A2P SMS to bring new life to aging messaging market
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SMS is not dead – not yet anyway. Ovum’s Mobile Messaging Traffic and Revenue Forecast: 2017-22 forecasts global revenues from application-to-person (A2P) SMS will finally exceed revenues from person-to-person (P2P) SMS by 2022, totalling $43 billion, even though A2P SMS traffic will be less than half of P2P SMS traffic by that time.
P2P SMS revenues will generate just $40.2 billion in revenues by the end of the forecast period, but P2P SMS traffic will total 3.4 trillion messages in 2022, by comparison to 1.5 trillion A2P SMS.
Figure 1: Global P2P and A2P SMS revenue, 2017-2022
Source: Ovum 2018
The bulk of P2P and A2P SMS traffic and revenues will come mainly from the mobile-first, powerhouse markets of China, India and Indonesia.
“Unfortunately for most telcos, P2P SMS has become essentially value-less, since they have had to bundle unlimited SMS into mobile tariffs to remain relevant to their customers, an increasing number of whom use chat apps such as WhatsApp, WeChat and Facebook Messenger. However, telcos can still charge a per-message termination rate for A2P SMS, which means it remains a more valuable source of revenues, since enterprises still value SMS for its global reach, affordability and mature ecosystem,” said Pamela Clark-Dickson, practice leader of Ovum’s communications and social team.
Ovum forecasts chat apps will have 3.2 billion unique monthly active users (MAUs) by 2020, connecting enterprises with consumers via their platforms. Telcos and the wider ecosystem are therefore under pressure to protect their A2P revenues, driving them to upgrade from SMS to Rich Communication Services (RCS).
Questions & Answers
Q.Which market type is forecast to generate the majority of SMS traffic and revenues?
Which market type is forecast to generate the majority of SMS traffic and revenues?
The mobile-first, powerhouse markets of China, India, and Indonesia are expected to account for the bulk of both P2P and A2P SMS traffic and revenues in the forecast period.
Q.Why have telcos struggled to generate revenue from person-to-person SMS?
Why have telcos struggled to generate revenue from person-to-person SMS?
Telcos have had to include unlimited SMS in mobile plans to stay competitive, as many customers now use chat applications like WhatsApp. This has made P2P SMS less valuable for them.
Q.Why do businesses still use A2P SMS despite the rise of chat apps?
Why do businesses still use A2P SMS despite the rise of chat apps?
Enterprises continue to value A2P SMS because of its extensive global reach, cost-effectiveness, and well-established ecosystem. This allows telcos to charge a per-message termination rate.
Q.What are telcos doing to protect their revenue streams from A2P messaging?
What are telcos doing to protect their revenue streams from A2P messaging?
Telcos and the broader industry are under pressure to safeguard their A2P revenues. They are upgrading their services from traditional SMS to Rich Communication Services to address this challenge.
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