Mobile Network Operators (MNOs) have long focused on protecting their Person-to-Person (P2P) communications revenue against the rising popularity of OTT messaging, either through partnership opportunities or developing their own competitive services.
It has proven an exercise in futility so far, as MNOs have yet to effectively solve their OTT conundrum, and now find themselves in the midst of brand consolidation to protect their value proposition and maintain healthy subscriber relationships.
A challenging landscape to be sure, but the good news is that as unfortunate as the current industry outlook is, it's equally unnecessary. Truth is, operator's counter strategies for OTT brands has distracted them from laying the business and infrastructure framework necessary to capitalize on an enormous revenue opportunity sitting right in front of them: Application-to-Person (A2P) messaging. As enterprises are embracing the new digital economy and actively integrating A2P messaging into their multichannel-strategies for engaging their customers, many lucrative legitimate use cases are being deployed. So much so, that the domestic and international A2P messaging is now considered the most popular near-term monetization strategy for MNOs according to a recent survey conducted by mobilesquared.
Problem solved, right? Not so fast.
You see, before operators can even begin their race to the proverbial A2P finish line and claim the very real revenue that awaits, grey routes – SMS traffic with no commercial agreements for MNOs to bill to – and other illicit traffic cut their efforts off at the knees. These unauthorized messages can dominate a network, triggering a blanket blocking, in some cases, rather than smart monitoring and controlling. Unfortunately, the lack of transparency into A2P messaging traffic and inability to differentiate it from legitimate traffic (the kinds of messages that subscribers are expecting to receive) undermines operator's quality control and security efforts necessary for realizing the revenue potential of A2P.
A2P Growth: Up, Up and Away
Despite the fast-tracked consumer adoption of OTT messaging apps, SMS remains the most ubiquitous communication service, which makes A2P SMS an ideal vehicle for a brand to engage with the majority of its customer base. At last count, Ovum expects A2P traffic will grow to 2.21 trillion messages per day in 2017, representing 31.3% of total messaging traffic. Furthermore, Juniper estimates that the A2P SMS industry will be worth USD60 billion by 2018.
mobilesquared captured today's numbers, which reveal the majority of mobile operators are experiencing year-over-year A2P growth of between 6%-36%, with 56% of mobile operators reporting A2P traffic growth in 2015, up from 49% in 2014.
Security Gap & Threats: Not Black and White
Steady growth is nice, but this traffic boom is rendered meaningless by virtue of the fact that grey routes account for 66% of A2P network traffic according to mobilesquared's report. Many operators lack visibility into grey route traffic, lacking the tools to monitor and filter the message types traversing their networks. This thwarts MNO monetization efforts, making grey routes an attractive option for low-cost SMS aggregators with no commercial agreements with destination MNOs, which means the destination MNOs will experience revenue loss.
The resulting industry reality revealed in mobilesquared's report is that only 33% of mobile operators are able to monetize A2P messaging, leaving the vast A2P potential untapped.
However, grey routes are not the only consequence of MNO's lack of traffic visibility Increased SMS spam is another byproduct of grey routes, one that is viewed as the greatest threat to networks by MNOs, according to the mobilesquared research. Because operators have no visibility into grey route traffic, they're not able to block unwanted content sent to subscribers—or worse end up blocking legitimate, time-critical messages, resulting in angered subscribers. In 2011, several governments worldwide began rolling out anti-spam regulation requiring operators to pay fines for SMS spam reported by subscribers. The inability to block SMS spam, coupled with delayed spotting of rising enterprise messaging opportunities, is a primary reason operators have been slow to pull the trigger on the A2P opportunity.
That said, MNOs could achieve greater visibility into their traffic by using next-generation firewalls, but less than 25% of mobile operators have deployed solutions necessary to identify and control grey routes.
SMS Firewall As The Necessary First Step
By implementing and properly managing an SMS firewall, MNOs can secure their networks and generate revenues from legitimate A2P use cases. In fact, according to mobilesquared, over 60% of MNOs using SMS firewalls reported a huge reduction in unauthorized messaging traffic and another 25% said it helped improve revenue.
The research also found that the key reason for adopting SMS firewall solutions is network security, anti-spam and/or fraud prevention, ahead of A2P messaging monetization. And the finding supports the growing consensus that network security measures must be put in place first in order to exploit the A2P monetization opportunities.
With that in mind, it's important to remember that not all firewalls are created equal. One of the key SMS firewall issues identified is the lack of effective management, including the tendency to block legitimate traffic in the form of number verification. To address this, MNOs need to deploy firewall solutions with configurable rules, and manage it to differentiate and monetize the incoming A2P traffic (SMS, portability and phone verification lookups) while also protecting their networks from threats such as illegitimate spam, flooding, faking, spoofing and others.
In addition to helping with security and monetization of A2P messaging, firewalls can also provide valuable analytics that boost operator's business intelligence and negotiating power. These supplemental MNO benefits include:
- Evaluating profitable sources of A2P SMS, arming MNOs with the data to better negotiate commercial agreements.
- Tapping into the increasing demand for clean phone intelligence information to support authentication and customer engagement services.
- Providing traffic data for MNOs to assess the market demand and stabilize SMS prices.
Clearing the Route to Monetization
By deploying and properly managing SMS firewalls, MNOs can achieve "clean" and "legitimate" A2P messaging growth, opening the door to finally recouping lost revenue and regaining their value proposition in the communications ecosystem. However, it's important to note that deployment of the infrastructure alone will not deliver the full revenue potential, it will require constant vigilance to keep pace with ever changing security threats — and partnerships to implement new business models for A2P monetization.
In short, a new perspective is needed. An SMS firewall is not just a network tool, it's also a business tool that enables MNOs to gain control over their core assets, and extract business value out of them.
Stefan Kuehne, Director of Carrier Relations at tyntec, a telecom-web convergence company that connects the immediacy and convenience of mobile telecom with the power of the Internet. Partnering with mobile network operators around the world, tyntec enables enterprises and Internet brands to power their applications, authentication, and mission-critical communications with universal mobile services such as SMS, voice, and phone numbers in the cloud.
Founded in 2002, tyntec employs over 150 people in six offices around the globe, serving over 500 global businesses, Internet brands, and mobile network operators.