Shut down the routes to claw it back says Dialogue CEO Hugh Spear
London, November 10, 2016: More than half of the world’s mobile operators are losing more than half of their potential revenue from business-led Application to Person (A2P) SMS traffic which is able to by-pass network charges by using so-called ‘grey routes’.
SMS message aggregators, working on behalf of many of the world’s biggest brands, are using these grey routes to avoid network operator charges and make increased margins from companies who believe they are paying a fair price. Typical messages are from banks, delivery firms, brands running competitions, travel and leisure companies.
According to Hugh Spear, Founder and CEO of A2P SMS specialists Dialogue Communications, identifying and shutting the loopholes could generate as much as $15bn in recovered operator revenue in 2017.
“There are some firms out there that are effectively not only cheating the operators but also cheating their customers,” said Spear talking at industry round-table event in London yesterday.
“Taking the grey route to by-pass operator charges increases the chance of non-delivery, provides a safe, profitable haven for the spammers, and risks damaging brand reputation both for the brands associated with the messages and the operators themselves,” he said.
Dialogue’s figures are based on tests it carried out on 199 mobile networks in 84 countries earlier this year. Only 23 per cent of the networks tested showed no A2P SMS by-pass activity. Some 51 per cent of networks however had significant by-pass activity ranging from just over half of all messages to a complete 100 per cent by-pass for 28 of the operators tested.
Supporting evidence for the Dialogue results comes from industry body the GSMA, which found partial or full grey-routing on 75 per cent of 816 operators surveyed – including on 271 of the largest and most influential mobile operator networks who together serve more than half of the world’s mobile consumers.
“Dialogue is in many ways a unique company in this marketplace,” said Spear. “We’re not an aggregator, so don’t try to sell to brands, or look for ways to reduce our costs through grey routing. Instead, we are committed to guaranteeing to our aggregator and operator customers that we will safely deliver 100 per cent of A2P SMS traffic on net.”
Dialogue says this commitment levels the playing field for all the aggregators; ensures a fair split of revenue for the operator; and gives the best guarantee of delivery for the brands. The company’s Sentinel solution sits in the operator network to identify and block grey route traffic. It then forces that traffic onto the managed operator network and shares the revenues at agreed rates.
“Identifying the grey-routes, blocking those messages and forcing them onto the controlled network should be a priority for operators. They will reap the cost of employing the technology to force a clean approach ten-times over in a single month,” said Spear. “The cost does not change for the brands, it simply ensures the revenue is more fairly shared, the service delivery is guaranteed, and the operator knows what is happening on its network.”
Since deploying its Sentinel technology in four territories earlier this year, those operators have noticed a sharp uptake in A2P SMS revenue. One operator is now receiving some $500k in new A2P revenue every month from Dialogue – a figure up from zero before the system was deployed.
“Research from multiple sources shows that the A2P SMS market will be worth more than $55bn this year – growing to an estimated $70bn by 2020,” said Spear. “We believe that operators should have, at the very least, half of that revenue as the carrier of the service.
“But all the indications, and the evidence of our initial deployments, suggests that globally operators are capturing only around a quarter of that income – and of course some are missing out altogether. In 2017, I believe there is upwards of $15bn in revenue that operators could recover if they took the right steps now.”
