The cannibalisation of the SMS market by data-driven over-the-top (OTT) services such as WhatsApp or in-app notifications favoured by banking apps will not lead to the obsolescence of legacy SMS. This is according to ReveNet chief financial officer Perry Offer, who spoke at a Mobile Monday event held in Cape Town this week.

Application-to-person (A2P) SMS “will remain a valid and valuable channel for the termination of mission-critical, time-sensitive, high-value messages – over and above anything that data can provide – until such time that data services are as ubiquitous and as quickly read as SMSs are today”, Offer said.

Distinct from person-to-person (P2P) SMS, where messages flow between individuals, A2P SMS is largely used by businesses to send marketing, authentication or emergency alert information to mobile subscribers. Whereas the P2P market has been almost totally cannibalised by data-based platforms like WhatsApp, similar trends in the A2P SMS market have been tempered by the reliability, affordability and ubiquity of SMS, which sustain demand for the service, especially for the purpose of authenticating users or transactions.

Speaking on panel alongside communications minister Solly Malatsi, Offer argued that the rationale for an enterprise choosing to use an over-the-top application to send messages to its customers may hold water in urban areas where 4G and 5G penetration rates are high – this means the intended recipient will receive a message in near real time – but the strategy does not work so well for subscribers in rural and outlying areas where internet coverage is low and users may be out of range for extended periods – or have no data.

“If an enterprise is sending a messaging that contains highly important information that the consumer needs to receive immediately, then SMS has to remain the preferred channel,” said Offer.

A2P messaging represents a revenue source for mobile operators. However, according to ReveNet CEO Stefan Olaru, operators are not always able to monetise their A2P, or bulk SMS, facility as well as they could. Typically, customers who purchase higher volumes get cheaper pricing, but the system is open to abuse with scammers, spammers and spoofers using SMS as a channel to trick unsuspecting consumers in various ways.

Secure

ReveNet monitors and secures a mobile operator’s SMS channels to ensure that only authorised and authenticated users are sending messages to subscribers. SMS messages are by design unencrypted, and this simplicity allows the most basic devices to support SMS. However, the channel the messages are sent through can be encrypted to prevent snooping or man-in-the-middle attacks.

“A2P transactional is critical … [it’s] indispensable. You have to use it. So, we ensure revenue for the operators by monetising transactional A2P. The entire mobile market is decreasing in revenue and A2P is one of the only traditional services where revenue can actually increase,” Olaru told TechCentral in an interview.

Read: From Talkomatic to WhatsApp: the incredible history of instant messaging

ReveNet was founded in Romania and has a presence across Europe and some parts of Asia. According to Olaru, the company is now targeting Africa because it sees SMS being important in the region for a long time to come. Low rates of 4G and 5G coverage, combined with low penetration rates of devices that use those networks, mean that OTT messaging will not be ubiquitous in Africa anytime soon, whereas SMS is.

ReveNet sees SMS as important to “mission critical” applications such as disaster areas or periods of political unrest. In such cases, internet services are sometimes disabled, leaving SMS as the most useful channel for sending out information to a large number of users at once. Olaru cited examples of the recent post-election violence in Mozambique as an example of a scenario where SMS-based A2P messaging retains its utility.

“There is SMS and there is data; they should be working together. It’s revenue for the operator on both sides. It doesn’t mean when operators have data revenue they should forget about SMS,” said Olaru. – © 2024 NewsCentral Media

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