Market Watch

Operators Brace for Slower Growth in Business SMS Revenue

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A recent study by Juniper Research, a leading authority in telecommunications markets, has unveiled a sobering forecast for operators’ revenue derived from business SMS traffic in 2024. Contrary to previous years’ robust growth, the study anticipates a mere 5% uptick in revenue, marking a significant decline from the previous year’s 23% surge.

The primary culprit behind this downward trend is a palpable reduction in demand from enterprises, triggered by substantial price hikes imposed by operators on SMS services. This surge in prices has dissuaded businesses from relying heavily on SMS for communication purposes.

To reinvigorate growth in this sector, the study advocates for operators to implement substantial reductions in SMS termination costs, aiming to cap the average termination cost at $0.10 per message. Failure to do so, warns the report, could render the market for SMS business messaging financially untenable, as high termination costs erode enterprises’ returns on investment. Consequently, operators run the risk of losing revenue-generating traffic to alternative mediums such as APIs or over-the-top (OTT) business messaging platforms.

Additionally, the report sheds light on the burgeoning threat posed by OTT messaging applications like WhatsApp to operators’ business messaging revenue. It predicts a substantial uptick in OTT business messaging traffic, particularly in areas such as authentication, including one-time passwords (OTPs) and multifactor authentication (MFA).

According to research author Molly Gatford, operators stand to lose a staggering $3.1 billion in business messaging revenue to OTT messaging channels over the next five years. Gatford emphasizes the urgency for operators to embrace new technologies, such as APIs, to stave off these looming losses and maintain a robust ecosystem for mobile messaging traffic.

As operators grapple with the evolving dynamics of the telecommunications landscape, strategic adaptation and technological innovation emerge as imperative pillars for sustaining growth and competitiveness in the business SMS market.

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