Majority of Mobile Network Operators Unprepared for A2P Monetization

New international research reveals less than 25% of MNOs have deployed next-generation firewalls necessary to identify and charge unauthorized traffic

Latest market research by analyst house mobilesquared and sponsored by tyntec, finds that 75% of mobile network operators (MNOs) do not have the measures in place to control and monetize Application-to-Person (A2P) SMS traffic that traverses their network. Although the majority of surveyed MNOs indicated their year-on-year A2P SMS growth grew between 6% to 36%, less than 25% of MNOs have actually deployed or updated an SMS firewall since 2012.

Firewalls that were installed before 2012 are unable to provide the message visibility needed to detect and control gray routes and other security threats. Therefore, having a properly managed nextgeneration firewall in place is a prerequisite for MNOs to be able to block security threats, and identify legitimate traffic which can be monetized. The potential of this overlooked revenue opportunity becomes even more obvious considering that 56% of survey respondents have experienced A2P messaging traffic growth in the last 12 months, compared to 49% over the prior 12 months.

Key findings of mobilesquared’s 2015 research report “Secure Networks Key to A2P Monetization” include :

• Less than 25% of MNOs have deployed or updated an SMS firewall since 2012.
• Two-thirds of MNOs using SMS firewalls reported a huge reduction in unauthorized messaging traffic.
• Gray routes account for two-thirds of A2P SMS traffic, meaning currently only one-third of A2P traffic can be monetized by MNOs.
• Spamming is considered the greatest network threat, followed by spoofing (messages sent illegally by simulating a roaming subscriber), and virus distribution (messages luring subscribers to a download site with viruses).
• Most popular near-term monetization strategies are domestic and international A2P SMS, followed by portability and phone verification information, Internet of Things and M2M, and lastly A2P messaging via operator-owned OTT apps.

The A2P SMS market is growing fast, with Ovum estimating that A2P SMS accounted for 24% of total messaging traffic in 2014. It is estimated that A2P traffic will grow to 2.21 trillion in 2017, by which point it will represent 31.3% of total messaging traffic. Despite the growth of the A2P SMS market, MNOs are in protection mode. Mobilesquared’s 2015 research reveals MNOs associate the rise of A2P SMS with increased spam and illegal messaging attacks on subscribers via their networks. They don’t, however, have the sufficient network security tools in place to control and manage this and as a result, are also losing out on monetization opportunities.

SMS firewalls connect the dots between network security and A2P monetization :

“SMS firewalls pave the way for clean and legitimate A2P messaging growth,” said Stefan Kuehne, Director of Carrier Management, tyntec. “Through using an effective, properly managed SMS firewall, MNOs can gain control over their A2P traffic, and open up their secured networks to legitimate A2P use cases, providing them with a termination fee for each message delivered to their subscribers.

Nick Lane, Chief Insight Analyst at mobilesquared, comments: “The A2P SMS revenue generating potential for mobile operators is effectively the Eighth Wonder of the World – at least in the wireless space. Mobile operators have been scouring the landscape to find ways of getting in on the OTT communications act, but with next-generation SMS firewall solution, they can access the even greater enterprise messaging traffic opportunity.”[su_box title=”About tyntec” style=”noise” box_color=”#336588″]tyntec is a telecom-web convergence company that connects the immediacy and convenience of mobile telecom with the power of the Internet. Partnering with mobile network operators around the world, tyntec enables enterprises and Internet brands to power their applications, authentication, and mission-critical communications with universal mobile services such as SMS, voice, and phone numbers in the cloud.

Founded in 2002, and with more than 150 staff in six offices around the globe, tyntec works with 500+ businesses including mobile service providers, enterprises and internet companies.

[/su_box][su_box title=”About mobilesquared” style=”noise” box_color=”#336588″]mobilesquared provides intelligence and insight on the mobile sector. We’ve been analysing the mobile space for two decades, so our expertise has been earned, not learned. Our instinctive ability to ask the right questions uncovers invaluable nuggets of insight, which we interpret to help shape truly effective strategy for our clients. Our experience is recognised by the industry – we sit on judging panels for the prestigious GSMA Awards, EMMA awards, and the MEFFYs.[/su_box]