USSD or Unstructured Supplementary Service Data is a capability of all GSM phones. It is a technology that is built into the signalling layer of the GSM specification, and is therefore already present in all GSM phones and networks. It is session oriented, unlike SMS which is a store-and-forward, transaction-oriented technology. Using an Internet analogy: If SMS is email, USSD is Telnet.
You may wonder? Telnet? My phone has Telnet ability? Yes. It is a powerful technology with many applications, and it is particularly useful for mobile banking and mobile payment. USSD opens a secure session that leaves no message trail and requires no local storage in the phone.
USSD response times are faster than SMS, and there is a session between the application and the mobile phone, just like a remote, old style, mainframe terminal. This means that if a carrier includes a USSD gateway into their network you can easily build all kinds of applications for a mass user base (yes, even old GSM phones can use USSD). USSD is part of the standard GMS stack, and all that is required to implement it is the USSD gateway.
Other than its use for banking and terminal initiated sessions, USSD also has server initiated messages that can be used, for example, for local oriented marketing. We can send a service message to all the users near a particulare base station indicating that a nearby store is running a sale.
Unfortunately most carriers and Value Added Service companies have never heard of USSD. Why? Well this can be explained when you understand the culture prevailing in mobile carriers, particularly in the developing world. I have had the opportunity to meet and I know lots of people from a number of different carriers. I have even had the opportunity to watch some of these carrier owners talk, and can confirm first hand that the culture prohibits the exploration of technologies such as USSD.
I also believe that in most companies, the owners or the founders are responsible for setting the tune of the company or the corporate culture. Once this is in place, it is very difficult to change. Therefore – if you know the origin of the company, you can take an educated guess as to what to expect when you try to do business with them.
Everybody knows that the cell phone carrier business is a good business to be in, particularly in the developing world, because people in these markets have very few alternative communication options. And since everybody needs to communicate, no matter how poor they are, the market is captive.
Every country has its upper class, wealthy and successful people. Again, no matter how poor the country is, there is always someone rich enough. It can be a land owner, coffee salesman, a politically influential oil company owner … there is always someone wealthy enough to buy or build his own carrier. It is no surprise that most countries have GSM coverage.
Contrary to popular belief, you don’t need to know a thing about technology or networking to build your own carrier. You can always call Sony Ericsson or Nokia-Siemens and tell them “I have purchased a spectrum from my country’s government, and now I want you to build a GSM carrier network for me”. They will be glad to do it.
After your business is up and running, thanks to the GSM standard you can try to make your operational costs lower by using other network providers and playing them against each other. Then you can start doing what you are good at. These guys are good into buying cheap and selling high, understanding their customers’ needs and how things work in their country.
As a technology provider we have to understand how these companies operate to enable us to work with them. If you want to sell a great technical project to them you have to understand that they don’t care about technology, and can barely understand how great or innovative your idea is. They want to increase their profit and they know that their user base is very different from their European or Japanese counterparts. They probably understand their user base a lot better than you do. Be prepared to learn from them, be patient in explaining the good points of your product and be ready to adapt to whatever they have in mind. Keep in mind that you will have a more difficult sell and probably a lower margin than you can could get from European carriers. You will probably have to shoulder all the risk for yourself and try to negotiate a kind of revenue sharing that does not require investments from them.
As a user I just want to have more payment options. As a technical guy I know that USSD can enable people that cannot have a bank account today to have access to banking services. Thus, I have to say that USSD technology may be old but it’s very new and useful in many places.
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