Operator revenues from SMS business messaging could reach $58bn by 2027 – up from an already impressive $46bn in 2023 – but only if they embrace the Diameter protocol, which supports routing and analysis of traffic over 5G networks.
According to the latest report from Juniper Research, Diameter protocols as critical to protecting this 30% revenue growth – and is particularly prescient as the proportion of mobile subscribers on 5G networks is set to hit x 45% by 2027.
Find out more about the new report: SMS Firewalls: Future Outlook, Regional Analysis & Market Forecasts 2023-2027
SMS authentication messages a key battleground
The report estimates that more than 1 trillion SMS business messages will be used for authentication purposes, including OTPs (One-time Passwords) and MFA (Multi-factor Authentication); a highly demanded use case, in which operators can charge premium prices for traffic termination. It identified third-party SMS firewall solutions as a key tool for identifying and monetising this traffic.
Additionally, operators must implement SMS firewalls to ensure the cleanliness of networks as competition for authentication traffic arises from outside the telecommunications ecosystem.
Emerging frameworks including device-based biometric authentication and OTT-based business messaging, will place pressure on operators to ensure that SMS business messaging remains the de facto channel for authentication over the next four years.
Report author Elisha Sudlow-Poole comments: “SMS firewalls are the key solution to allow operators to protect their networks against fraudulent SMS traffic and the emergence of these cost-effective alternatives for authentication. Not only has the rise of 5G networks necessitated new technologies such as Diameter protocols, it has also driven the complexity of messaging-based fraud.”
Firewalls key to protecting operator SMS business
The research identified the deployment of SMS firewalls as a prerequisite to providing a security product that effectively identifies, monitors, filters and blocks fraudulent traffic, such as grey route and SMS spoofing fraud. A failure to protect subscribers from fraudulent SMS activity will damage consumer trust in operator-led messaging, ultimately driving enterprises towards the aforementioned alternative channels and reducing operator revenue from SMS business messaging.
Diameter protocol at a glance
According to our friends at F5 networks, the Diameter Protocol provides authentication, authorisation and accounting (AAA) messaging services for network access and data mobility applications in 3G, IP Multimedia Systems (IMS), and LTE/4G networks.
What is the Diameter Protocol?
AAA services provided by the Diameter Protocol form the basis for service administration within the telecommunications industry, such as deciding which services a user can access, at what quality of service (QoS), and at what cost.
The Diameter Protocol focuses on the application layer. AAA nodes receive positive or negative acknowledgment for each message exchanged between nodes and TCP and SCTP ensure reliability.
A variety of LTE and IMS network functions make use of the Diameter Protocol, including the Policy and Charging Rules Function (PCRF), Home Subscriber Server (HSS), and Online Charging System (OCS) elements.
Why is the Diameter Protocol Important?
Since the introduction of IP-based technology in a telecommunications network, Diameter Protocol has been chosen as the AAA protocol for all fixed and mobile networks. Diameter has the competitive edge over legacy AAA solutions (e. g. RADIUS) and is a foundation of the core Evolved Pack System (EPS) network that supports Long Term Evolution (LTE) technology.
The Diameter Protocol has been embraced by many standards bodies, such as 3GPP and ETSI NFV, as the foundation for all AAA functionalities in next-generation networks. Only Diameter Protocol supports upgrades in 4G such as real-time functionality for transactions. Other advantages include:
- Unlimited scalability to enable growth
- Fault tolerance to guarantee message delivery
- Agent support to clearly define proxy, redirect, relay, or translation agents
- Secure transmission of Diameter message packets
- Reliable transmission over TCP or SCTP
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