Following extensive research, Mobilesquared forecasts the A2P messaging sector was worth $17.21 billion as of the end of 2016, rising to $58.75 billion by 2020. During this timeframe, the global average enterprise SMS communication will double per subscriber from 0.5 per day to 1 per day.
However, it is the threat from grey route traffic that is generating significant concern among mobile operators, with mobilesquared estimating that the revenue leakage caused by grey-route messaging will cost the A2P ecosystem upwards of $82 billion between 2015-2020.
On average, the A2P SMS industry will be leaking $13.67 billion in revenues year-on-year during that timeframe, with each individual mobile operator on average losing $17 million per year. It is this level of fraudulent activity that is making mobile operators take not.
“Our focus is on securing our own networks and enriching our products," said James Lasbrey, Global Head of Messaging at Telefonica UK, during the roundtable. "We’re not trying to monetise everything, because it’s not about monetising, instead protecting our customers is an absolute priority for us.”
Lasbrey believes that enterprise messaging (or A2P SMS) has in some ways become a victim of its own resounding success over time. "In so much as its effectiveness in 2-factor authentication for say, banking services has made it a legitimate target for fraudsters. Fraud will always follow the money and the unstoppable growth of SMS in business has not escaped its attention. It means we as providers need to stay one step ahead in terms of innovation and strategic collaborations.”
The view from industry experts attending the roundtable is that the threat of fraud is an industry-wide issue that is now being addressed as more mobile operators look to secure their networks and protect their customers.
Simeon Coney, chief strategy officer at AdaptiveMobile Security, said during the roundtable: “Protection of subscribers and networks and revenues is actually something that a lot of mobile operators will be doing in the next 12 months – more so than they have probably done in the previous four or five years,”
He continued: “I think the implementation of that protection may be lumped in some cases and that will create disruption. I think some people are going to try and use that to insert themselves in the value to chain in order to get more value out of their position and that will create dysfunction.”
Nevertheless, the industry experts agreed that mobile operators have to act fast, as the rise of enterprise messaging is founded on highly-impressive performance SMS that reveal the medium is unparalleled across all other marketing channels.
“Messaging is probably the biggest return on investment in terms of communication that an enterprise will ever make. The power of SMS is just unprecedented in terms of cost of sending it, the read rate of 98%, the low level of spam, the very, very high level of redemption rates, the very small amount of opt out rates – less than 5% on average marketing campaign. So the one thing that I would say is that the reason for the growth is because the return on investment is incredible,” said Rob Malcolm, VP marketing and online sales at CLX Communications, and global board member of the Mobile Ecosystem Forum (MEF).
Malcolm added: “The MEF survey shows that SMS is still the most trusted communications channel as viewed by consumers, which just reiterates the fact that it is one of those channels that is unpolluted and very, very powerful. The only concern that I have right now is the level of trust that enterprises continue to have in the channel and if we don’t work collaboratively across the eco-system to ensure spam and fraud stays out, then I think that would significantly impact growth. But overall, I’m very bullish and very optimistic about the overall market.”
The roundtable concluded that the rise of alternative IP-based messaging channels, such as Snapchat and WhatsApp, are helping to create the opportunity of enterprise messaging.
“Our research reveals that consumers will accept two main channels when it comes to accepting communications from businesses: SMS and email, and not Facebook or Twitter. As more people transition their person-to-person messaging to IP-based services like WhatsApp and Snapchat, that frees up SMS as a channel for the enterprise,” said Nick Lane, chief insight analyst at mobilesquared.