A2P SMS will make more money that P2P SMS by 2022: Ovum

P2P SMS
Image credit: digieye / Shutterstock.com

Global revenues from application-to-person (A2P) SMS will finally exceed revenues from person-to-person (P2P) SMS by 2022, totalling $43 billion, even though A2P SMS traffic will be less than half of P2P SMS traffic by that time.

However, that won’t be because of A2P revenue growth, but rather because P2P SMS revenues are dropping much faster.

That’s according to Ovum’s Mobile Messaging Traffic and Revenue Forecast: 2017-22, which forecasts that P2P SMS revenues will generate just $40.2 billion in revenues by the end of the forecast period, but P2P SMS traffic will total 3.4 trillion messages in 2022, compared to 1.5 trillion A2P SMS.

The bulk of P2P and A2P SMS traffic and revenues will come mainly from the mobile-first powerhouse markets of China, India and Indonesia, Ovum says.

“Unfortunately for most telcos, P2P SMS has become essentially value-less, since they have had to bundle unlimited SMS into mobile tariffs to remain relevant to their customers, an increasing number of whom use chat apps such as WhatsApp, WeChat and Facebook Messenger,” said Pamela Clark-Dickson, practice leader of Ovum’s Communications and Social team. “However, telcos can still charge a per-message termination rate for A2P SMS, which means it remains a more valuable source of revenues, since enterprises still value SMS for its global reach, affordability and mature ecosystem.”

A2P P2P SMS
Source: Ovum, Mobile Messaging Traffic and Revenue Forecasts: 2017-22

That said, as the above chart demonstrates, A2P SMS is also forecast to decline over the five-year period, albeit at a much slower rate than P2P SMS. Clark-Dickson said that A2P SMS remains under pressure from OTT messaging/chat apps, which Ovum forecasts will have 3.2 billion unique monthly active users (MAUs) by 2020, are also connecting enterprises with consumers via their platforms.

“Telcos and the wider ecosystem are therefore under pressure to protect their A2P revenues, driving them to upgrade from SMS to Rich Communication Services (RCS),” she said.

Japanese operators are the latest to do just that – last week, KDDI, NTT DoCoMo and SoftBank launched a new service called ‘+ message’, which is based on the GSMA’s RCS specifications that enable SMS customers to use enhanced messaging features such as chat, group chat, video, GIFs, file and location sharing.

The GSMA’s research arm, GSMA Intelligence, says that over 50 operators have launched RCS, and that there are currently an estimated 165 million active monthly RCS users, which is expected to double to 350 million by the end of this year.

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John C. Tanner
About John C. Tanner 355 Articles
John Tanner has been covering the Asia-Pacific telecoms industry since 1996. He has two degrees in telecommunications, and worked for six years in the US radio industry in various technical and advisory capacities, covering radio and satellite equipment maintenance, studio networking, news writing and production, the latter of which earned him several regional and national awards.

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