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In an increasingly crowded world of mobile virtual network operators (MVNOs), Ultra Mobile has been running quietly under the radar for nine months. It doesn’t have the eye-catching unlimited data plans or bandwidth sharing options of its sexier virtual operator peers. But it does have one particularly tantalizing feature: You can text any mobile phone in the world for free.
No, this isn’t a over-the-top app likes WhatsApp. It’s straight out of your SMS client. Carriers typically charge anywhere from 25 cents to 50 cents to send a text of multimedia message across the border. Though many carriers and MVNOs offer unlimited global texting options — for instance Cricket Wireless(s leap) has a $5 a month international messaging add-on — they often contain restrictions. Many of them limit you to a core group of 40 country codes or allow only text but not multimedia messages.
Ultra, however, is making international SMS and MMS a core element in all of its service plans, even at its $19 a month tier. And included in that unlimited bundle is access to 190 countries (there are 193 total countries officially recognized by the U.N.).
According to Ultra EVP of product and marketing Chris Furlong, international text messaging is one of the industry’s most sacred cash cows. Carriers refuse to discount it because of the huge margins they bring in. But an SMS payload is so small and messages move in such huge volumes, that the incremental cost of delivering a message internationally versus domestically is practically nil, Furlong said.
“The big carriers could do this but they choose not to,” Furlong said in a recent interview. “It’s really cheap for the carrier so it’s really cheap for us.”
An international service for an international customer base
As you’ve probably already guessed, Ultra is targeting a particular segment of the U.S. population: Foreign nationals and recent immigrants who have a lot of family and friends living overseas. But Ultra isn’t just targeting the low end of that market with basic talk and text phones. It’s adopted the same bring your device model of TracFone’s successful MVNOs Straight Talk and Telcel América.
Ultra is a T-Mobile(s tmus) MVNO, giving it access to the fastest non-LTE network in the country, while most of its plans come with unlimited domestic calling and some kind of data package (from 50 MB to 2 GB a month before speeds are throttled). All of its plans come with a monthly credit for international long distance — customers can buy more — and it charges cheap per-minute rates for global calls. Like other international calling MVNOs, it also offers a local-number service, which allows people in other countries to call Ultra customers at local rates.
It sells both regular and micro-SIMs for $10, but it doesn’t yet have the nano-SIM necessary to support the iPhone 5. Given that T-Mobile is in the process of retuning its HSPA+ networks to the more common PCS band, pretty much any GSM smartphone will work on both its voice and data networks.
Ultra’s core management team founded Hometown, a telecom long-distance provider, which runs the popular IndiaLD calling card service. The two businesses are closely linked: Ultra uses the same Hometown’s network to route its international calls, and the success of the long distance business helped fund the MVNO. Furlong wouldn’t reveal the exact size of Ultra’s customer base, but he did say the company has now shipped more than 700,000 SIM cards to its retail partners.
Does global SMS have a future?
Still, Ultra is operating in a crowded market. There are dozens of mobile companies that either focus on or pursue its core international calling
market, from Telcel and Lycamobile to the big operators themselves. Ultra, however, is smart to make international SMS a key pillar in its strategy. Foreign nationals in the U.S. are a diverse bunch, encompassing everyone from migrant laborers to University PhD candidates. Just like the rest of the populace — especially the younger crowd — gravitating away from voice to SMS and messaging services as a primary communications tool.
But there’s an open question as to just how much life global SMS has left. Because of the normally high costs of international SMS, many high-volume texters have already moved to over-the-top mobile communications services like WhatsApp, Viber and Tango to avoid cross-border tolls.
The big advantage of SMS is that it’s the world’s largest messaging network — anyone with a mobile phone can receive a message. But those OTT apps have built up huge networks in their own right, connecting hundreds of millions of people. If the operators don’t find a new model for international SMS (and voice) soon, it could disappear entirely.
Phones image courtesy of Shutterstock user Reno Martin