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Q&A: How SMS is weathering the OTT storm

CBR sits down with Infobip CEO, Silvo Kutic, to discuss text messages as a professional telco channel.

By Alexander Sword

With the increasing popularity and convenience of communications apps such as WhatsApp, less and less of us are using the mobile phone’s oldest app, humble old SMS.

Infobip’s CEO Silvio Kutic explains why we shouldn’t expect to see the back of text messages any time soon.


CBR: What is the future of SMS? Will it ever die out?

"SMS messaging has successfully transitioned to become a professional telco channel. In recent years, professional SMS systems and business models have evolved in ways no-one could have foreseen.

"There is no other telecoms technology that can match the global availability and universal adoption of SMS, and it’s for this reason SMS has attracted lots of technical input, investment and innovation.

"The versatility of SMS technology means the way it’s used is constantly evolving. Start-ups and online companies around the world are innovating daily in the mobile space, putting A2P SMS messaging to all kinds of uses.

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"It’s almost impossible to predict what will be the next stage of development, but it’s clear SMS will continue to exist for many years to come."


CBR: With many smartphone users opting for OTT applications like WhatsApp instead of SMS, why has SMS traffic grown?

"It’s important to understand the difference between consumers texting each other for private or social matters, and businesses building consumer interaction using SMS.

"With the rise of messaging apps, mobile users have migrated to OTT platforms like WhatsApp and Viber for person-to-person communication.

"However, when a company needs to interact with its end users via mobile – whether that’s for marketing communications, authentication, or delivering alerts and real-time confirmations – and needs to reach users all over the world, integrating a professional messaging solution becomes a necessity.

"This area has grown a lot in recent years. Professional SMS (A2P SMS messaging) and associated business and managed services are driving SMS traffic volumes and revenue.

"It’s expected that SMS volumes generated by applications will continue to grow, primarily because of the robust and flexible features of SMS and its global availability and popularity among users."


CBR: On the other hand, Google has recently removed SMS notifications. Do you see this as a growing trend and do you think the telecoms industry should be concerned about traditional revenue streams, such as SMS, drying up?

"The fate of P2P SMS is not in the control of operators. It’s in the hands of mobile users and has been for some time, which suggests it’s on the decline. However, contrary to popular opinion, cumulative SMS figures have decreased far less than expected in recent years, both in terms of financial performance and traffic volume.

"This is due to a steady increase in A2P SMS traffic, which is expected to keep driving SMS profits of mobile operators at least for the next five years.

"Google ditched SMS notifications for its Calendar app in favour of smartphone push notifications, but many users were less than pleased and objected to the removal of a channel they see as more robust and suitable for this purpose than push notifications.

"In any case, Google’s decision is not indicative of the overall trend, and it wouldn’t come as a surprise if Google decided to reinstate SMS notifications for Calendar."


CBR: What is the function of a mobile platform like Infobip’s?

"On the telecoms side, existing messaging infrastructure and resources are huge and have the capacity to connect the world faster than ever. Yet, for mobile network operators, it’s not always easy to capitalise on the vast opportunity this represents, making it difficult to shape marketable enterprise services around these resources.

"It’s not just a matter of technical know-how, but also a deep understanding of what enterprises around the world need in terms of mobile messaging solutions, and what they are willing to pay for.

"At the service level, Infobip’s platform enables mobile services that add value to a business, app, or software, through security features, alerts and notifications for end users and number validation services.

"Banks, app and software developers, marketers, and even government institutions and organisations all use SMS messaging as their preferred channel for time-critical notifications and alerts, two-factor authentication and one-time PIN delivery."


CBR: Why should operators care about mobile payments and SMS based security measures?

"In the current landscape, where revenue sources for mobile operators have either shrunk or shifted but investment costs have increased significantly, monetising underutilised resources like SMS should be an integral part of any operator’s strategy to maintain a healthy bottom line.

"Operators are still the central element in the mobile ecosystem, with access to millions of people worldwide.

"Providing direct carrier billing-based mobile payments and A2P SMS messaging as value-added services can greatly contribute to their profitability."

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