A survey of mobile operators from around the world conducted by Mobilesquared has revealed that the most popular near-term monetisation strategy is domestic and international A2P SMS, followed by phone number portability and verification information, Internet of Things and M2M, and lastly A2P messaging via operator-owned OTT apps.
To unlock the revenues presented by domestic and international A2P SMS traffic, mobile operators must deploy an SMS revenue assurance platform and SMS firewall in order to transform the un-monetised grey route traffic into revenue generating white route traffic.
Mobilesquared research reveals that the number of mobile operators to have either introduced or updated an SMS revenue assurance platform and SMS firewall in the last 3 years is anywhere between 100-2005 — and like the markets they are addressing, this figure is a little “grey”.
Regardless, even at 200 this figure still leaves more than three-quarters of the approximate 850 mobile operators around the world yet to address their revenue leakage via grey routes and alternative illicit SMS traffic.
SMS is the channel that keeps on giving
SMS has become something of an anomaly within the telco space, as its much-heralded and anticipated demise has yet to materialize. Based on the findings of the MNO survey, 52% reported that their P2P traffic had actually increased over the last 12 months, up from the 39% of MNOs experiencing P2P SMS growth in 2014.
On the whole, the SMS market is in better health than the mobile industry suggests. The global SMS market was worth around $113.5 billion in 2014 and is only expected to fall to $112.9 billion by 2019, according to Juniper Research.
In developed countries where smartphone penetration is high, messaging apps are abundant and clearly impact MNO messaging revenues as peer-to-peer traffic migrates from SMS onto IP. But in developing markets P2P SMS traffic continues to grow.
Given the stats associated with SMS — including mobilesquared’s own finding that 90% of all messages are read within 3 minutes — not to mention the fact that SMS has total mobile ubiquity, it should not come as a surprise that enterprises9 are rapidly adopting SMS as a means to communicate with customers across all verticals — including financial, retail, health (and medical), food and drink, logistics, entertainment, utilities, transport, gaming, broadcast and so on.
Most noticeably, 56% of MNOs surveyed in 2015 identified growth in A2P traffic over the last 12 months, compared to 49% of respondents in our 2014 survey. Even disregarding the organic growth in enterprise SMS, by deploying an SMS firewall and converting grey route traffic into white route traffic, each individual MNO is unlocking the A2P traffic potential that already exists within their network.
Ovum estimates that A2P SMS accounted for 24% of total messaging traffic in 2014. The number of A2P messages sent each day is already in the billions and projections place A2P traffic at 1.99 trillion by the end of 2015, 2.12 trillion in 2016, and 2.21 trillion in 2017, by which point it will represent 31.3% of total messaging traffic.
Based on 2015 A2P traffic estimations of 1.99 trillion, each of the 3.76 billion mobile subscribers around the world will receive on average 1.45 A2P SMS messages per day this year. Which in relative terms seems incredibly low.
In fact, research into the A2P messaging space revealed that retailers, for example, were under-utilising the messaging medium based on the number of messages opt-in users would welcome from their favourite retailers. This research ultimately revealed that mobile users welcomed communications from companies provided there is a value exchange, which could take the form of a discount or voucher from a retailer or restaurant chain, or information about a delivery, or an appointment reminder.
As companies become more accustomed to communicating via SMS, their propensity to send messages to their customer database should increase exponentially.
This blog is based on a recent report published by mobilesquared. To access a copy of the report please click here