Application to Person, A2P (also referred to as Wholesale) SMS messaging is experiencing significant growth and as the only platform on which every mobile device is capable of sending and receiving messages, Mobile Network Operators need to be capitalising on this expansion and increasing their revenue.
A report issued by analyst firm Juniper Research states that by 2018 the A2P SMS messaging industry could be worth as much as $60 billion, citing reliability and reach as the main reason why businesses are choosing to target their customers in this way. While all MNOs should be taking immediate advantage in this period of expansion, the reality is that many are missing out on easily securable revenue because their networks are open to incoming third party A2P traffic not subject to commercial scrutiny. This traffic is often referred to coming in over “Grey Routes”.
What are grey routes?
In short, grey routes are paths into the MNO network which are used by third parties – aggregators and enterprises – to push A2P SMS messages to their customers, often avoiding the mobile network operator’s termination charges but still utilising their infrastructure. Leaving their networks open is in fact costing each MNO as much as €35 million every five years in revenue, while this form of clandestine delivery is not illegal it presents an enticing commercial loophole typically for entrepreneurial aggregators.
That is not to say that all MNOs are failing to address these issues. Operators that have recognised and moved to correct the problem of grey routing have experienced considerable success and in doing so have recouped a significant amount of revenue. Norwegian telecoms operator Telenor has saved over $81 million in revenue since implementing an SMS revenue assurance platform in 2007 and in a similar scenario O2 Ireland is witnessing revenue increases of €2.5 million per year just by closing their network and billing for all A2P SMS messages.
With the benefits of billing such messages clear for all to see, why aren’t other MNOs following suit and blocking these fraudulent channels? SMS revenue assurance experts and platforms are available for MNOs to install and rectify the issue of grey routing, so now is the time for operators to stand up and take notice of the problem and in doing so gain the monetary rewards.
What MNOs need to be doing and why
As well as installing SMS revenue assurance or filtering mechanisms, operators must enter into agreements with aggregators to ensure approved routes and pricing; aggregators then buy the messages at an agreed wholesale rate and in turn resell them to businesses at a retail rate. Operators must also be cognisant that all points of tihird party access to their network infrastructure represent potential grey route avenues for A2P traffic. Direct and interconnect binds must also be monitored in order to truly close the network and protect infrastructure investment.
The blocking of these grey route channels is not just beneficial for the operator, while grey routes remain accessible and cost effective for third parties, tens of thousands of A2P SMS messages can be pushed to the in-boxes of unwitting customers, resulting in increased levels of SPAM and fraud. In many cases it is the operator who ends up compensating subscribers who fall victim to premium call scams. Identifying and plugging this gap in the system will result in customers receiving only messages which they have subscribed to and which are relevant to their specific wants and needs.
It has been suggested that almost two thirds of MNOs have not yet taken the steps necessary to optimise their A2P opportunity and until they stand up and take notice they remain out of pocket and will be allowing others to profit from revenue which is rightly theirs. Some MNOs have taken no action at all and others believe they have implemented an effective solution to identify and block messages being sent in via grey routes. The reality is that most have only partially addressed the task of closing down their network, and any access holes remain, their networks remain permeable and aggregators in particular will find and penetrate their subscribers with A2P messages, likely free of charge.
The growth in the A2P SMS market represents an immediate and very significant opportunity for MNOs to secure new SMS revenues, however many MNOs are still unaware that their networks are wide open to grey route messaging and are therefore losing income. There is the need for education of MNOs on the area of grey routing to make them aware of the issues and many benefits of filtering incoming SMS traffic. This will lead to a fairer and more profitable space.