Operators told billions lost from grey routes messaging

Operators are losing out on a multi-billion dollar revenue opportunity because of grey route messaging as the Application-to-Person (A2P) SMS market continues to grow. This was the key message from Perry Offer, the CEO of A2P messaging specialist firm Dialogue Group, speaking at the Wholesale Messaging and SMS World event in London.

A panel of industry experts, including Offer and Telefonica’s Head of Wholesale Messaging James Lasbrey, discussed at the event the recent surge in A2P messaging, and how grey route SMS traffic takes away from operator profits.

“Now is the time for operators to act,” Offer said. “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.

“The industry needs to work together as a whole to address fraud by understanding that it’s within our power to do something about it. This said, operators must not kill the goose that laid the golden egg by setting the price too high and decimating the volume.”

Grey messaging means the way aggregators can take advantage of the non-contracted routes, which exist between many international operators, to send large quantities of SMS messages.

Recently speaking to Telecoms.com, intelligent messaging solutions firm ANAM Technologies’ VP of Managed Services, Brian D’Arcy said most operators are not aware of the true amount of grey messaging going through their networks. “I can say this with confidence, every operator in the world today is carrying A2P traffic and not all are charging for it,” he said. “Some [operators] are doing a great job, but most aren’t doing anything to charge for it. But this is not illegal, it is basically a loophole.

“Some aggregators have used that non-contracted route to push through vast quantities of A2P messages, and because it comes through the non-contracted route there’s no billing and there are no termination fees charged. So the operator carries the traffic but ironically never gets paid for it. Our view is that over 75% of global mobile operators have done nothing about that, and they basically have this revenue hole. Our estimation is that the market is worth somewhere between six to eight billion dollars globally.”

According to D’Arcy, the grey messaging market doesn’t only cover spammy stuff, but also messages receivers have opted into through various kinds of services and legitimate organisations. He said if operators took action to block grey routes on their networks, it wouldn’t only increase their revenues, but would also ensure companies using A2P messaging through aggregators get a better and more reliable service, and customers would receive less spam.

Perry Offer said: “As long as these fraudulent routes are available then there will always be a price point pressure so we need to work together to put the market in order. 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.

“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.”