Declining profit margins in the retail sector have compelled mobile network operators (MNOs) to shift away from conventional priorities. The emphasis is now on the wholesale business, given that A2P messaging revenues in numerous markets surpass P2P messaging revenues. However, let’s go through the primary obstacles that may impede the growth of A2P messaging.
Why is retail struggling while wholesale is thriving?
Revenues from subscribers in the conventional retail sector of MNOs are either declining or stagnant. Intense competition and standardized offerings continuously squeeze profit margins, prompting MNOs to seek alternative revenue sources.
On the flip side, wholesale presents significant business opportunities! A2P messaging is emerging as a focal point for MNOs aiming to spur growth. Operationally, overhead costs are generally minimal; typically, a team of two or three people can manage it. In essence, it’s a promising avenue for profit that isn’t reliant on retail.
MNOs’ Top 3 A2P Messaging Challenges
The A2P messaging industry faces its share of challenges, both internal and external. Let’s explore some of these factors.
1: Safeguarding the SMS Channel
While SMS remains a reliable and trusted communication channel for end subscribers and enterprises, it is susceptible to fraudulent activities. MNOs frequently overlook termination fees for messages sent to their subscribers, leading to revenue leakage. Grey routes or P2P SIM cards in SIM farms exploit unlimited retail offers, causing further revenue loss. Deliberate misrepresentation of messages as P2P traffic instead of A2P traffic is another threat. Additionally, SMS can be exploited by bad actors for phishing attempts, posing a risk to end customer’s sensitive data. To address these issues, MNOs must implement appropriate measures, including firewalls and monitoring tools, to maintain the safety of SMS as a channel. We need to make ongoing efforts to preserve the longstanding trust in SMS.
2: Escalating Concerns from OTT Players Targeting the A2P Market
Over-the-top (OTT) players such as Facebook, WhatsApp, Messenger, and Telegram have already seized a share of the P2P messaging market by providing enhanced user experiences and exchanging multimedia messages. MNOs now confront the danger of A2P messaging following a similar trajectory, with an increasing number of OTT players permitting enterprises to utilize their channels for consumer communication. Simultaneously, customer expectations for a more immersive A2P messaging encounter are rising. To address this, MNOs must implement RCS, delivering a heightened messaging experience that fosters engagement between enterprises and consumers. With this upgrade, MNOs can avoid relinquishing A2P revenues to OTT players for specific messaging scenarios, jeopardizing current and future revenue streams.
3: Internal Knowledge Gap in Wholesale Messaging
The third significant hurdle for the MNO’s wholesale department lies in the broader business’s need for more understanding regarding wholesale messaging and how the organization can fully capitalize on the business prospect. Frequently, there is also a need for more awareness or comprehension of the challenges mentioned earlier. Consequently, unintentional support for fraudulent activities occurs, such as offering SIM cards with limitless text messages. Additionally, there is a limited incentive to invest in technology and services that could mitigate these issues. Educating the broader MNO business is crucial, providing information on how wholesale produces revenue to ensure optimal support for this expanding business opportunity.
Conclusion
A2P messaging is a potent tool for enhancing customer engagement, boosting revenue, and cutting costs. Nevertheless, mobile network operators (MNOs) need help effectively monetize and oversee A2P messaging. Tackling these messages becomes imperative for MNOs to capitalize on this expanding market’s potential fully. Through proactive efforts in overcoming these obstacles, MNOs can secure the advantages offered by A2P messaging and position themselves for sustained growth.
Meta Description: As retail profits drop, MNOs turn to wholesale A2P messaging for growth. Learn about the challenges and opportunities in this growing market.
