Monetizing SMS traffic: pros and conmen
12 Nov 2018
There are over 900 mobile network operators in the world. Their aim, like any other business, is to generate revenues and profits, increase cash flows, and develop services provided. Three services help them achieve this: internet data (2G, 3G, 4G), text messages (SMS), and voice. Voice has traditionally been the focus, and internet data is currently in the limelight.
SMS, however, is often distrusted and overlooked – we believe, unfairly so.
Something which unites most of these businesses across the world is their common believe that they aren’t accumulating as much revenue as they could and should. We believe that the leakage of revenues experienced by most mobile operators and the current state of the SMS traffic are indeed connected, but not in the way many operators think.
Is SMS traffic really plummeting? (Spoiler: no)
A widespread misconception about the total statistics for SMS traffic is due to confusing two different types of SMS: P2P (peer-to-peer) and A2P (application-to-person).
The general sentiment among operators is that total SMS traffic is in decline encroached upon by messaging apps such as WhatsApp, Viber, Messenger, and others. This is true of P2P traffic: more and more individuals are using one or another messaging app to communicate, which indeed leads to a decrease in SMS text messaging between individuals.
If it were only about P2P, this would explain away the common concern. However, there is another huge part of the total SMS traffic, one which is by no means in decline: A2P. Businesses, including the same messengers which are stealing away P2P traffic (Facebook, Google, and other services) are actually adding to A2P traffic.
The good news is: this traffic is growing, consistently and reliably. And, according to Mobilesquared, it is projected to keep growing in the nearest future: the 1.67 trillion A2P messages sent in 2017 will rise to 2.8 trillion by 2022. The global A2P messaging market was worth $12 billion in 2017 and will increase to $26.6 billion in 2022. Over the 2017-2022 forecast period, the market will grow at a compound annual growth rate of 17.5%. Driven by the A2P traffic, overall SMS traffic is still growing.
The invisible, real threat to your revenues: MNOs’ weak spots
So, if A2P is driving growth, how come so many mobile operators are watching their revenues from SMS traffic decline?
Quite simply, it is because MNOs are not in complete control of the wholesale SMS traffic. And as a result, they are being cheated out of part of their revenue.
Operators are the final network to receive traffic which they then deliver to their subscribers, the last link in a long chain. They do not have access to information about what happens to this traffic before it reaches them. As a rule, there is a long journey an A2P message takes before reaching the MNO, and the routes that message takes aren’t always white or secure.
If A2P is driving growth, how come so many mobile operators are watching their revenues from the total SMS traffic decline? That’s because MNOs are not in complete control of the SMS traffic wholesale. And as a result, they are being cheated out of some of their revenue.
In most cases, what really happens is cheating with the traffic routes. Grey routes breed on most networks, funneling away part of the mobile operator’s revenues. Being between a traffic generator and a mobile operator, some unscrupulous hubs might abuse their position to terminate the international A2P traffic as local – at a cheaper rate. Or ignore the messages entirely and send false delivery reports. MNOs, that often don’t see the entire picture and are restricted to their local markets, find it difficult to protect and secure their mobile network and block grey-route traffic. To understand the scale of the problem, let’s look at a rather frightening stat: between 2017 and 2022, SMS fraud is expected to cause a cumulative total revenue leakage of $30.8 billion.
Grey-route traffic termination: what to look for
First off, know what you’re dealing with. There is a number of reasons why grey-route traffic is flooding your network.Internal issues:
- No firewall solution
- Lack of knowledge on how to use the existing firewall solution
- Lack of expertise, experience, and resources to establish SMS traffic control and mobile network security
- Local regulation rules which do not allow MNOs to split traffic into local and international.
- Local SIM box fraud
- Local A2P connections substituted for international traffic (cheating the operator out of the price difference)
- Using free of charge P2P roaming links for business messages;
- Manipulations of SMS content and sender ID to bypass Firewall rules
Bridging the gap: how to monetize A2P traffic and take your mobile network under controlAs a rule, an operator is only reaching 30-40% of its real potential, losing a lot of the revenues to grey routes directly, or indirectly.
The purpose of the Firewall is to ensure a) security and trustworthiness of your network and b) to maximize profits from all traffic. At GMS, we have expertise in both SMS fraud prevention and monetization. Using Firewall solution by top-of-the-line global vendors plus our extensive experience, we deliver monetization to maximize the full potential of an operator’s network.
Here’s how GMS Monetization solution works:
First, we analyze the situation.
What should be done:
- legal aspects to safeguard MNO’s interests
- technical aspects (Firewall)
- commercial aspects (smart rate policy)
A dedicated GMS team conducts stress-tests of your network and reveals the weak spots abused by the perpetrators. We probe the market and gather statistics.
Then, we summarize it.
We put together the pieces of information to show the operator a full picture of what’s happening on their network: all the grey routes, questionable hubs, weaknesses of the network, unauthorized traffic and how much it’s costing the mobile operator. In short, we make a mobile operator’s network as transparent as possible and unleash its maximum potential.
Finally, we deploy.
After the main issues are identified, and expected results are made clear to you, with your permission, we integrate a Firewall solution and transform grey-route traffic into revenue. Chaos is turned into the order.
There is a huge part of the total SMS traffic, one which is by no means in decline: A2P. The global A2P SMS messaging market was worth $11.86 billion in 2017 and will increase to $26.61 billion in 2022.
In 2017, grey-route traffic accounted for 47.7% of total A2P SMS messaging traffic. Traffic which you could have been monetizing, which should have been contributing to your profits, but instead was just overloading your network. However, the forecasts are optimistic: white-route traffic is projected to increase to 85% of total SMS traffic by 2022. And we at Global Message Services choose to be an active driver of this powerful process.
Geocell Georgia achieved an unbelievable revenue growth of 2400% with the GMS Monetization solution, and we’re here to help take your business to the next level, too. Join GMS in our fight against unauthorized traffic and SMS fraud, and monetize your traffic to the fullest!