Let’s start at the very, very beginning: there is no investable business model for messaging. And yet, messaging networks require a significant amount of capital to reach network effects.
There is, in fact, only one honest business model in messaging: rated infrastructure. And, the returns from rated infrastructure, while dependable and linear - don’t maintain the kinds of revenues venture investors expect. And so, every other messaging business model ends up, eventually, exploiting the user, the data, or the terms of the relationship to keep up with the kinds of returns that investors expect. Usually, a messaging platform does one of two things: (1) gets acquired by a private equity interest that gradually turns it into a honeypot or advertising product; or (2) gets backed by an institution that takes a charitable or marketing interest in its success.
WhatsApp is the canonical example, which Facebook acquired to kill for the gobsmacking sum of $22B - only to strip down its business model and gradually integrate it into its advertising machine, contrary to its founders’ promises. Signal, from the Internet freedom community, was eventually given a philanthropic endowment - by one of WhatsApp’s co-founders. Neither organization, is trying to make a business out of messaging. In fact, one of the things that makes Signal such a growingly popular app is that its lack of commercial motivation means that it doesn’t have to make the revenue-driven turn to user exploitation. Signal can stay smart about being intelligently secure, dumb (wilfully ignorant, really) pipes.
As it turns out - most of human infrastructure is built on (arguably) secure, dumb pipes. It’s what enables us to rely on infrastructure without constantly worrying that it’s being used against us. Confidence in the security of dumb pipes is why we drink water from taps (or bottles), trust pharmacists, and express some of our most personal things to our loved ones, over the phone.
The world runs on dumb pipes - and, past a point, the capital necessary to run dumb pipes that connect the whole world exceeds the amount that even a very guilty feeling billionaire is able to pay for. And that’s a good thing! It’s also an observation that typically results in governments exerting their influence, through regulation and subsidies, to push for reasonably negotiated, publicly transparent, rated pricing to build and maintain infrastructure services.
“Confidence in the security of dumb pipes is why we drink water from taps (or bottles), trust pharmacists, and express some of our most personal things to our loved ones, over the phone. ”
The reason that the GSM standard (with SMS as its killer product) still reaches 1.5 billion people more than the whole Internet (the lowest number in history) isn’t technology. It’s because the GSM standard was rolled out through business models that locally reinvested revenue - and created exponential incentives to invest in the expansion of the underlying infrastructure. International capture wasn’t possible, because local spectrum auctions still determine market access. And SMS is an embedded component of that standards - an afterthought that packaged unused spectrum into 160 character messages, and accidentally launched the killer app of the most used technology in human history.
And yet, 25 years in, the vast majority of SMS users still misunderstand its true value: as a data channel. SMS is real-time, works in places without reliable power or Internet infrastructure, and is designed to be encoded. It is not restricted to any carrier or handset. And, more often than not, it’s the last communication infrastructure to go down and the first to come back up in emergencies.
For more than two decades now, SMS has been viewed as an elder technology, unignorable for its reach, but mostly relegated to afterthoughts and contingency planning in markets driven by cutting-edge technology. Despite its advanced age, SMS still dominates the messaging realm - with an install base of 2 billion larger than all of social media combined.
Despite the large user base, reliability, and its reach to the last mile community, even in areas with no or limited access to electricity and internet, most technology systems treat SMS as a blast/spam channel. It doesn’t matter how smart the pipes are, if all you do is pipe spam through them.
At Frontline, we’ve seen what’s possible when people use messaging to do smart things, using SMS’s dumb pipes. We’ve used SMS to connect people to healthcare, increase the turnout of national elections, and enable environmental monitoring in places where nothing else could. Through SMS, governments have been able to contain pandemics, humanitarians have coordinated camp management, schools have resumed studies in the middle of the Covid-19 epidemic, youth have lent their voice on matters that were affecting them, and universities have conducted research with participants who were historically unaccessible. We’ve also seen people use SMS to build human rights reporting systems, to protect their communities from harm, and build participation into systems previously designed for broadcast.
As anyone will tell you, SMS isn’t the right tool for every occasion - and as recent events have shown, the world very much needs messaging apps like Signal, as well as even more digital infrastructure that isn’t motivated by profit maximization. We may also want digital public infrastructure that isn’t purely motivated by privacy - but focused on other, positive values like research, advocacy, or altruism.
Regardless, that infrastructure will benefit from learning 3 of the core business model lessons of the SMS paradox, toward building a sustainable, transparent, and ethical future:
The business model should distribute revenue toward re-investment;
The use of the infrastructure should directly generate revenue, so as not to require subsidization from other lines of business; and
Designing toward standards exponentially increases the ability to vary and contextualize products, and thus market saturation.