With the mobile internet attracting more and more attention and use, it’s getting very difficult for online businesses to ignore the world of mobile.

SMS (Short Message Service) is the technology behind text messaging and even though it’s far from being the most cutting-edge mobile technology, it’s often the first one companies will experiment with because it’s the most widely-used. Over 200 billion SMS messages were sent in 2007.

Here’s a basic primer on SMS designed to give businesses interested in the opportunities offered by mobile a general understanding of SMS.

The SMS protocol was designed to allow mobile communications devices to send messages to each other.

While the details of the protocol, like the details of most protocols, are boring, the most important thing to remember is that SMS makes it possible for a text message sent to your mobile phone’s number to get there.

SMS relies on a “store-and-forward” delivery mechanism. When a message it sent, it is sent to a Short Message Service Center (SMSC). The SMSC then forwards it to the recipient. If the recipient is unavailable (i.e. the mobile is turned off), the SMSC will try sending it again later.

It’s important to note that the delivery of SMS messages is not guaranteed.

If your business wants to take advantage of SMS to, for instance, send special offers or to provide stock quotes, you’ll need an SMS gateway.

Just as payment gateways connect your website to the banking infrastructure that permits you to charge someone’s credit card and have the amount deposited in your checking account, an SMS gateway allows your “application” to connect to the infrastructure that enables SMS messages to be exchanged via an API.

Messages that originate from your application are called Mobile Terminated (MT) messages. An example of a MT message would be a coupon that you send to 1000 customers who signed up to receive mobile coupons from you.

Messages that originate from mobile phones that are “routed” to your application through your SMS gateway are called Mobile Originated (MO) messages. An example of a MO message would be a text message sent to you to opt-in to that mobile coupons “list.”

To receive MO messages, you must obviously have a “number” to which those messages are sent. This is called a short code. You’ve almost certainly seen these in advertisements (i.e. “Text 1111 to PATOAK“). You can purchase a dedicated short code of your own or most gateways have shared short codes that you can use.

Sending MT messages and receiving MO messages is not free. The rates vary based on the mobile operator and your gateway provider.

There are also Premium SMS (PSMS) messages that enable you to sell via SMS. For instance, if you want to charge 99 cents for a ringtone, you will likely employ PSMS to deliver the ringtone.

The buyer will be charged for the PSMS message by his mobile operator. Because settlement of payments is not instant, some gateways offer programs to accelerate payments to you. Additionally, a transaction involving a PSMS message may involve MO and MT messages (i.e. you receive an MO message that initiates the purchase, send a MT message to confirm, receive a MO confirmation message and then deliver the PSMS message).

As you can see, while the overall functioning of SMS messaging is not incredibly difficult to grasp, the infrastructure behind it that connects mobile operators and the steps that are involved in dealing with SMS can be complicated. Most importantly, the overall costs of implementing SMS can be significant while the margins remain low.

Fortunately, there are lots of companies that provide end-to-end solutions be it for marketing, content delivery, alerts and more. These eliminate the need for you to develop popular SMS applications in house, integrate with a gateway and deal with all the other logistics required to set up an SMS initiative.

In future posts, I’ll take a look at SMS gateways and service providers.