In July, Mobilesquared hosted a workshop (in partnership with Mada) focused on building a more sustainable messaging market for the long term. Messaging experts from 30 mobile operators from around the world attended the interactive session, featuring detailed analysis and insight of the messaging market, recommendations and best practices, all intertwined with collaborative discussions and live polls to gather real-time feedback from participants.
To corroborate with Mobilesquared’s SMS projections, 50% of participants expect the SMS market to decline over the next few years, with close to 45% expect the market to decline in the next few years.
Pricing continues to play an integral role in the sustainability of A2P SMS, and this was one of the key focus areas for discussions. The majority of mobile operators believe a domestic A2P SMS should cost $0.01, and virtually all attendees agreed that the cost should not be greater than $0.05.
In terms of the international termination rate, an area of massive contention over the past 4 years, both market research and anecdotal evidence points to $0.10 per message being the highest rate that mobile operators can charge without impacting the demand for SMS. Two-thirds of attending mobile operators backed up Mobilesquared’s research. In fact more than 90% of workshop attendees agreed that the cost should not be greater than $0.10.
The interactive sessions during the workshop also revealed that one-third of mobile operators increase their international termination rate on a monthly, quarterly, and biannual basis. Exclusivity agreements is now the biggest driver for rate these increases.
Fraud is still a big challenge for the messaging market as a whole. While mobile operators are not necessarily the main victims of Artificially Inflated Traffic (AIT) they understand deeply the impact it has on the reputation of messaging channels. Over 60% of mobile operators taking part in the workshop identified AIT as a big threat with measures in place to reduce the threat. Less than 10% of mobile operators now view AIT is the biggest threat to A2P SMS monetisation.
Despite the clear challenges in the SMS industry the business messaging ecosystem as a whole is expected to grow significantly over the next 5 years, driven by the long-awaited emergence of rich messaging. Mobile operators will play a key role in this growth and almost half of the workshop attendees expected RCS business messaging (RBM) to offset the decline in SMS revenues by 2029.
Clearly, mobile operators continue to hold a positive outlook on the future of RBM, as the minority (just over one quarter) do not expect RBM to play a significant revenue generating role by 2029.
Final Reflections
The key takeaways from the workshop is that mobile operators play a vital role in the messaging ecosystem and strategy has wide ranging impacts across multiple areas of the business. It is important that mobile operators, aggregators, firewall vendors, enterprises, regulators and other players work together to ensure the industry is managed effectively and sustainably.
It is clear that strategy and approach needs to be flexible. Over 66% of the mobile operators participants said that they would need to review their existing A2P SMS strategy based on the data, insight and recommendations provided by Mobilesquared’s industry experts. This shows a clear need for transparent and up-to-date market intelligence.
Thank you to Mada for working with us in organising the workshop and for all the participants who contributed time, expertise and candid opinions. This workshop was not just about discussing the state of the market but also creating a better path forward.
If you would like to find out more about our workshops and other services, reach out to me at scott@mobilesquared.co.uk.
