MNOs, show SMS some love to maximize profitability

SMS is a must-have service, but mobile network operators (MNOs) often struggle to control it – and assuming a decent firewall is the whole answer is a common mistake. Many customers are still feeling the love for SMS, but with revenues dwindling, MNOs need to rethink their SMS business to kick start growth.

Consumers and businesses of all sizes regard SMS as a vital means of communication – bank statements, restaurant bookings, delivery notifications and one-time passwords are all delivered via SMS.

As the economy digitizes faster than ever, the A2P (application-to-person) SMS market is growing quickly. The stay-at-home orders during the pandemic have cranked up usage of digital channels and online shopping, further expanding the A2P market. In 2020, global spending on A2P SMS rose 20% to US$ 21.5 billion. One-time passwords and notifications account for much of this traffic.

However, many mobile operators are leaving money on the table!

Revenue is being lost as A2P messages travel via so-called grey routes[1] that circumvent operators’ termination fees for A2P traffic, while some legitimate A2P messages get blocked[2]. Ironically, operators also end up paying termination charges for spam SMS that shouldn’t be delivered. Believe it or not, 20% to 40% of P2P messages in a typical network is actually illegitimate traffic that could be blocked.

Now is the time to fix this to keep SMS trusted and reliable, or in the long run erratic deliveries will weaken the channel in the ongoing battle with OTT (over-the-top) messaging services.

In the past, fixing the flaws in operator SMS solutions would have been both time-consuming and complex. But here at Sinch, we’ve got an end-to-end solution that will transform your SMS business and help you meet the soaring demand for easy and secure communications between businesses and consumers!

Unsurprisingly, OTT players want their slice of the business messaging cake and SMS is facing unprecedented competition in the A2P market from WhatsApp, Facebook Messenger, Instagram Messenger, Telegram, Apple iMessage, and the like.

But even with such fierce competition, A2P SMS still has huge potential. Out of the 300 million enterprises in the world, only 2% are using A2P SMS. And since SMS is one of the most reliable channels to reach customers and secure services on mobile devices, that proportion could easily reach between 5% to 10%. Plus, it works on every handset!

Still, mobile operators shouldn’t take SMS for granted. With such an important commercial channel, a laissez-faire approach could be costly! Instead, they need to actively manage their A2P SMS offering to make the most of the channel’s greatest strengths – flexibility and usability.

If MNOs take control of their A2P traffic, they can increase annual revenue by around US$250,000 for every million subscribers on their network[3]. Correct routing of the many A2P messages that get blocked by the receiving network would further boost revenue substantially.

Given the pressure on their top lines, operators can’t afford to ignore the fast-growing A2P messaging market. Forward-thinking operators like SmarTone in Hong Kong and Mobicom in Mongolia are relying on Sinch’s A2P Monetization service to grow their A2P SMS revenue. Similarly, the UK’s #1 communications provider, EE/BT is using our global SMS hub to exchange messages with 1,100 operators serving 7.4 billion subscribers around the world.

By using Sinch SMS Select to block illegitimate P2P traffic, operators can also cut SMS termination costs by up to 20%. As most operators no longer charge directly for delivering these messages, they need to minimize the cost of handling P2P SMS.

Sinch is the only provider with a comprehensive solution to fix all these glitches. SMS Transformation is our one-stop shop for MNOs working to maximize profitability, with everything you need to give SMS the attention it deserves!

[1] The message originates from unauthorized networks for which there is no agreement between the sender and the receiving network. Many grey routes use P2P channels to support A2P messaging, thereby lowering termination charges.

[2] About 20% of messages in P2P links are legitimate A2P messages that get blocked by the receiving network.

[3] Estimate based on international SMS on unsecured network, 1 A2P message per subscriber per month, $0.03 A2P SMS termination rate, 30% current monetization.