At a time when IP-based chat apps have eaten into P2P messaging revenues, application-to-person traffic has successfully bucked the trend. It’s grown year-on-year and is now deeply entrenched in the enterprise space. A2P has even become the go-to channel for delivering notifications and alerts to mobile users, and recently it’s developed into a security channel for two-factor authentication and bank PIN delivery.
This should come as no surprise since a lot has already been said about the rise of A2P SMS in the face of P2P traffic decline. But the true value of this technology is only now being realised as operators and messaging specialists partner up through the Business-as-a-Service model.
A2P SMS is currently the main driver behind messaging traffic growth for operators. This has stemmed from enterprises and developers integrating SMS into their existing systems, supported by messaging providers who handle the delivery and interconnectivity between different networks. Yet it may come as a surprise that operators are not the key players in this sector, despite their crucial role in the mobile ecosystem. A2P SMS has largely become a law unto itself with unique processes, software and dedicated hardware. Most operators simply do not possess the resources needed to develop and maintain their own A2P messaging platforms, which are very different to their P2P counterparts.
This space has instead been filled by mobile messaging providers who understand the needs of enterprises when it comes to A2P messaging, and have the necessary skills and infrastructure in place to meet those business goals. This has been the case for more than a decade. But now it’s time for the next phase of development in the A2P SMS industry – the Business-as-a-Service (BaaS) model – which will see operators working closely with messaging providers to get a bigger slice of the action.
The benefit of BaaS compared to the more traditional Software-as-a-Service approach is it lets operators take a back seat. The expertise and in-house support they need to offer A2P SMS as their own service is handled for them. By partnering with a mobile messaging specialist an operator will not only get access to their framework and technology, but also years of A2P industry experience and an existing global network of connections to ensure automated text messages can be delivered around the world. Ultimately, the BaaS model creates transparency in terms of how A2P SMS is handled, strengthening the relationship between operator and messaging provider.
This has never been more important than in today’s mobile messaging market. According to Ovum, the next five years will become the ‘golden era of A2P SMS,’ with more than two trillion text messages expected to be sent by 2018. Mobile operators and SMS providers are natural partners in making this a reality, and this relationship will go one step further once BaaS model becomes more widespread. It will give operators the tools they need to easily explore the fast-growing A2P market segment, without taking on any of the complexities associated with opening a new business arm that isn’t part of their core business model. They can capitalise on the huge potential of A2P SMS without investing significant resources into building their own systems. It’s a win-win situation for all involved.
By Silvio Kutic, CEO at Infobip
Silvio Kutic, founder and CEO of Infobip, earned a M.Sc. at the University of Zagreb Faculty of Electrical Engineering and Computing. Silvio took over responsibilities at Infobip as CEO in 2006. Since then, he has been the driving force behind Infobip’s rapid growth and the strategic shift towards enterprise and MNO solutions.
