In 2017, white-route traffic accounted for only 52.3% of total A2P SMS messaging traffic, according to Mobilesquared report 2018.
In other words, almost half of the total traffic is terminated through grey routes. And this means that a staggering percentage (47.7%) did not yield the profits mobile network operators should have received. We’re talking about operators being underpaid $30.8 billion between 2018 and 2022.
Mobile operators are the final part of a long chain of A2P traffic termination and oftentimes aren’t in control of what happens before it reaches their network. Which puts the hubs and aggregators in an intermediary position all too easy to abuse.
Read more: Threats to A2P SMS business
Instead of making contracts directly and dealing with thousands of partners, mobile operators and enterprises prefer to deal with national or international aggregators and hubs. This process means that once a service sends an SMS to its user, it takes a long journey involving many parties before it even reaches the operator’s network.
A system with these many variables is susceptible to manipulations, aimed at taking away part of the revenue from MNOs. Below are the most common types of grey-route traffic termination mobile operators should be aware of.
Grey route 1: Termination through other MNOs
The most common type of grey route. It’s all about finding a way to terminate the traffic without reimbursing a mobile operator or do so paying local P2P rates.
A long time ago, operators used to make direct contracts with each other allowing the traffic termination on partner’s networks for free. Today, this is very rare but some of the old agreements are still in play.
So a “cunning partner” can use such contracts to terminate A2P messages. It disguises the international A2P traffic as P2P traffic, which is cheaper. As a subscriber, you might notice this when, say, requesting an authentication code to log into Facebook, and getting the code from a regular phone number of a local operator as if sent by another person, instead of a Facebook Sender ID.
Most service users are unlikely to be bothered too much by this. As a service provider though, you are unlikely to take kindly to the manipulation. But it’s truly the operator who loses profits: instead of being paid the full price of international A2P traffic termination, it receives it at very low or even zero rate.
Learning: this is a very subtle scheme which many MNOs are unaware of, and which impacts their A2P volumes and revenue. We recommend checking all the zero rates contracts with local/roaming partners and close them or increase the rate to match the average local/international P2P rate. Dedicated GMS team will help you identify an «unreliable partner» who terminates international A2P traffic bypassing the authorized routes.
Grey route 2: Blending
A partner can start to sort the SMS traffic generated by a global enterprise to determine non-sensitive or urgent traffic (say ads rather than one-time passwords). To reduce costs and yet receive all profits, the partner can fake the delivery reports by not sending non-sensitive traffic to users.
Learning: most services and mobile operators can’t catch on to the scheme. If tracking conversion rates, they can only see the decreasing, which could be caused by either technical issues or blending. In such cases, services usually warn their partners and change the routing scheme to ensure proper delivery.
Grey route 3: Termination through national aggregators
An international partner approaches a local aggregator that terminates traffic generated by a local service (for instance, a delivery service). This local service has a registered Sender ID and national A2P rate which is lower than the international rate. The partner asks the aggregator to deliver its international A2P traffic under the guise of the local service, using the Sender ID of the local service. Kind of a win-win story. And the operator simply sees more “local delivery service messages” instead of international service traffic. Again, it is the mobile operator who loses.
Learning: this scheme is also insidious, one way to catch it out would be to spot a rapid abnormal increase in the traffic volume of the local service and investigate it, which rarely happens. The best advice for an operator here is to examine the traffic terminated through its network and understand the traffic type, volume, seasonality.
Grey route 4: SIM box fraud
This scheme is not so much a grey route, as a fraud. A SIM box is a hardware containing many SIM cards owned, housed, and stored by a third party but determined by MNO as simple mobile phones.
What the fraudulent partner does, in this case, is it collaborates with the owner of this hardware (SIM “farm”) to terminate the traffic, literally cutting the operator out of the chain. This is a quick and easy and way for partners and SIM box owners to earn money on traffic termination. The operator isn’t being paid properly for the international traffic, as it is disguised as national P2P which is cheap or even free between local MNOs.
Learning: MNOs wondering how to detect SIM box fraud have to make sure their SMS Firewalls are up to the challenge. Firewall solution is aimed at detecting and blocking some grey-route traffic. Another way to deal with SIM box fraud is the anti-fraud team.
GMS offers managed services which consists of detecting such traffic, adjusting the Firewall rules, and supplying an anti-fraud team who have the knowledge and tools of SIM box detection.
SMS traffic control is an integral part of A2P SMS monetization. Without it, operators can’t establish a smart rate policy and, in turn, ensure a strong boost to their revenue flow. SMS fraud is blooming, forcing operators to be tech savvy and diligent about SMS traffic monitoring.
Start with thoroughly examining your partners list: strike out the cheating A2P partners and opt for reliable ones. A tailored A2P managed solution, including fail-proof SMS bypass detection and SMS Firewall deployment, are some of the many services GMS can offer to safeguard your network and revenues. From successfully deploying managed services to providing training for your staff – we will help you to take full control over your network.