Technology | Media | Telecommunications

Monday, May 12, 2014

Application-to-Person SMS Revenues will Reach $60B

The growth of Over the Top (OTT) mobile messaging offerings has threatened mobile network operator revenues and the market is now at a juncture, with many questioning whether the more traditional network operators are capable of competing head-to-head with those progressive OTT messaging players.

According to the latest market study by Juniper Research, revenues from Application-to-Person Short Messaging Service (A2P SMS) -- defined as messages which are sent both to and from a mobile application -- will be worth almost $60 billion by 2018, that's up from $55 billion in 2013.

The reach and reliability which SMS affords organizations looking to contact customers and employees remains far greater than many other forms of communication.

Secure, Reliable and Ubiquitous Messaging

Juniper found that A2P SMS would see growth both in terms of traffic and revenues over the forecast period. For organisations such as financial services or ticketing providers, SMS is the most secure and reliable option for A2P communications.


Furthermore, it is ubiquitous. Almost all handsets can receive SMS, however the fact that OTT messaging platforms frequently do not inter-operate -- and there are still a significant number of people without mobile data plans -- means they’re not appropriate for A2P communications.

Person-to-Person SMS Revenues are Declining

Moreover, the growth in A2P SMS revenues comes at the same time as P2P (person-to-person) SMS revenues are in decline.

Mobile operators are losing out as their customers are switching to OTT messaging platforms, which have the allure of free offerings.

MNOs have reacted by aggressively bundling messaging into cheaper deals for users, squeezing their messaging ARPU and, subsequently, total revenues.

Other key findings from the market study include:

  • By 2018, IM (Instant Messaging) traffic will stand at 63 trillion messages, but only account for just over $3 billion in revenues.
  • Far East and China will generate the most traffic across all mobile messaging formats, throughout the forecast period.