These days operators are finding it difficult to achieve the same level of returns from traditional services such as messaging. A recent report from Juniper Research estimated that the messaging market will decline from $113.5bn in 2014 to $112.9bn in 2019 – a reduction of $600m. This is despite a growth in messaging traffic overall, driven primarily by OTT messaging applications.
There is light at the end of the tunnel for operators however, as the report cited A2P SMS as a generator of significant revenue growth for MNOs over the next five years. Interestingly, Juniper Research revealed that user concerns regarding privacy will aid this A2P SMS growth – with secure message delivery and reliability being key.
This predicted growth in A2P traffic, and the need to ensure message delivery reliability should send out a warning cry for operators to finally tackle an increasingly important issue: grey routes.
Grey routes
A grey route is an SMS route that is legal but which takes advantage of a loophole in the GSM commercial framework whereby not all MNOs have (or require) a commercial agreement to terminate an SMS. Grey routes are SMS routes that are “white” for the originator, but “black” for the destination. This results in the impossibility to bill for terminating messages, as well as a decrease in the reliability of delivery.
Grey routes can cause damaging levels of SPAM, security threats (authentication, etc.) and result in poor customer experience leading to an increasing likelihood of churn. But due to reduced messaging resources inside MNOs, many MNOs are not actively addressing this threat.
Traditional grey route management software was sold as a plug-in SMS filter, implemented with a certain set of rules. While these services do block basic spam, they’re typically static based on historic rules which can easily be bypassed. Realistically, many operators no longer have Messaging Teams to properly analyse the traffic coming in and out of their network. Meanwhile, grey routes are becoming increasingly sophisticated, with companies able to move numbers so quickly that analysis needs to be done almost in real-time.
Why is this an issue now?
The consensus from industry reports is that the mobile industry is losing significant revenue on an ongoing basis due to grey routes, with estimates ranging from $2BN to $5BN per annum. Furthermore, it is estimated that over 50 of mobile operators are not actively addressing the issue. With the well-documented reduction in mobile operators’ retail revenue, the greater focus to be placed on wholesale revenue will include the grey route gap.
The global growth in A2P SMS traffic growth is a wake-up call for operators to take steps to properly analyse the traffic coming in and out of their networks. But how can they do this?
Detecting grey routes on the network
There is a range of options available to the operator market. At one end is the traditional licensed platform installed into the operator’s data centre, integrated into the messaging infrastructure, with training for its operation. At the other end is a managed service which, in addition to providing the licensed platform, can operate the platform on a daily basis for detection and enforcement.
These managed services can be used to run analysis of web traffic in real-time as part of an SMS spam filter. Managed services can alert the operator to grey routes, look for trends, spikes, follow traffic, and examine lots of different data waves in real-time. This is particularly important because more and more enterprises such as Google and Facebook are using SMS to send short message codes for authentication. Operators cannot take a hard line against all forms of suspected spam as often it may come from one of their revenue-driving customers.
Once these grey routes are detected, they can be shut down and traffic can be monetised via appropriate channels.
From Grey to Pay
The customers of A2P growth are across many verticals, from financial services, media, ecommerce, and lifestyle. Many enterprises are unaware that their traffic is being routed as ‘grey’ traffic on their behalf – often by a 3rd party SMS aggregator. Once the managed service has detected the grey route through a sophisticated algorithm engine, it can inform the company that their traffic will be blocked. Often the response from these verticals when informed that their traffic will be blocked is to request a route for the traffic to continue with appropriate commercial terms.
For some such verticals their cost requirement reinforces the grey route market. However, many other verticals place a greater importance on reliable and timely delivery and are prepared to pay accordingly.
As Juniper Research reported, A2P SMS will generate significant revenue growth for MNOs over the next five years. Those operators who correctly detect and monetise grey routes can not only ensure message delivery reliability, but will also be in a position to take full advantage of these future revenue opportunities.
Chris Lowe, Business Development Manager, Openmind Networks
