A decline in international business SMS traffic, exacerbated by major tech companies withdrawing from SMS one-time passcodes (OTPs), threatens the sustainability of the international SMS ecosystem.
With international A2P traffic projected to peak in 2025 and then decline, industry leaders debated the impact of pricing models, fraud, and potential solutions to restore trust in SMS.
Speakers
- Sham Careem, MEF Advisor – Mobile Ecosystem Forum (moderator)
- Muhammad Jibran Mehmood, head of enterprise and messaging business – ACMETEL
- Dzenan Teletovic, regional director, operator partnerships MENA – Infobip
- Mohammad Alhoshan, GM, wholesale mobility services – stc
- Nick Lane, CEO, Messagologist – Founder, Mobilesquared
- Tejas Sawant, VP- strategic partnerships – Globe Teleservices
Market outlook: Declining international A2P traffic
Nick Lane, chief messaging officer and founder of Mobilesquared, provided a stark outlook on international A2P SMS, stating, “I wouldn’t say grey clouds, more black clouds… between now and 2030 we expect revenues to drop by about 50%.” He attributed this decline to high termination rates, fraud, and the movement of hyperscalers away from SMS. Lane warned that the combination of increasing fraud, artificial traffic inflation (AIT), and fluctuating pricing structures is creating a “perfect storm” in the industry.
While domestic A2P SMS is expected to remain relatively stable, Lane highlighted the stark contrast in international markets. He noted, “Africa is going to see a drop in spend by about 75%, whereas Western Europe will only see a drop of around 13%.” He emphasised that despite the variations, the decline in hyperscaler spending will impact all regions globally.
The need to restore trust in SMS
A key concern raised in the discussion was the loss of trust in SMS due to fraud, artificial inflation, and inconsistent pricing models. Mohammad Alhoshan, GM of wholesale mobility services at stc, acknowledged the concerns, stating, “It does not sound good for me… but I think it differs from market to market.” He pointed to the Middle East as a region where traffic remains relatively stable but agreed that a combination of security, commercial, and regulatory initiatives is necessary to restore trust.
Alhoshan highlighted the importance of collaborative efforts between mobile network operators (MNOs), aggregators, brands, and regulators. He referenced industry initiatives such as the GLF Messaging Charter and the SMS Anti-Fraud Code of Conduct, which focus on blocking fraudulent traffic, limiting payment flows, and increasing transparency. He stated, “We have to tackle this issue collectively, ensuring transparency and security within the industry.”
Addressing artificially inflated traffic (AIT)
Artificially Inflated Traffic (AIT) was identified as one of the most significant threats to the A2P SMS industry. Dzenan Teletovic, regional director, operator partnerships MENA at Infobip, described AIT as “the main cause of traffic volumes dropping in the market.” He explained that bad actors exploit pricing models to manipulate traffic, leading to revenue losses for both brands and telecom operators.
According to Teletovic, AIT has severely impacted trust between brands and telecom operators. “It has taken around two years to break the trust that was built over the last ten years,” he explained, adding that without intervention, traffic volumes would continue to decline. To counter AIT, he suggested a model similar to corridor deals used in voice traffic, where direct relationships between brands and MNOs improve transparency and reduce fraud.
Alhoshan supported this approach, advocating for reducing the number of intermediaries in the messaging chain. “Minimising the number of hops between MNOs and hyperscalers will help in detecting and addressing AIT more effectively,” he stated. However, Sham Careem, MEF advisor and moderator of the discussion, raised concerns about whether such an approach might be considered anti-competitive. Teletovic countered, “It’s about control and traceability, ensuring trust in the ecosystem.”
The impact of pricing models on the industry
A major challenge facing businesses is the lack of unified pricing structures, making it difficult to allocate budgets effectively. Tejas Sawant, VP of strategic partnerships at Globe Teleservices, argued that MNOs play a crucial role in ensuring a sustainable ecosystem. “The commercial objective of the MNO has to align with the overall industry needs. Otherwise, we risk further destabilising the market,” he said.
Lane also warned against pricing strategies that drive businesses away from SMS. “The trouble is, if you go around telling people that the industry is going to die, people believe it… and what they’re actually doing is killing the market,” he explained. He urged the industry to focus on sustainability rather than short-term profit maximisation.
Is RCS taking over?
With the challenges facing A2P SMS, some have speculated that Rich Communication Services (RCS) could replace traditional SMS for business messaging. However, the panel remained cautious about its potential to fully replace A2P SMS. The consensus was that while RCS offers enhanced features, its adoption remains fragmented, and SMS will continue to play a vital role, particularly in regions with low smartphone penetration.
Conclusion: The path forward for A2P SMS
The future of A2P SMS hinges on industry-wide collaboration to tackle fraud, unify pricing structures, and restore trust in the ecosystem. Key takeaways from the discussion include:
- Collaboration is crucial: MNOs, aggregators, brands, and regulators must work together to combat fraud and stabilise the market.
- Transparency and security initiatives are needed: Initiatives like the GLF Messaging Charter and the SMS Anti-Fraud Code of Conduct play a vital role.
- AIT must be addressed: Reducing intermediaries and implementing stricter fraud detection measures can help mitigate artificially inflated traffic.
- Pricing strategies should focus on sustainability: Excessive price increases drive traffic away and harm the long-term health of the industry.
- RCS adoption remains uncertain: While RCS offers advantages, SMS is still crucial for business messaging, particularly in emerging markets.
As the industry moves forward, proactive measures and collaboration will be key to ensuring A2P SMS remains a viable and profitable communication channel.
As Careem summarised, “We need to sit up as an industry, understand that there is jeopardy ahead, but also recognise that there are steps we can take to secure the future of SMS.”
