SMS technology has been an important part of the mobile ecosystem for more than two decades. During this time, it’s transformed from a service information channel into one of the largest communications platforms available. The success of SMS has also inspired a wave of app-based person-to-person (P2P) messaging platforms including WhatsApp and Line, and it hasn’t stopped there.

The true value of SMS in recent years, though, is not its continued contribution to the P2P arena. For operators, and businesses looking to take advantage of the global connectivity they can offer, particularly those in the South Asia and MENA regions, the continued rise of SMS technology has been in the application-to-person (A2P) sector.

The Eastern opportunity with A2P SMS

Recently, businesses all over the world, but particularly in the Middle East and South Asia, have turned to SMS to help reach consumers in a more direct and engaging way. The unique advantage of SMS is that it’s ubiquitous. It also has an almost guaranteed read rate compared to the hit-and-miss approach that email or direct mail offers. This is especially important in regions such as the Middle East, where the multicultural environment and substantial expat growth means that targeting subsets of users via SMS is typically the most efficient way of driving engagement.

SMS allows anyone with any device, from the latest smartphone to the most basic feature phone, to send and receive a text message. Thanks to the extensive networks of operators in these regions and around the world, millions of people rely on text messages to receive (often vital) information that would otherwise be difficult or time consuming to get – everything from basic customer service alerts to weather warnings in remote regions, banking notifications, and even sensitive information such a credit card PIN or 2FA codes.

What challenges lie ahead?

For mobile operators, there’s no doubt that this is a lucrative opportunity. The sheer volume of SMS messages being sent each and every day has the potential to translate into considerable revenues, especially as P2P messaging falls short against app-based alternatives.
Ovum predicts the next five years will become the ‘golden era’ of A2P SMS with more than two trillion text messages expected to be sent by 2018, and its continued uptake shows that messaging still represents a strong revenue generator for operators. After all, they should be the ones that hold all the cards in this arena. They should have the technical capability to handle millions of messages each and every day, and the interconnectivity with other operators around the world to deliver messages anywhere. Demand is growing constantly, since it’s enterprises, retailers, government bodies, and more looking to reach consumers. Yet the delivery reality among operators in these regions is quite different.

Despite this tremendous potential, many lack the capabilities to take full advantage of A2P SMS. Although some have the relevant systems and direct connections in place, the majority find that the delivery and management of an A2P SMS platform is time and resource intensive. It’s also different to what operators have deployed in the past for P2P traffic, which they still need to prioritise. Simply put, in many cases, A2P SMS growth is something that operators are looking to capitalise upon but putting their own systems to deliver it is expensive, time consuming, and technically complex to deliver.

Not only that but enterprise messaging also comes with its own set of rules, which can cause even the most progressive operators, who do have their own A2P SMS systems in place, to come unstuck unless they can offer immediate value and added security in any consumer engagement.

A new operator relationship

It’s no surprise, then, that specialist mobile messaging providers have been quick to meet this demand, addressing the requirements of enterprises looking to reach consumers with A2P messages and helping operators rework their business models around this tremendous new opportunity.

Although, to date, this relationship has been vital in allowing operators to benefit from A2P SMS, in 2017 and beyond operators will gain far more control as a result of a new model called Business-as-a-Service (BaaS). This goes beyond merely connecting existing messaging infrastructure with an operator’s network. In the case of A2P SMS, for example, the BaaS proposition not only means that a specialist will provide the entire messaging platform, they also manage the service on the operator’s behalf. It’s a win-win for all involved, and an avenue that operators are using to quickly and easily capitalise on a market that Transparency Research expects to be worth over $70 billion by 2020.

The future of A2P SMS lies in operators taking a fresh approach to how they deliver on this growing requirement as well keep the service secured from any misuse. SMS is a technology with unparalleled reach to billions of devices across the world. As new SMS use cases arrive and create even higher volumes of overall messaging traffic, SMS will remain a lucrative technology for operators to tap into – even if it’s one they’ll need support to deliver.

It’s only through the BaaS model that operators can make the most of A2P SMS in order to monetise their otherwise underused mobile messaging capabilities. They can avoid the day-to-day running of the service and take advantage of the expertise and experience in handling high volumes of enterprise messaging traffic that comes from working with a mobile messaging specialist. It’s an approach that allows operators to once again reap the benefits of one of the world’s most versatile and ubiquitous technologies, and one that operators in the Middle East and South Asia are in a prime position take advantage of. But they need to act quickly in order to maximise revenue from this source before other parties step in and claim what is rightfully theirs.

By Rashedur Rahman Chowdhury, regional director of Operator Partnerships at Infobip

Rashedur has more than a decades’ experience working with mobile operators for roaming and A2P SMS. He’s been involved with Infobip’s Dubai office from the very start, where he has built and shaped relationships with the largest operators across MENA and South Asia.