In A2P messaging, mobile operators have a service that will potentially offset the decline in SMS revenues, but to date they have been slow to exploit this potentially lucrative opportunity.
Our research into the global A2P messaging marketplace reveals a disconnect that has developed between traffic levels and market revenue discussed by the A2P community, and the A2P messaging traffic levels mobile operators are actually seeing. This has resulted in mobile operators forming a risk-averse A2P messaging strategy.
It is in the interests of the entire A2P ecosystem that mobile operators jump on the bandwagon post-haste.
White-route A2P is recognised as legitimate messaging that provides payment to a mobile operator for each message delivered on its network, whereas grey route is illegitimate messaging whereby no termination fee is paid to the receiving mobile network. To transform grey-route traffic into white-route traffic the mobile operators must invest in a next-generation SMS revenue assurance platform.
Right now, grey-route traffic accounts for 65% of total A2P messaging yet yields approximately one-tenth of the revenue per message compared to the cost-per-message of white route. Between 2015-2020, Mobilesquared forecasts that the revenue leakage caused by grey-route messaging will cost the A2P ecosystem upwards of $82 billion.
Between 2015-2020, cumulative revenues for A2P messaging will be $185.5 billion. However, had all grey traffic been converted into white traffic by the start of 2015, the A2P space would generate $267.6 billion over the same period. On average, during that same timeframe, the A2P industry is haemorrhaging money at a rate of $13.7 billion per year to grey-route traffic.
Mobile operators that invest in next-generation SMS revenue assurance platforms are able to convert grey-route messaging into white-route thereby generating revenues for themselves and the wider A2P messaging ecosystem. At present, mobilesquared data reveals that 15% of mobile operators have invested in the platform, and that figure will be just over 50% by 2020.
The success and growth of the A2P messaging opportunity is incumbent on the mobile operator investing in a next-generation SMS revenue assurance platform, but also on the wider industry to demonstrate a compelling business case for them to invest in a platform that has experienced declining traffic over the last 5 years.
The A2P industry believes mobile operators require educating when it comes to A2P messaging. Based on our research, Mobilesquared does not believe the mobile operators need educating, they need convincing about the actual opportunity that A2P messaging presents.