Rapidly rising business SMS prices and increasing levels of messaging fraud such as AIT and pumping tactics could see SMS authentication traffic grow by a mere 4% in 2024, hammering a much-needed revenue stream for operators.
According to data from Juniper Research, the sector has seen consistent 10% growth year-on-year over the past five years and many MNOs have put faith in business SMS from A2P being a lively revenue stream. However, the rise of AIT (Artificially Inflated Traffic), where enterprises pay for SMS authentication traffic for users that do not exist, will be a key driver of rising SMS prices. This is leading enterprises to explore alternative authentication technologies, such as one-time passwords over OTT messaging apps and flash calling.
Growing usage of telco APIs
According to the study, more than 50% of SMS traffic will be attributable to authentication use cases in 2024. To combat slowing SMS traffic growth, operators must promote authentication APIs such as Number Verify and SilentAuth, to keep demand for authentication services within operator-controlled environments.
If operators are unable to reduce prices and fraud on their messaging networks, they risk losing vital authentication traffic and revenue to other channels.
Open standards will accelerate API roll-out
The GSMA Open Gateway, launched in 2023, will enable operators to swiftly develop and deploy API-based authentication solutions, eliminating the need for user authentication, silently authenticating at the SIM-level instead. This will provide a frictionless experience for mobile users whilst retaining the use of telecoms networks.
Research author Rosie O’Connor comments: “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.”