Friday, 15 December 2017

Ovum survey highlights impact of A2P SMS price strategies

Anam Technologies
Monday 23 February 15

Mblox, the global leader in application-to-person (A2P) text messaging, and Anam Technologies, the leading A2P revenue assurance partner for mobile operators, today announced the results from a global survey and SMS affordability analysis conducted by Ovum, which found that mobile network operators (MNOs) are not currently realising full revenue or growth potential due to inappropriately pricing A2P SMS for each marketplace. The A2P SMS market is poised for significant adoption in the coming years, which provides MNOs an opportunity to increase revenues if the optimal SMS price is charged for each market and networks are closed to fraudulent routes…

Mblox, the global leader in application-to-person (A2P) text messaging, and Anam Technologies, the leading A2P revenue assurance partner for mobile operators, today announced the results from a global survey and SMS affordability analysis conducted by Ovum, which found that mobile network operators (MNOs) are not currently realising full revenue or growth potential due to inappropriately pricing A2P SMS for each marketplace. The A2P SMS market is poised for significant adoption in the coming years, which provides MNOs an opportunity to increase revenues if the optimal SMS price is charged for each market and networks are closed to fraudulent routes.

The report, based on a global survey of enterprises and analysis of global SMS volumes, found a high level of price elasticity for A2P SMS. Specifically, half of respondents would send two to four times less traffic if the per-message price of an A2P SMS increased from the industry average of US$0.03 to US$0.05. Conversely, 33.9 percent of respondents said they would send between two and four times more traffic if the price was US$0.01.

“MNOs in every market should consider the effect of price elasticity on their pricing strategies for A2P SMS,” said Pamela Clark-Dickson, principal analyst, Consumer Services, Ovum. “Ovum estimates that A2P messaging traffic will total 2.2 trillion messages by 2017, representing 31.3 percent of total messaging traffic, up from 1.8 trillion messages in 2014.”

Additionally, the report highlighted the difference pricing strategies will have around the globe. For instance, MNOs in Belgium would more than double their revenues by reducing the price of A2P SMS by 25%. By contrast, MNOs in India currently charge below the optimal price. A price increase would cause a small drop in traffic but a windfall for the bottom line.

“This report underscores the impact pricing has on A2P SMS adoption and growth across the globe,” CEO of Mblox Tom Cotney said. “A2P SMS is poised for significant growth because it provides enterprises with a cost-effective channel for engaging with customers. This new study proves that adoption could increase and MNO revenue will be maximised, if MNOs can identify the optimal price point for their market.”

The report also reiterated that, in order to maximise revenue and enforce the optimal price point, MNOs must close their networks to fraudulent routes. Without commercial agreements, MNOs are losing a portion of revenue to messages sent over grey and black (fraudulent) routes, which bypass proper compensation for the MNOs. The most effective way MNOs have begun battling fraudulent routes is by deploying a managed SMS revenue assurance platform and SMS firewalls, enabling them to close and protect their networks, identify legitimate traffic, block spam and ensure that aggregators and enterprises pay them for SMS services.

“For mobile network operators, deploying managed revenue assurance platforms and firewalls is a vital first step to realising the full revenue potential of application-to-person SMS,” said Anam CEO Louise O’Sullivan. “These tools enable MNOs to be part of the value chain of an already robust A2P market. When combined with managed protection of the channel and pricing optimisation efforts, mobile network operators can achieve maximum profits while ensuring adoption and utilisation of application-to-person SMS within the business market.”

In order to help MNOs maximise revenues, Ovum partnered with Mblox and Anam to develop an Affordability Index for application-to-person SMS pricing. The index was created to enable MNOs on a per-country basis to visualise the impact that increasing or decreasing their application-to-person message prices would have on their revenue. Click here for the white paper reporting the full findings.

Methodology

For the white paper, Ovum drew on primary research which was conducted over a number of months, comprising phone and face-to-face interviews with companies including Mblox, Anam, infrastructure vendors, SMS aggregators and telecommunications hubs.

Ovum conducted an online survey between October 15 – November 21, 2014. This survey was conducted independently by Ovum. The sample included enterprises based in all seven regions globally. Respondents were drawn from business/professional services, device vendors, manufacturing, financial services, media and internet companies, the public sector and app providers/OTTs.

In conjunction with Mblox and Anam, Ovum has also developed an Affordability Index for A2P SMS pricing, from which content was also drawn for the white paper.


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