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SMS Authentication Faces Decline in 2024 Due to Rising Prices and Fraud

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A recent study conducted by Juniper Research, a renowned telecommunications authority, has revealed that the escalating costs of SMS authentication services and the emergence of fraudulent activities are poised to curtail the demand for SMS-based authentication among enterprises. As a result, telecommunications operators are projected to witness a mere 4% increase in traffic in 2024, in stark contrast to the average annual growth rate of 10% observed over the past five years.

The surge in Artificially Inflated Traffic (AIT), where enterprises pay for SMS authentication traffic for non-existent users, is a primary factor contributing to the surge in SMS costs. This, in turn, is prompting businesses to explore alternative authentication technologies, including one-time passwords via Over-The-Top (OTT) messaging applications and flash calling.

To combat the deceleration in SMS traffic growth, operators are urged to promote authentication Application Programming Interfaces (APIs) like Number Verify and SilentAuth. By doing so, they can maintain demand for authentication services within their controlled environments. Failure to address the issues of rising prices and fraudulent activities on their messaging networks may result in operators losing essential authentication traffic and revenue to alternative channels.

The introduction of the GSMA Open Gateway in 2023 is expected to facilitate the swift development and implementation of API-based authentication solutions by operators. This innovation eliminates the need for user authentication and, instead, silently authenticates at the SIM level. This approach not only offers a seamless experience for mobile users but also retains the use of telecommunications networks.

Rosie O’Connor, the author of the research, remarked, “With high prices and unreliable SMS termination, enterprises are beginning to lose faith in SMS authentication. Operator APIs offer an opportunity for operators to ensure that authentication remains on operator networks.” As the telecommunications landscape evolves, industry players must adapt to these challenges to maintain the vitality of SMS authentication services.

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