Sinch : Mobile Operators, Show SMS Love to Maximize Profitability

SMS needs a bit of TLC.

SMS is a must-have service, but mobile network operators (MNOs) often struggle to control it, and assuming that a decent firewall is the complete answer is a common misconception. Many customers continue to love SMS, but with revenues declining, MNOs need to rethink their SMS business to drive growth.

Consumers and businesses of all sizes find SMS to be a vital means of communication: bank statements, restaurant reservations, delivery notifications and one-time passwords are all sent via SMS.

As the economy digitizes faster than ever, the A2P (application-to-person) SMS market is growing rapidly. Stay-at-home orders during the pandemic have increased the use of digital channels and online shopping, further expanding the A2P market. In 2020, global A2P SMS spend increased 20-40% to $21.5 billion[1]. One-time passwords and notifications account for much of this traffic.

However, many mobile operators are leaving money on the table!

Revenue is being lost as A2P messages travel through so-called gray routes.[2] that bypass carrier termination fees for A2P traffic, while some legitimate A2P messages are blocked[3]. Ironically, carriers also end up paying termination charges for unwanted SMS that shouldn’t be delivered. Believe it or not, 20% to 40% of P2P messages on a typical network is actually illegitimate traffic that could be blocked.

Now is the time to fix this to maintain the trust and reliability of SMS, or in the long run, erratic deliveries will weaken the channel in the ongoing battle with over-the-top (OTT) messaging services.

It’s time to respond to the growing threats to SMS revenue

In the past, fixing flaws in carriers’ SMS solutions would have been cumbersome and time consuming. But here at Sinch, we have a comprehensive solution that will transform your SMS business and help you meet the growing demand for easy and secure communications between businesses and consumers.

Unsurprisingly, OTT players want their share of the enterprise messaging pie, and SMS is facing unprecedented competition in the A2P market from WhatsApp, Facebook Messenger, Instagram Messenger, Telegram, Apple iMessage and the like.

But even with such fierce competition, A2P SMS still has huge potential. Of the 300 million companies in the world, only 2% use SMS A2P[4]. And since SMS is one of the most trusted channels for reaching customers and securing services on mobile devices, that proportion could easily reach 5-10%. Plus, it works on all phones!

Still, mobile operators should not take SMS for granted. With such an important business channel, a laissez-faire approach could be costly! Instead, they need to actively manage their A2P SMS offering to take full advantage of the channel’s greatest strengths: flexibility and ease of use.

Here’s how to monetize A2P SMS traffic while lowering termination costs

If MNOs take control of your A2P traffic, they can increase annual revenue by around $250,000 per million subscribers on their network.[5]. Correct routing of the many A2P messages that are blocked by the receiving network would increase revenue substantially.

Given the pressure on their main lines, operators cannot afford to ignore the fast-growing A2P messaging market. Forward-thinking operators like SmarTone in Hong Kong and Mobicom in Mongolia rely on Sinch’s A2P monetization service to grow their A2P SMS revenue. Similarly, a major mobile operator in Western Europe is using our global SMS center to exchange messages with 1,100 operators serving 7.4 billion subscribers worldwide.

By using Sinch SMS Select to block illegitimate P2P traffic, operators can also reduce SMS termination costs by up to 20%. Since most carriers no longer charge directly for the delivery of these messages, they need to minimize the cost of handling P2P SMS.

Sinch is the only provider with a comprehensive solution to solve all these technical problems. SMS Transformation is our one stop shop for MNOs working to maximize profitability, with everything you need to give SMS the attention it deserves!

Ready to show SMS some love?

[1] Source: Mobilesquared:

[2] The message originates from unauthorized networks for which there is no agreement between the sender and the receiving network. Many gray routes use P2P channels to support A2P messaging, which reduces termination charges.

[3] Around 20% of messages on P2P links are legitimate A2P messages that are blocked by the receiving network.

[4] Source: Mobilesquared:

[5] Estimate based on international SMS on an unsecured network, 1 A2P message per subscriber per month, $0.03 A2P SMS termination rate, current 30% monetization.


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