The mobile network operator (MNO) landscape is rapidly evolving, driven by declining profit margins in the retail business. This has caused them to explore new revenue opportunities such as the rising use of A2P (Application-to-Person) messaging for customer communication.
This blog explores the current market situation, the rise of A2P messaging due to increasing mobile penetration and the challenges faced by operators when monetizing this opportunity.
A2P Market – The Current Trajectory
This growth is driven by the widespread penetration of mobile devices globally and the increasing demand for secure, instantaneous communication channels. According to Statista, the global A2P market is projected to reach a revenue of USD 77.76 billion by 2027.
Several key factors fuel this market growth. First, the rising number of smartphone users is transforming how businesses engage with their subscribers. A2P messaging enables businesses to send quick, direct messages, such as reminders, deals, and purchase updates, straight to consumers.
Additionally, the proliferation of wearable technology keeps end-users constantly connected to their mobile devices, frequently checking texts and calls. This connectivity has prompted businesses to actively use text messages for customer communications.
Key Trends Influencing the Enterprise A2P SMS Market
- Rising Demand for Customer Engagement Solutions
Enterprises are leveraging A2P SMS to enhance customer engagement, using personalized and timely messages to build stronger relationships, drive brand loyalty, and improve customer satisfaction.
- Adoption of Rich Communication Services (RCS)
RCS is an advanced messaging protocol offering interactive media, branding elements, and enhanced security. It provides richer communication channels, making it an attractive option for enterprises looking to engage customers more effectively.
As per Juniper Research, about 50% of mobile users will be RCS capable by this year.
- Integration with Chatbots and AI Technologies
The integration of A2P SMS with chatbots and AI is gaining traction, enabling automated and intelligent responses to customer queries. This advancement significantly improves the efficiency and effectiveness of customer support services.
- Focus on Transactional Messaging
Text messages are used for transactional messaging, such as account notifications, payment confirmations, and delivery updates. Its reliability and immediacy make it ideal for delivering critical information to customers.
- Growth in Mobile Payments and Banking
The expansion of mobile payments and banking services has fuelled its demand in the financial sector. It is widely used for transactional messaging, including account notifications, OTP (one-time password) delivery, and fraud alerts.
Challenges Faced by MNOs While Monetizing A2P Revenues
1. Protecting the SMS Channel
- Vulnerability to Fraud
While SMS is a trusted communication channel, it is susceptible to fraudulent activity. MNOs must implement measures to prevent revenue leakage from messages routed through gray routes and protect end customers from phishing attacks.
- Ensuring Secure End-to-End Delivery
MNOs must safeguard their network and customers for secure end-to-end message delivery. This involves implementing strong firewalls and monitoring systems to preserve the trust established over the years.
2. Growing Threat from OTT Players
- Competition from OTT Messaging Apps
OTT players like Meta have seized a significant share of the market. MNOs face the risk of losing A2P messaging revenues as these players offer enriched messaging experiences, allowing enterprises to reach their consumers directly.
Conclusion
A2P messaging presents a significant revenue opportunity for MNOs amid declining retail profit margins. However, successful monetization requires addressing key challenges, including securing the SMS channel, countering OTT competition, and educating internal stakeholders.
MNOs must adopt secure A2P messaging services to minimize revenue leakages and transition towards richer communication formats. With the right strategies and technologies, A2P messaging can become a cornerstone of MNOs’ revenue growth and customer engagement efforts.
As an MNO be in total control of your A2P business with secure A2P messaging services from Globe Teleservices, to minimize revenue leakages, helping you make the perfect shift towards richer communication formats.