At Capacity’s first SMS Wholesale World event in London last year, you raised concerns about pricing points in the A2P market, urging operators and aggregators to work more closely together in order to bring down price points. Does this remain your view in 2015?
The aggregators always want the cheapest price possible and the danger is if operators get too excited about the A2P monetisation opportunity, they will want the highest price possible.
If they get dollar signs in their eyes, they could kill the goose that laid the golden egg.
The immediate effect of putting prices up is you remove the undesirable volume. Spam traffic disappears because the spammers aren’t prepared to pay.
However, if you put prices too high then you will start to encourage the defection of non-sensitive traffic, which will find other channels.
How can operators ensure they position their pricing points effectively?
The real value of the channel is for what I call mission critical, time-sensitive, high-value information. A very large proportion of the traffic now is authentication messaging, which is being driven by global enterprises.
These types of messages are price resistant, as SMS is by far still the best way to reach an individual. SMS is ubiquitous and can run on any network. The strength of the SMS channel lies in the fact that 95% of consumers read an SMS within one minute.
However, if operators are not careful with pricing then they will give an excuse for global enterprises to explore sending non-sensitive traffic, such as marketing messages, by a different channel other than SMS.
Typically if a price is pitched at between 2.5 US cent and 3.75 US cent per SMS, the overall volume of legitimate messaging remains.
What are some of the new drivers of A2P traffic?
The whole double opt-in authentication market is a major driver. So even if the non-time sensitive traffic does find other channels then we are still comfortable that the market will carry on volume wise.
There has been a huge growth in double opt-in authentication, from major OTTs like Facebook and Google, particularly for validating services abroad.
So has this rise in double opt-in authentication has brought added stability to the SMS wholesale marketplace?
Well its part of a larger story that demonstrates to operators the importance of monetising A2P traffic, that the revenue is significant and that they need to do something about filtering their networks sooner rather than later.
We have just completed a successful trial with an operator in Singapore, which has 2.5 million subscribers. Before we arrived they were not earning a single cent from their A2P traffic, and within six to seven weeks they were monetising 30 million a month.
They’re now receiving a lot of additional revenue. They pitched the pricing absolutely right – maintaining the overwhelming majority of legitimate traffic and monetising about 95% it, and now they’re earning $10 million that their competitors aren’t.
What’s new from Dialogue this year?
We are driving even deeper into the operator space. We’ve now fully productised our offer, which is called Sentinel. I call it a ‘non fire-wall firewall’. There are two ways in which you can lock down a network: You can either install a firewall on the network or you can use a track analysis tool.
Sentinel is unique as it analyses grey route traffic by brand. It can tell you which aggregator and which brand the traffic came from. You can therefore see very quickly through a web portal which brands are sending grey traffic.
We will be driving even deeper into that space. Our research tells us that about 75-80% of the world’s operator can filter using this type of approach. You don’t need a firewall installed on the network, and therefore go through that whole procurement or technical process. With Senitel, you can sign-up today and see the results 24 hours later.
What has been the interest from operators in Sentinel so far?
We have completed two very successful deployments in the last six months and have now sufficient confidence and credibility in the product that we are in the formal launch process.
