In recent years, SMS traffic has lost significant traction to WhatsApp and other messaging applications for personal messaging. This shift in the personal messaging preferences of mobile phone users has not only caused a decline in SMS revenues for service providers and network operators over time, but it has also burdened them with growing OTT traffic that has limited revenue generating value.
However, the use of SMS is gradually making a comeback in the enterprise segment, says Arnd Baranowski, CEO of Oculeus. Today, businesses of all sizes are actively using SMS communications to send alerts, notifications, confirmations and marketing messages to customers that cannot be supported by smartphone-based messaging applications.
Common examples of SMS-based communications used by businesses include the confirmation of a doctor appointment, a notification of when a package will arrive at the post office or be delivered by a courier service, a reminder to make an appointment to service a car and many others.
Through application-to-person (A2P) platforms, enterprises are also using SMSs as an essential part of customer identification and authentication processes. At the same time, government organisations rely on SMSs to communicate with their citizens and residents, especially in emergency situations.
Why SMS and not messaging applications
In parallel, many enterprises are currently exploring ways to leverage the popularity of WhatsApp and social networks and incorporate them into their customer interaction processes. Businesses want to utilise all possible communication channels to be in contact with their customers and create an omni-channel customer experience.
The idea in general is that customer inquiries to the company can be initiated from messaging applications and social networks, which will then be queued in the contact center together with all inbound calls and emails. However, enabling inbound communications is the limit of how a business can utilise messaging applications and social networks for customer interaction processes.
For outbound communications, SMS communication provides a more controlled framework for a business to share personal information with its customers. Customers would certainly resist and even object if a business would send sensitive personal information over a messaging application, knowing that there is severe exposure to misuse and that, ultimately, they would have no control over what the provider of the messaging application can and will do with their personal information.
At the same time, businesses can also generate automatic and mass messages for SMS communications. For messaging applications, there is no such mechanism available, at least for now.
Understanding the opportunity
To support the recent growth in SMS traffic a new kind of network operator has emerged that is being referred to as an SMS hubbing service. These new SMS hubbing services act like an interconnect carrier in the voice business, offering efficient and automated direct and wholesale routes to mobile operators, SMS aggregators and enterprise customers. Many of these SMS hubs support A2P and P2P SMS services, allowing mobile operators to efficiently expand their SMS traffic and revenues.
With all this in mind, SMS traffic will certainly continue to grow. To take advantage of this opportunity, many mobile operators are deploying dedicated BSS systems to manage their SMS services and create an operational framework to automate routing, pricing, rating, reporting and billing as much as possible.
To say that the growth in SMS traffic is a significant revenue generating opportunity for service providers and network operators might be too strong of a statement. However, it would be more accurate to state that the continued growth in SMS traffic represents a solid opportunity for service providers and network operators to offset the ongoing decline in revenues from voice-based services, which in itself is an attractive opportunity that should not be overlooked.
The author of this blog is Arnd Baranowski, CEO of Oculeus, a provider of OSS/BSS solutions for telecommunications companies and mobile operators worldwide
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