The Mobile Ecosystem Forum (MEF) community gathered in Dublin this week to discuss the future of business messaging. As proud MEF members, Openmind Networks were delighted to sponsor the event, and indeed, run a session on fraud prevention in messaging ecosystem. Across two days, industry experts came together to identify potential issues facing the industry and find solutions, with a number of themes and topics coming up again and again. With that in mind, here are five key insights that we gathered from the event.
1. Price inflation in SMS is the #1 issue for business messaging
The most pressing issue in business messaging today is price inflation in A2P messaging termination. In all cases business messages like OTP passcodes, marketing messages have been increasing in price for Enterprises and Brands. Between Jan 2021 and Jan 2023, on average, international termination rates have increased by 132% according to Mobile Squared research in 200 countries globally. In some cases these increases have been 500% to 3500% according to Mobile Squared.
Source: Mobile Squared.
The reality appears to be MNOs are trying to exact profit from business messaging more and more as revenues in other areas dry up. This strategy though is jeopardizing longer term adoption of SMS for A2P messaging services. Brands are simply giving up on SMS for OTP or other use cases as it is becoming unaffordable. The danger of a total collapse in business messaging use cases or the migration of Enterprises to other methods such as Flash Calling is becoming a reality as we speak.
A2P Enterprise users need more stable & predictable SMS pricing so they can justify their spend and manage their budget.
2. When is the industry going to deal with fraud on it’s networks?
Openmind Networks CEO Alex Duncan led a robust conversation acknowledging that fraud is endemic on our networks and it is beyond time for us to address it. Alex surfaced the nuances within fraud actions including grey routes revenue leakage, artificially inflated traffic and, of course, human cost stories that come from smishing. Even though there are short term gains to the industry of allowing messaging traffic to be inflated with things like artificially inflated traffic (AIT) and smishing campaigns, the longer term damage to the credibility of SMS as a channel will be catastrophic if not dealt with.
The good news is that the tools to fight fraud on our networks are now easily available. Vendors from Haud to Anam and, of course, Openmind provide ways to identify and stop fraudulent traffic and stop revenue leakage for network operators. There was a growing acceptance that despite this is an ethical question. It is likely that national regulators will need to lead the line and force network operators to take responsibility for fraud rather than leaving it to the businesses and individuals that are currently dealing with the fallout. Alex’s challenging session is here in full (starting at 1hr 8mins).
3. A2P traffic is unbalanced at this stage of its development
When we dig into the make up of A2P traffic volumes and A2P revenue we find imbalances and heavy dependencies on certain brands and traffic types. For example, a group of the 20 top brands account for circa 80% of A2P traffic. These brands like Google, Twitter and Meta can have inordinate effects on A2P industry as a result of their corporate decision making. A lot of brands are slow to understand what messaging means for them and how powerful it can be. The industry needs to sell A2P use cases better to reduce the dependency on top brands, as well as grow the industry.
One time passcodes (OTPs) make up a significant percentage of all A2P traffic, typically cited as about 40% of all traffic. More striking though is the fact that up to 90% of A2P revenue is driven by OTP passcodes. This is an extremely fragile base on which to grow A2P messaging as other methods can be used such as RCS, Flash Calling, OTT providers and so on. In order to improve the mix of A2P usage into the future it will be important to develop use cases for marketing, customer support and more.
As we develop these offerings for Enterprises it will be important to make the onboarding experience simple and easy, as well as control the cost of these messages versus the value that that they offer to businesses. For example, an intuitive user interface for business users that allows them to send marketing messages to their customers has a very high value. This business can see direct revenue creation from this type of business communication and might be willing to pay much more for a message of this nature than, say, for an OTP message.
4. SMS is in defensive mode
SMS is the old reliable system that has unparalleled reach. However, the dangers are on all sides now for SMS most notably from price inflation which is making it unaffordable, from the fact that legacy platforms for SMS now require expensive upgrades, and from newer technologies like WhatsApp, Viber and WeChat that are encroaching on the space. SMS, as a channel, needs to provide price predictability and security and it also needs to clean up the 7-10% of all traffic volume that is pernicious fraud like smishing.
There is huge potential in business messaging if these issues are addressed as Enterprises do want reliable ways to communicate with customers, especially if those ways can promise 98% deliverability, 50% open rate and so on, which dwarf the figures achievable in digital communication methods currently.
5. When is grey a spectrum?
SMS grey routing is when an SMS is sent through a legal channel initially, but at some point travels through illegal channels before reaching its destination. By sidestepping international SMS laws and fees, grey routing reduces the cost of sending messages. Up until now grey routes were monolithic with little distinction in the threat involved in each type of grey routing. Nick Lane presented a typically insightful research that separated out the ‘SMS rainbow’ into a variety of colours to help us understand the volume of SMS traffic that is truly pernicious.
View Nick’s session here. It is the first session in this recording.
Not all grey traffic is maliciously targeting individuals to steal their money. Sometimes it is used to artificially inflate traffic levels in order to ‘skim’ traffic revenue from large brands like the big social media players. It is, of course, used to target smaller businesses but it is largely a corporate revenue leakage event. In Nick’s spectrum of threat the orange section below relates to traffic that gets routed through SIM Farms which are used to avoid paying the standard tariffs of network operators by using the free text message packages that come as standard with SIM cards. Information routed through SIM Farms intersects with more malicious Smishing activity by allowing fraudsters to get access to private individuals’ information. This data and information can then be used to run Smishing campaigns.
The Red band in this spectrum of grey routes relates to campaigns like Smishing designed to steal money or identity from private individuals and is, obviously, the one that gets most of the headlines. Grey routes make up circa 20% of all messaging traffic, one in 5 of message travel the grey routes. However, the Red band represents about 3.5% of overall messaging traffic, the Orange band represents something similar. So, malicious grey route traffic is still quite a small percentage of overall traffic.
If you would like to discuss these issues or the solution space of Consolidated Core Messaging systems, Fraud Prevention Services or CPaaS solutions then please don’t hesitate to contact our team of experts to book a 1-on-1 meeting.
PS – Where are the brands?
Why are the brands that clearly want other channels to communicate with customers not using the tech that is now available? Every provider, every vendor is innovating and finding solutions, so why are the brands not using them? Lack of industry stories to pave the way, poor onboarding experiences for brands, the wrong commercial models or models that lack price certainty seem to be the culprits.
PPS – Is omnichannel the right term for the communication mix?
Omnichannel business messaging is an industry standard term at this stage but is it scaring off businesses in adopting business messaging as a channel. Any communication channel that works is good. You don’t need a complete tech stack of chat bots, in-app, OTT, SMS, voice, video and smoke signals to start to communicate with your customers. Add one, then add another, try to link them together, add more. Be pragmatic, test and see.
If you would like to discuss any of these topics further, or learn more about Openmind Networks products & services, you can contact our experts online here, or call +353 (0)1 633 0070
