As the messaging and communication landscape continues to evolve, the combined impact of price inflation and Artificially Inflated Traffic (AIT) poses a significant threat to the sustainability of A2P SMS. These challenges are prompting enterprises and mobile network operators to reconsider the viability of traditional SMS as a core communication channel. With rising costs and compromised traffic integrity, businesses are increasingly shifting towards more secure, flexible, and cost-efficient alternatives such as WhatsApp, Viber, in-app messaging, and RCS. In particular, in-app authentication is gaining popularity for its enhanced user experience and resistance to fraud. As these modern platforms gain traction, the risk of losing A2P SMS revenue becomes more imminent, signalling a potential decline in its dominance. To remain competitive and relevant, stakeholders in the messaging ecosystem must proactively adapt, diversify their communication strategies, and embrace the transformative potential of next-generation messaging solutions.
A2P SMS Price Inflation
In the Mobile Network Operator (MNO) landscape, A2P SMS has historically served as a reliable revenue stream, but the escalating inflation of A2P SMS pricing now poses a serious threat to the stability of the mobile messaging ecosystem. Many operators, in an effort to boost short-term profit margins, have increasingly leaned on A2P SMS as their principal income source, often at the expense of long-term sustainability. This overdependence has led to practices such as pressuring clients to commit to higher message volumes than required and inflating expectations beyond what market dynamics can realistically support. By prioritizing inflated revenue targets over balanced growth, some Telcos have even aligned with aggregators engaged in Artificially Inflated Traffic (AIT), inadvertently compromising trust in the A2P messaging industry. This shortsighted focus not only undermines customer confidence but also erodes the foundational scalability and integrity of the ecosystem, emphasizing the urgent need for MNOs to adopt more diversified and transparent revenue strategies that protect the long-term viability of the industry.
Numbers Don’t Lie
According to Mobilesquared’s updated report, Global A2P SMS: The Complete Overview 2017–2027, the A2P SMS industry is experiencing a dramatic shift, marked by a sharp rise in international messaging costs. Since mid-2021, the average price of international A2P SMS has nearly doubled—from $0.033 to $0.0646—prompting 90% of mobile operators to hike their rates. Among them, 36.4% have implemented increases of more than 100%, while 3.9% have surged prices by over 500%. As a result, some brands now face staggering costs of over $0.25 per SMS in certain markets, challenging the affordability and scalability of A2P messaging. This pricing trend is projected to contribute to a potential revenue loss of $14.36 billion for the industry by 2027. While the total anticipated spend between 2022 and 2027 stands at $224.47 billion, the actual projected market spend is only $210.11 billion, signalling a critical imbalance and raising concerns about the long-term viability of A2P SMS in its current form.
The Unavoidable Consequence
A major consequence of rising A2P SMS price inflation is the potential shift by businesses and Application Service Providers (ASPs) toward alternative authentication and communication methods. As costs escalate, these entities may seek more cost-effective channels, threatening the steady revenue stream MNOs have traditionally depended on. This migration not only risks financial loss but also undermines the fundamental role of A2P SMS in enabling secure transactions, two-factor authentication, and crucial interactions between businesses and consumers. Without addressing these price pressures and the risks they pose, the stability and reliability of this essential communication service could be compromised. Therefore, it is critical for MNOs to find a balanced approach that aligns profitability with customer satisfaction, revisiting revenue strategies to stay competitive, agile, and customer-focused in an evolving market landscape.
The Fight Against Artificially Inflated Traffic (AIT)
Furthermore, the increasing prevalence of Artificial Inflation of Traffic (AIT) poses a serious threat to the credibility and reliability of A2P SMS as a secure business messaging channel. AIT, which manipulates messaging volumes using automated bots, undermines not only financial stability but also the fundamental trust, security, and reputation that telcos and businesses depend on. Addressing and countering AIT is therefore critical to preserving the integrity and sustainability of the A2P SMS ecosystem.
Understanding AIT
Artificial Inflation of Traffic (AIT) is a fraudulent scheme where attackers use automated software to flood businesses with fake requests for one-time passwords, artificially inflating message volumes to generate revenue at the businesses’ expense. Distinguishing these fraudulent requests from legitimate ones is a significant challenge for businesses. This deception erodes trust in the digital ecosystem, damaging the reputations of both telcos and businesses. Moreover, AIT raises serious doubts about the reliability of A2P SMS for two-factor authentication, threatening its role as a trusted and secure channel for business messaging.
Main Messaging Use Cases for AIT
AIT mainly targets time-sensitive, user-generated messages such as one-time passwords (OTPs) and messages that encourage user-initiated interactions. Businesses rely heavily on OTPs for critical processes like onboarding, user logins, and password resets. In regions where SMS rates are high, fraudsters exploit this vulnerability by deploying bots to generate fake traffic, causing significant financial and operational harm.
The High Stakes for Telcos and Enterprises
Telcos have long relied on A2P SMS, especially for delivering one-time passwords, as a steady and dependable revenue stream. However, the rise of AIT fraud threatens to push enterprises toward alternative authentication methods, which may lack the broad accessibility and simplicity of SMS for all users. The widespread availability and ease of use of A2P SMS for two-factor authentication (2FA) are its greatest strengths, and losing this option would pose serious risks to account security and user convenience.
The Paradox of AIT: Everyone’s a Potential Beneficiary
The paradox of AIT is that, despite its significant costs, various players within the messaging ecosystem may derive some short-term benefits from it. While enterprises generally suffer as victims of AIT, certain entities exploit this fraudulent activity to artificially inflate user counts and demonstrate misleading growth metrics. However, these immediate gains come at the expense of the broader ecosystem, causing long-term damage. The consequences include the proliferation of fake A2P SMS traffic, financial losses for enterprises, reputational harm to telcos, and an overall erosion of trust in SMS as a reliable and secure channel for business messaging.
Best Practices to Prevent AIT
Preventing AIT can be challenging but not impossible, and each of the main affected parties should adopt tailored strategies to combat it:
• For Telcos: Deploying advanced traffic analysis and filtering technologies allows telcos to distinguish legitimate user activity from fraudulent behavior effectively. Selecting trusted partners and implementing robust security measures—such as SMS Firewalls—are essential for monitoring network traffic, identifying anomalies, and responding swiftly to maintain the integrity of their services.
• For OTTs (Over-The-Top Service Providers): OTTs can play a vital role in combating AIT by implementing strong encryption and authentication mechanisms to protect user accounts and data from unauthorized access. Additionally, restricting suspicious IP addresses and enhancing CAPTCHA challenges help in detecting and blocking automated bot activities.
The Call for Collective Action
To combat the rising threat of AIT, it is imperative that telcos, OTTs, aggregators, communication providers, and enterprises work together closely. Protecting customers and businesses from fraud and abuse, as well as securing the entire business messaging ecosystem, is a shared responsibility. This collective effort is crucial to rebuilding trust and ensuring the integrity of the digital messaging landscape.
Creating a Safer Messaging Ecosystem Together
In conclusion, maintaining A2P SMS revenues requires unified and proactive efforts. Telcos must carefully manage price inflation and collaborate closely with businesses and aggregators to implement effective solutions that prevent AIT while preserving trust and security within the communication industry. OTTs, by leveraging exclusive partnerships with MNOs’ aggregators and potentially limiting the aggregator chain, can play a pivotal role in more effectively containing AIT. Failure to address these challenges risks eroding credibility and driving messaging use cases to alternative channels. Monty Mobile is leading this crucial effort, committed to securing the messaging ecosystem and ensuring its reliability for all stakeholders.