ANALYSIS: OTT players pose major threat to A2P revenues

ANALYSIS: OTT players pose major threat to A2P revenues

OTT players could pose a major threat to carrier application-to-person (A2P) messaging revenues, warned Thorsten Trapp, CTO at Tyntec.

Trapp told Capacity that OTTs have the potential to dominate the A2P market, similar to how they have grasped a hold on the person-to-person (P2P) messaging market. “If two or three OTTs did it correctly, they could attack the A2P market in a big way,” he said.

Traditional P2P SMS revenues have declined rapidly over the last decade due to the influx of messaging services over Wifi, with one analyst suggesting that operators will be hit by a further 20% decline in revenue by 2017.

Carriers have helped offset this by tapping into opportunities in the A2P sector, which, driven by global marketing trends, is estimated to reach $70 billion by 2020.

Tyntec specialises in telecoms-web convergence and has over 500 enterprise customers and internet companies connected via 1000 networks worldwide. Trapp believes carriers need to adapt their approach and learn from their experiences with P2P.

“A2P and voice termination are the obvious destinations for OTTs, where they can use their existing subscribers to get paid revenue,” he said. “There needs to be a change of mind set [from the carrier community]. They need to learn that you need to let go of some revenues to gain others.”

Last year, Tyntec published an industry report which identified that mobile operators are struggling to enter into the A2P SMS market.

The survey was completed by more than 50 MNOs, with 81% stating that a decrease in traditional telecoms offerings such as P2P SMS is their "most pressing concern". A further 32% of respondents had seen a reduction in P2P traffic over the last year, while 50% have seen an increase in A2P SMS.

However, A2P SMS has long been associated with spam, and operators seem to be unsure how to work this to their advantage.

Pricing points have also been another area of debate in the A2P messaging market. Panellists at Capacity’s first ever SMS Wholesale World event last year raised concerns about future levels of revenue growth and said that operators should work more closely alongside aggregators in order to bring down price points.