Why operator A2P messaging revenues are on the rise

News

Total operator revenues from A2P (Application-to-Person) messaging services will reach $62 billion (€55 billion) by 2023, up from an estimated $43 billion (€38 billion) in 2019.

This is according to new analysis from Juniper Research and represents a growth of 42% over the next four years.

Application-to-Person messaging (A2P) is a one-way SMS to which recipients are not expected to reply – this could be voting on a TV talent show, for example, or generating a one-time passcode.

Juniper claims that the revenue growth will be driven by operator efforts to mitigate messaging fraud over ‘grey routes’, alongside the emergence of rich-media messaging technologies including RCS (Rich Communications Suite).

Grey route SMS

A grey route SMS refers to an SMS between two parties or countries which is legal for one party at one end but is illegal for the other party. It is a way of sending SMS where two operators or entities do not have a commercial relationship or agreement.

Grey route SMS includes A2P messages disguised as P2P (Peer-to-Peer) traffic to exploit the lower costs compared to directly connected A2P SMS. Juniper estimates that 24% of A2P SMS messages will be delivered via grey routes in 2019 but efforts in improving SMS firewall capabilities will drive this down to below 10% by 2023.

The new research, A2P Messaging: SMS, RCS & OTT Business Messaging 2019-2023, also found that increased investment in SMS firewalls and Artificial Intelligence (AI) will drive down operator loss due to grey route SMS messages to $4 billion (€3.56 billion) by 2023. This represents a fall from $10 billion (€8.9 billion) in 2019, further contributing to operators’ messaging revenue growth over the next four years.

RCS business messages

Meanwhile, RCS business messaging is expected to account for under 10% of operators’ A2P messaging revenue by 2023. However, the research claims that RCS business users will continue to use SMS for simple notifications, such as OTPs (One Time Passwords) owing to the low cost and simplicity. In response, the research identified the integration of mobile payment capabilities directly into the RCS client to provide a differentiation point to SMS and increase RCS traffic.

Juniper Research’s  Sam Barker said, “RCS will provide operators with additional revenue opportunities beyond simple message termination. Operators must explore the advertising ecosystem and mobile payments over RCS to exploit their substantial subscriber bases to generate fresh revenue streams