Does having more A2P partner connections equate to more A2P SMS revenues?

Perry Offer, CEO of Dialogue Group

As the A2P SMS market continues to be driven by low market rates, it is becoming more and more competitive. It is therefore apparent that MNOs (Mobile Network Operators) need to take the necessary steps to evaluate their A2P business model to protect their network and revenue streams.

Granting high numbers of A2P SMS partner connections is not the answer to creating a sustainable A2P SMS business stream. It creates pressure between those partners to sell to enterprises on price alone, resulting in dog fights over volumes and ultimately forcing their prices down for the operator. If MNOs are looking to thrive and not simply survive, they need to review their A2P connectivity practices and resist creating these pressures.

The A2P SMS ‘Pie’ is a fixed and specific volume on any given day – so signing more A2P partners cannot generate higher revenues for operators – all it does is cause A2P SMS volumes to move from one connectivity partner to another at ever lower prices. The greater the number of partner connections that any operator grants, the greater the price competition in the marketplace created between those partners and the greater the price pressure ultimately exerted on the operator itself.

In order for operators to form good partner relationships, there has to be a mind-set shift from the belief that quantity is better than quality and that more partner connections equals more revenue. Rather than looking to increase the A2P partner portfolio, MNOs need to instead create a sustainable volume flow through a small number of partners, which will support the long-term interests of all parties.

Selecting the right partner to manage your A2P SMS and enhance consumer experience

Fierce price competition can also lead to partners seeking to use low cost ‘grey routes’ in order to secure volume, meaning MNOs will not receive any A2P SMS revenue. Some partners out there will be looking for a direct on-net connection but will also be the first to move their traffic if a grey route becomes available. Here again, MNOs play a vital part in helping to create an orderly A2P SMS market place by only allowing legitimate routes to terminate A2P SMS on their network and blocking any fraudulent traffic. One of the key ingredients for achieving this is selecting an ethical and experienced A2P SMS partner who is focused on creating a ‘win win’ arrangement and helps MNOs enhance consumer experience.

It is important for MNOs to establish a partnership that will be based on trust – they need to be sure that a partner is committed to bringing all A2P SMS traffic 100% on-net. By working with a select few trusted A2P SMS partners, operators can increase market rates which means new and sustainable revenues can be generated, volumes of unwanted messages are reduced, and ultimately consumers are protected – preventing a high customer churn rate.

Partners to be avoided are the spot buyers who are only interested on selling on price. They have no scruples regarding the use of grey routes or SIM farms despite having a direct connection with the MNO. In granting connectivity to these types of A2P providers, MNOs are effectively rewarding those seeking to defraud and undermine operators’ efforts to monetise their A2P messaging. This type of activity also creates price wars amongst the A2P players as these low cost, non-legitimate routes become available and MNOs lose out on generating revenues.

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In order to enhance consumer experience and reduce the customer churn rate, MNOs need to select a trusted A2P partner that is committed to 100% on-net A2P SMS traffic delivery. This will help operators to support and underpin their business by monetising their traffic, securing additional revenue and protecting their network from fraudulent activity. The revenue potential is substantial and by taking a simple approach, operators will be rewarded with financial gain. Not only this, but by getting the business model right, operators could have an incredibly lucrative A2P SMS business stream.

The author of this blog is Perry Offer, CEO of Dialogue Group.

For more information go to: www.dialogue.net

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