Start Corporation says the service providers concerned -- who sell corporate clients short-message service capacity -- are able to offer discount rates on the basis of using cheaper capacity from European and Asian telecommunications carriers. They then "mask the foreign-originated phone number with a falsely assigned local number," according to the provider.
Start's chief executive officer, Michael Mak, said Start's research found that a number of providers had been using overseas carriers to offer cheaper short-message service rates to a number of major blue-chip customers in Australia.
"Our agenda is to stop the SMS services industry from exposing Australian consumers and corporate customers to potential trade practices and a data privacy fiasco -- which will be very damaging to the industry as a whole. Australia is a leading market in SMS applications and we don't want to see that change, which is not good for us, our competitors, carriers, consumers or anybody in it," said Mak.
Mak claimed, however, that Start had no plans to enmesh its competitors in legal battles.
"We would like to discourage industry participants from engaging low-cost foreign-originated services, which is not sound from data-privacy, service-quality or spam-prevention points of view. We are not trying to cause legal troubles for the other service providers, but more so to encourage them to use Australian carriers for a higher-quality service, and to play on a level playing field with costs," he added.
Mak said the company had communicated with the Australian Competition and Consumer Commission (ACCC) two weeks ago and was told that the ACCC was now investigating the matter.
ACCC public relations director Lin Enright said a service provider "may be at risk of breaching the Trade Practices Act" if they are deceiving customers on certain information about their services. However, Enright emphasises that there needs to be solid proof that the service provider in question is in fact misleading or deceiving consumers.
Mak said the issue came to their attention after a few of their customers asked them about the international service. The customers also asked Start to match international rates after they had been pitched to by other SMS service providers in the market.
"We have offices and partners in other countries and certainly have access to cross-border messages. We choose not to provide this service. We offer services to banks and airlines and cannot afford to compromise data privacy and service reliability. In fact, we actively urge our partners in other countries to also only purchase from their respective local carriers," Mak said.
"There is no other reason why these messages cannot retain their original foreign originating phone number other than the fact that consumers do not welcome them. So to mask it with a local origin is misleading behaviour," Mak added.
"It's a bit like replacing a 'Made in China' tag on a t-shirt with 'Made in Australia' even though it's not really the case," he said.
ZDNet Australia tried to get more information about the issue from one of the players named by Start, Legion Interactive. However, a spokesperson said they have a policy not to comment on "mere allegations".
Instead, the company released the following statement under the name of its chief executive officer, David Burden: "Legion Interactive is committed to sourcing the most cost-effective messaging services for our client base".
Mak said Start was waiting for a reply from the ACCC before taking further action.
One telecommunications company weighed in to the debate. Vodafone Australia released a statement saying "We do not support the practice of service providers using overseas carriers to route SMS traffic. Whilst we do not have commercial agreements in place with all of our roaming partners, we carefully monitor SMS traffic between carriers and where there is an imbalance of ingoing and outgoing volumes we put a formal commercial agreement in place, or in extreme cases block messages. By having the appropriate agreements in place, we ensure that all of our customers have a high-quality reliable service."