When you receive a text message, chances are that you’re already halfway to checking it before you even know who sent it. SMS, the oldest mobile phone application, is installed on every handset in the world and is checked regularly by anybody with a phone. This reliability gives it a unique appeal to marketers and users alike. Not sure if someone has WhatsApp? Send them a text.
There are two types of SMS message – person-to-person or peer-to-peer (P2P), application-to-person (A2P) and person-to-application (P2A). P2P is simple enough – these are messages exchanged between two users of a mobile network. Since there are so many mobile users spread across several different networks, operators don’t charge for peer-to-peer messages sent from other networks.
A2P refers to opt-in messages sent from a software application within a commercial organisation to an individual consumer. An example might be opting in to receive alerts from your bank when the funds in your account reach a certain level. Another might be an authentication message when you sign into a familiar website from an unfamiliar location. Operators charge fees for A2P messages sent to users of their network. P2A is simply the reverse of this.
However, according to Perry Offer, CEO of Dialogue operators are only being paid for about 20 percent of the A2P messaging that is occurring, due to a little-known phenomenon called grey route messaging.
"Because of the need to send P2P messaging between themselves at no cost, operators leave their networks open to A2P messaging being sent through a P2P gateway," Offer comments. "As a result the operators don’t realise they’re carrying that traffic and therefore they don’t raise a fee for it."
Offer adds: "The whole A2P value chain is currently being debased by the ability of aggregators to send messages to operators and defeat their networks and therefore drive value down in the marketplace as opposed to trying to drive it up and capture the full value of the channel."
Dialogue pulls no punches in its criticism of aggregators who use this approach.
"Because they send P2P typically at no cost, they’re not monitoring those gateways for A2P traffic. Those aggregators who see the opportunity to make a lot of money off the back of this are basically intentionally setting out to defraud the operators.
"The argument from the aggregators would be that the operator is allowing this to happen. My response would be that they are not doing it accidentally. You’re doing it with the express intention of avoiding a charge from them."
Grey route messaging is having huge impacts on operator revenues derived from A2P messaging. In fact, Offer believes an approach that fully realises the revenues from A2P traffic could make up for lost revenues elsewhere.
"If you’re looking for revenues in the face of cannibalisation of P2P by OTT applications, just lift up your doormat because there’s a golden key underneath, and you don’t have to do very much to capture these revenues."
What will this mean for consumers? If A2P channels are fully monetised, will we have to start paying to opt in to time-critical mobile messages?
"As far as the consumers are concerned it’s going to remain kind of invisible, because the cost of it is absorbed in whatever charges they end up paying for services like banking," Offer continues. "I think where it will start to cause turbulence in the marketplace – there is a fairly high element of messaging that is non-time-sensitive.
"I think if the market price of sending non time sensitive text messages starts to go up as a result of all the operators in the world monetising, people are going tostart looking for alternative ways of sending that kind of message."
He concludes: "But for time-sensitive messages, because it is installed on every handset in the world – and that situation will remain in place – I can see that kind of traffic being, number one very sticky and number two, growing."