In A2P messaging, SMS has been the only show in town since the very beginning of business messaging. However, as technology has evolved, the rise of rich messaging channels is reshaping the A2P arena, bringing both challenges and opportunities.
In this blog, Brian Kelly, Chief Technology Officer at Openmind Networks, explores the current state of A2P messaging, the impact of rich messaging on A2P SMS, and the promising future that lies ahead.
The Dominance of SMS A2P
SMS continues to dominate the A2P messaging space, serving as a reliable means of communication for enterprises. Estimates suggest it carries about 90% of all A2P messages. However, this dominance faces challenges such as price inflation and a diminishing user experience. Prices of A2P termination have more than doubled on average worldwide in the past three years.
The SMS user experience in A2P sits side-by-side on phones with a significantly different user experience when using the likes of WhatsApp and Viber. For the end user, they are moving between a WhatsApp for messaging friends and family versus getting SMS messages from businesses for the likes of one-time passwords (OTP) and delivery updates. The contrast between these two experiences tends to reflect badly on SMS.
Additionally, the growing threat of A2P messaging fraud is a concern both on traditional SMS and OTT platforms. Smishing attacks are getting more and more aggressive and artificially-inflated traffic (AIT) is hitting enterprises where it hurts – in their balance sheets.
The Shift Towards Rich Messaging Channels
The future of A2P messaging lies in the realm of rich business messaging channels like RCS, Whatsapp and Viber. These channels promise enhanced features, better user experiences, and opportunities for businesses to connect with their customers in more meaningful ways.
The transition from traditional SMS to rich messaging channels is not just a technological shift but must be a strategic move for MNOs in order to stay relevant for consumers. MNOs know that their enterprise or business clients want a better experience in messaging their customers.
Implications for SMS in the Rich Messaging Era
As businesses increasingly adopt rich messaging channels, the implications for SMS are significant. SMS as a percentage of the overall business messaging traffic will become less and less dominant.
For MNOs the solution may be integrating their SMS business into a more comprehensive multi-channel rich messaging strategy. This will be crucial for MNOs in aiming to remain relevant in the evolving landscape.
The Growth Potential of Rich Business Messaging
The evolution of email from simple text to HTML transformed it into a powerful business communication tool. Internationally renowned companies like MailChimp and HubSpot emerged as leaders in the email revolution and created a category of business expense worth $7 billion every year.
When we think that the A2P market generates circa $50 billion currently and it is estimated that only 3% of business worldwide [as of 2021 according to Mobile Squared] send A2P messages then it is clear that this is an area of huge potential. For innovators in the rich messaging space the race is on to make A2P messaging a great user experience and a simple platform to use for marketing teams, customer support and more.
Lagging Innovation: Networks vs. OTT Providers
While the demand for rich messaging is on the rise, traditional networks are lagging behind OTT providers like Google and Meta in introducing innovative services to the business messaging market. This poses a real risk of networks being bypassed by OTTs, emphasizing the need for networks to catch up and stay competitive. MNOs have not traditionally been strong on new technology innovation. However, they do have the customer base already as subscribers and they are in a prime position to upsell a better A2P offering to their clients.
Google’s Strategic Move with RCS
A key insight that has not gained much visibility is the that Google is willing to deliver RCS business messages without adding in a termination fee. They are offering MNOs the opportunity to charge a termination fee on RCS A2P traffic as long as the MNO can manage billing and settlement with the enterprise themselves. Google’s offering of RCS without charging a delivery fee sets it apart as a strategic move distinct from all other OTT providers. By providing RCS as a ‘loss leader’, Google encourages network operators to embrace the rich messaging evolution. This presents an opportunity for networks to generate revenue without having to do any actual routing of messages.
It does, however, leave MNOs on the sidelines in the growing RCS business traffic – albeit generating revenue from being on the sidelines. For many MNOs, this may not be sufficient and they may seek greater control over A2P traffic, whether it is SMS or RCS, simply because they need to be able to manage messages if they are to protect their subscribers from things like smishing attacks.
The Apple Factor
Apple’s announcement supporting RCS messages adds a significant dimension to the rich messaging landscape. If Apple extends support to RCS in its business channels, RCS could transition from a significant player to a ubiquitous force in rich messaging. The industry momentum currently favors RCS, making it a focal point for the future.
Enterprises and the RCS (R)Evolution
Enterprises are eagerly awaiting the RCS evolution, driven by the belief that rich messaging offers more value than SMS. In turn, MNOs see that RCS business messaging, with its added functionality, will yield greater A2P revenues when compared with SMS fees. Enterprises seeking a superior messaging experience will demand greater functionality from their rich messaging providers, including:
In conclusion, the future of A2P messaging is undeniably intertwined with the evolution of rich messaging channels. While SMS has been a stalwart in the business communication realm, the time has come for networks and enterprises to embrace the shift towards richer, more engaging messaging experiences. The strategic adoption of RCS, coupled with innovative solutions, presents a unique opportunity for carrier networks to shape the future of A2P messaging and build lasting connections with customers in this dynamic digital age. It is clear that mobile network operators are now able to recast themselves as OTT players in conjunction with the Google RCS infrastructure. If this opportunity is not grasped then it is clear that OTT providers will continue to encroach on business messaging with services that will likely take business messaging traffic and revenue away from the operators.
To learn more about the topics covered in this article, or to discuss how Openmind Networks can help navigate your business messaging journey, please get in touch at sales@openmindnetworks.com or contact our team of experts online here.
