q Telcos in Europe put muscle behind firewalls as SMS grows - Business Reporter

Telcos in Europe put muscle behind firewalls as SMS grows

Mijo Soldin at Infobip describes how messaging is set to be one of the biggest traffic sources for telcos worldwide

Prior to COVID-19, many researchers predicted that the A2P (application-to-person) SMS market would peak in 2023. But the pandemic has changed things in ways we could not have foreseen. Mobilesquared’s Global A2P SMS Databook Report states that by the end of 2020, there were 5.2 billion unique SMS users, which is now expected to increase to 6.03 billion by 2025.   

What industry saw as a temporary and enforced change in the way communities engaged with service providers has in fact created converts for whom having to walk to a bank or supermarket now seems outdated and bothersome. 

In other words, this consumer behaviour of ‘click-to-receive’ initially caused by temporary lockdowns and interim social distancing measures is not going away.  If anything, it has ushered in a new era of convenience underpinned by application-to-person messaging SMS.  

For telcos, the whole messaging revolution that took off in a big way two years ago, and for which many carriers simply bolted on network capability through technology partners as a short-term measure, now see this as a growth opportunity.  In fact, in 2020 carriers in Western Europe as a group was the second largest adopter of SMS firewalls.  

A2P SMS traffic is provisioned through what the industry refers to as ‘white routes’. These routes provide capacity for organisations to send out text messages in bulk, things like marketing messages, one-time-passwords (OTP) or appointment reminders, for example. 

This capacity is bought in packages from carriers and is more expensive but comes with deliverability guarantees. In this sense, white traffic is communications that originate and terminate legally and are the primary source of revenue for MNOs providing this type of messaging service.  

The costs for completely legal, white routing operations are higher. When companies use what are referred to as ‘grey routes’, which hijacks network capacity reserved for Peer-to-Peer (P2P) messaging – in other words text messages sent from one individual to another – for their mass communications (often spam), it bleeds revenue from these approved providers and spoils customer experience.  

In fact, according to Mobilesquared, SMS grey routes are expected to generate revenue leakages of US$37.1 billion between 2020-2024.  So, there is a lot at stake. 

The total opportunity for A2P SMS could reach $27.48 billion in 2024 (based on 100% white route traffic).  Considering the significant impact grey routes have on mobile operators’ business, it is becoming imperative for them to deploy next generation SMS firewalls. 

We believe it is crucial for MNOs to be aware of the importance of next-generation SMS firewalls to realise an immediate uplift of their A2P SMS revenue.  

According to Gartner, these firewalls bring a level of intelligence equipped to a whole other level, with features like application awareness and control, integrated intrusion prevention, and cloud-delivered threat intelligence. 

Mobilesquared forecasts the number of MNOs investing in a next-generation SMS firewalls will increase from 58% of total MNOs covered in 2020 to 74% by 2025 representing three-quarters (74%) of the global market. In Western Europe, the percentage of total locked down networks currently stands at 88%, second highest in the world, which is promising. We’re proud to play our part in this ecosystem.

The stakes for good digital defences are high, as it’s tied closely to the digital experience people come to expect post-pandemic. MNOs must not be complacent in times like this. With the ability to take action, and protect customers, next-generation SMS firewalls will give telecommunication providers the upper hand amongst competitors.  

Mijo Soldin, Director Operator Strategy and Partnerships at Infobip 

Main image courtesy of iStockPhoto.com

© Business Reporter 2021

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