ANALYSIS: Grey routes take centre stage at inaugural Capacity SMS wholesale event

Pressure was put on the industry to take more action to address grey route trafficking to help support the growth of the Application-to-Person (A2P) market, during Capacity’s inaugral Wholesale Messaging and SMS World conference.

The event, which was held in London in early December, brought healthy debate among members of the carrier and aggregator communities. 

The A2P market is poised for major growth over the next three years, but concerns are growing that operators and aggregators might be unable to capitalise on this opportunity if price point pressure continues. Fraudulent routes are driving prices down, eradicating revenues that should rightfully flow to the operators. 

Perry Offer, CEO at Dialogue, was particularly vocal in urging operators and aggregators alike to act now to address fraud

He said operators must move away from encouraging SIM farms and tackle disorderly markets and fraudulent activity head on: “I’d like to invite the CEOs of the world’s operators to sit down with their CFOs, and a flipchart, to map out the relationships between their differing revenue flows, because in that way they would understand that much of their current ‘success’ is being delivered at a huge price,” he said. 

He also warned that operators must not “kill the goose that laid the golden egg” by setting the price too high and destroying the volume. 

“Operators should work more closely alongside aggregators in order to bring down price points and by moving to 100% on-net delivery the true value of SMS can be reached,” said Perry. “The value of the channel is centred on fast and reliable delivery. This is particularly true for mission-critical, high-value, time-sensitive information in an age of increasing concern about security and authentication.”

The event coincided with the 22nd anniversary of the first delivery of an SMS message, a market which remains in strong health despite the sharp decline of person-to-person messaging. According to estimates by Ovum, over 7.6 trillion SMS messages will be sent worldwide in 2015. 

“While some commentators have been eager to sound the death knell for the humble text message, the reality is that carriers are seeing demand increasing even in the age of disruptive OTT players. Only SMS can operate on any mobile device regardless of operating system, geography and level of network evolution,” said Bart Vandekerckhove, head of mobile messaging at BICS.

“OTT services cannot offer the same reach and reliability for large enterprises as SMS – which works seamlessly on legacy systems. No matter how big the OTT communities are, the largest community will always be the mobile community, with almost seven billion users worldwide.”