Over the last few years’ leading ISV’s, Content companies, e-commerce firms and organizations from other varied industries ranging from automobiles to transportation to healthcare have increasingly started using SMS as a platform to communicate with their customers.
This has resulted in an explosion in the adoption of SMS as a medium of choice for sending one-time passwords (OTPs), two-factor authentications (2FA), transaction alerts, promotional marketing messages, and delivery confirmations, to name a few. According to research firm Ovum, the number of A2P messages sent is expected to touch a staggering 2.2 trillion this year.
As a result, a new lucrative source of revenue has emerged for mobile operators in the form of application-to-peer (A2P) SMS market. But, it has also meant that operators now have the added responsibility to protect their customers from unwanted promotional offers and spam to ensure a good customer experience.
The Grey Cloud
However, operators are losing a substantial chunk of the revenue from A2P messaging to entities which use grey routes to terminate the traffic. This grey routing can be in the form of entities or aggregators using SIM boxes to generate A2P messages in bulk and sending them to individual mobile subscribers as if they are P2P messages. Some even use the SS7 network by getting a global title and pretending to be a network operator to send A2P messages in the garb of P2P messages.
This not only means millions of dollars lost in termination fees, but also increases costs and takes up precious network capacity of mobile operators. Mobilesquared estimates the grey route A2P SMS traffic to have been worth $3.3 billion in 2016 alone and projected upwards of $82 billion between 2015-2020, with each individual mobile operator on average losing $17 million per year. This is despite the increased deployment of firewalls and other security measures by the operators.
More Than Just Revenue
Besides, this grey routing of A2P SMS needs to be addressed by mobile operators, not just for revenue reasons, but also to prevent fraud since it’s the grey channel that fraudsters use. For instance, since 2FA is proving to be effective in banking transactions, it has also become a legitimate target for fraudsters as fraud follows money. All this means that mobile operators need to stay a step ahead and focus on securing their own networks and protect their customers.
But, what’s stopping telecom operators from addressing this issue, especially since the potential losses are so huge? This is because the biggest challenge mobile operators face is the difficulty in understanding the difference in the ecosystem between P2P SMS and A2P SMS, especially since the technology remains same in both the communication modes. Besides, they are overwhelmed by the capital expenditure required to address this revenue leakage and justify the RoI for such investments.
Managed SMS Firewalls to the Rescue
To be in a position to monetize the booming A2P traffic, protect their own networks from being misused, and safeguard their customers from potential fraud, mobile operators need a reliable managed SMS firewall service, which is smart and intelligent to ring-fence the network to block grey routes and curb revenue leakage. Apart from capital expenditure, implementing a reliable state-of-the-art managed firewall solution needs investment in terms of both time and effort from the operators. This investment is required to finalise the call flows, test all scenarios, observe network performance and KPIs, and to orchestrate traffic migration activities, which involve coordination between the various partners providing the core network.
For a SMS firewall service to function effectively, operators need to have the capabilities to reconcile message count and billing. And the operators need to review their contract with partners that might allow free termination, else it will dilute the effort of the SMS firewall implementation. However, if implemented properly, these managed SMS firewalls can effectively safeguard the mobile network and give the operator much needed visibility and control over the volume and type of A2P SMS terminating in their network. They can also apply complex filtering rules to prevent spam, faking, spoofing, etc, as and when required, which safeguards their customers.
Besides, managed SMS firewalls can dig down into the actual body content and find recurring patterns and visualize these in an understandable way. Additionally, they can withstand all the other known SS7 vulnerabilities, which can potentially be exploited to commit fraud.
The good news is that many operators are realizing the need for a robust managed SMS firewall and are expected to implement such solutions over the next 12-18 months as they increasingly realize the need to protect their customers and networks and to stop the revenue leakage happening right under their noses. The A2P messaging revolution is coming if not already here. And mobile operators need to be prepared for the revolution. The time to act is now. Else, someone else will eat your cheese.