Companies like ours lease, build the infrastructure and maintain these codes, absorbing all of the overhead, and then sell the use of it in smaller portions to companies that don't need their own dedicated short code. It's a long-proven method that works in a variety of industries - one company buys in bulk (food, hardware, vehicles, whatever) and sells, or distributes, those items in smaller quantity at a slightly higher price to make a profit.
Recently there have been companies trying to use "long codes" - which are essentially just 10-digit telephone numbers - instead of carrier-approved short codes in order to save money. There are situations where it works (although it's almost never as reliable or fast as short codes) and many where it doesn't.
Just yesterday a company that depended on long codes for their business decided that they just couldn't continue with that model any longer. The long codes simply didn't work well enough. In their own words, here's what happened:
"To all of our customers (past & present) the team at ReadyPing would like to thank you for your business. We were one of the very first companies to offer web-based wait list management and text message paging and are happy to know ReadyPing provided a valuable service to your business.If you have an application that is demanding, requires mission-critical infrastructure or high-volume throughput you might be doing yourself a disservice by taking any route other than a standardized, stress-tested short code provider.
This email is to inform you that Saturday, September 10, 2011 is the last day ReadyPing will be available for use. Your account will not incur any charges beyond that date. A final audit will be performed on or before September 10th to ensure all active accounts have been billed appropriately for services received.
Should you decide to search for an alternate provider, pay attention to how they send SMS messages. ReadyPing uses short codes (the 5-6 digit numbers you've undoubtedly seen for American Idol voting, etc.). Most companies in this space use long codes (standard 10-digit GSM phone numbers). Both messaging protocols work, but short codes can handle significantly more volume. That can be very important during peak dining hours when messaging volume is high.
Again, we thank you for your business. "