The SMS Value Chain Is Broken!

Published October 29, 2015 by Tony Jamous

As revenues from person to person messaging continue to be cannibalized by over the top applications, the carrier community has started to increasingly focus on monetizing application to person messaging. A2P revenues are expected to become the largest share of carriers’ messaging revenues. According to IDC the A2P messaging market is large at $23.4 billion in 2014, and it is growing at a compound annual growth rate of 8% through 2019.

However, the fact is that the carrier network is not designed to allow business critical A2P messaging at scale. SMS, and its infrastructure for instance has been designed for person to person. Actually, SMS uses the signalling network which is not designed for communication at all.

So what does this mean for developers? There are 5 challenges that face software developers when attempting to integrate a messaging service into their apps.

  • Latency: Messages are sent through multi-hub routes that can significantly impact the delivery time of a message. Limited capacities of A2P SMSCs, combined with peak volume, will lead – often on a daily basis – to massive queues.
  • Security: Business sensitive material is copied at each hub and can be viewed by anyone with access to those copies. Some messages can cross multiple continents before reaching the final carriers and data security regulations differ by jurisdiction.
  • Deliverability: Each hop messages take creates a potential point-of-failure and could prevent message from being delivered. The least cost routing behaviour of the industry leads to frequent switching of routes and exasperate the deliverability issues.
  • Compliance: You might not know that the content you are sending is illegal or politically sensitive in some countries.
  • Visibility: Quality customer care is next to impossible because you have limited visibility that is often inaccurate or fake. Take, for instance, handset delivery confirmations that are often faked due to inaccurate spam filters.

Hence it is clearly not enough to only innovate on building easy to use APIs for developers. To fully solve the end-to-end problem and enable A2P use cases to emerge and grow, it is necessary to innovate across the entire value chain, from the API access to the carrier network design.

Abstracting these challenges for developers in a transparent way will lead to more growth and more revenues from messaging for carriers around the world. Developers are currently paying a hefty price to get their critical messages across, and failing to address their expectations in terms of quality of service and scalability is one of the key obstacles for growth.

For more insights on how developers and carriers can enable scalable A2P communications, join me at the upcoming TadSummit in Lisbon from Nov 17-18, where I will be one of the keynote speakers.

This piece was originally published on the TadSummit blog.