to their content.

However, the reality is far from ideal. CPs simply cannot and are reluctant to weed out misbehaving Sub-CPs.

“We do ask for Sub-CP’s business profile before working with them, but they behave otherwise after we accept them.

There are simply too many Sub-CPs to handle, it’s extremely tedious for us to scrutinize each one,” said Johary.
Still, MCMC insist that CPs are responsible in monitoring their Sub-CPs and will only prosecute CPs who fail to do so.

Anyone can become a Sub-CPs as it does not require any operating license. They are usually based overseas and couldn’t be bothered about local laws and business culture.

“There are a lot of Sub-CPs from Africa, China and Europe, operating through local CP gateway. Malaysian authority has no jurisdiction over them, so it is difficult to regulate this part of the business.”

Meanwhile, MCMC said in a written reply, 18 short codes has been suspended as of August this year. A total of RM595,000 in fines were also issued in 3 years to CPs who have breached their license conditions and failure to adhere to Mandatory Standard.

When asked of whether a blacklist exist to identify frequent offenders, Monitoring and Enforcement Division Head, Mr. Zulkarnain Mohd Yasin only revealed that a task force is in place to “discuss and address” matters related to mobile content service, and will continue to punish errant CPs.

Members of the taskforce includes Cellular Service Providers (Celcos), MMCP and Communications & Multimedia Consumer Forum of Malaysia.

Industry fear being scrutinize
Although the MMCP Association has been around for 7 years, it only managed to recruit 33 out of 140 local CPs to register as their member.

Connecting members of the industry and sharing information makes it hard for anyone to quietly accept contract from Sub-CPs with bad track records or cheat consumers. Many refuse to join the association because large portion of their revenue is at stake, he added.

“The more CPs are regulated, the lesser money they make,” he explains.

Johary attempted to recruit more members by reaching out to Telco companies, but see little progress.

“I asked them (Telco) to make MMCP membership a prerequisite, before CPs can register their short codes with the Telco. But this will affect the Telco’s income from CPs as many are not are members yet.”

No Real Risk for Misbehavior
The only spam detection method for CPs and Telco is via consumer complaints. Telco and MCMC are able to cut off or suspend the short codes if it’s being abused.

Under the Communications and Multimedia Act 1998, any non-compliance with the Mandatory Standards may lead them to a penalty of up to RM100,000.00 or jail, or both.

Though MCMC has been compounding CPs for spamming and cheating offenses, none of them has ever got their ASP license revoked, said Johary.

“Suspension and compounding is like digging one hole to fill up another.”

When there is no risk of being put out of business, CPs can just rent another short code from Telco to replace the suspended one.

Whereas Sub-CPs that close down due to the suspension can still make a comeback, disguised under a new company name.

“I don’t want the industry to go haywire just like in Indonesia, consumer complaints flooded the government office and the authorities decided to shut down the entire CP business.” he noted.

He feels that the authorities should grant real regulatory power to the association to curb the problem more effectively and shoulder some of the authorities workload.

“Members of the association try to do clean business, but who are we to force others, including our own members, to heed our calls? We don’t even have the power to blacklist Sub-CPs.”

Responding to that, MCMC indirectly rejected the request saying :”As an association, they already have internal mechanisms to deal with errant CPs who are members on any non-compliances issues.”

Given the current situation, Johary opined that raising consumer awareness can help stop CPs and Sub-CPs raking in millions through unsolicited SMS.

“Don’t give your consent easily. If you’re not sure whether you subscribed to anything, send to the 3 series short code, that’ll cancel whatever services you accidentally agreed upon. ”

Consumers should not stop at complaining to their Telco, but also make known to MCMC. Else, regulator would not take actions against the CPs.

He foresees a rise of mobile content related complaints as purchases via smartphones becomes more common.

Source: Yahoo! Malaysia News
Related Stories:The EDGE

  • 4 Nov, 2013
  • marilyn
  • 0 Comments

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