If you’ve used text messages from Facebook or Google to authenticate your account information, you’ve used application-to-person messaging – and a recent survey from Mobilesquared shows that such usage is on the rise, even as traditional text messaging use declines in favor of over-the-top applications.
Thorsten Trapp, co-founder and CTO of A2P provider Tyntec, said that those two trends in text messaging represent the evolution of two value chains, instead of one that centered on the mobile operator. Tyntec sponsored the Mobilesquared study, which was conducted from July to September of this year.
“The decline of [person-to-person text messaging] is really clear,” Trapp said. “The messaging is not going away, it’s changing channels. What was [text messaging]before is now going with OTT players: WhatsApp or Google messaging or Facebook Messenger. This is where the messaging is disappearing out of the balance sheets – it’s not lost, it’s just changing value.”
Juniper Research earlier this year predicted that A2P messaging both to and from applications will be worth about $60 billion by 2018, reflecting modest growth from a $55 billion market in 2013.
“While mobile operators look for an OTT business model that will help offset the demise of voice and messaging revenues, growth in A2P [text messaging]has become a viable revenue generating opportunity, providing growth in [text messaging]traffic that has not been seen for a number of years,” said Nick Lane, chief insight analyst at Mobilesquared, in a statement. “As an industry we talk of community and engagement, and now businesses and brands are capitalizing on the power of messaging to do the same.”
The Mobilesquared research found that 18% of mobile network operators reported P2P traffic down by more than 5%, and half of mobile operators expect that about half of their customer bases will be using OTT services in 2015. Trapp said that the decline of P2P texting has been particularly strong in Europe, where text messaging is often more expensive than in the U.S.; Trapp said that U.S. operators have been able to hang on to a higher percentage of their P2P messaging by early on including text messaging in flat-rate bucket plans. Mobilesquared found that 81% of mobile operators are worried about revenue declines on traditional telecom services, including text messaging.
Despite the overall declines, Trapp said, new use cases are popping up for A2P text messaging, driven by enterprise usage and trends such as cloud services.
“It is growing,” Trapp said, but added, “it is not growing faster than the decline in P2P.”
Text messaging-based two-step authentication is one example, but others include the use of text messages from Amazon.com to notify users of package shipping and tracking information to optimize its deliver processes. Trapp also said that while infrequent users of businesses and services won’t want to download an app and clutter up their devices with something rarely used, but they are probably just fine with receiving a text message with a secure link to, say, event tickets or travel tickets.
But what about rich communication services and the “Joyn” services that are being deployed by various carriers around the world? They’re supposed to allow operators to recapture that lost revenue by more tightly integrating text messaging and features like presence information under the carrier’s purview. Thorsten laughed.
“Doomed to fail,” he said – P2P text messaging and its revenues are not coming back to telcos, in his view. Joyn, he added, “was dead from the beginning.”
“The idea to be their own OTT player is by definition an error by companies which cannot do fast moves,” Trapp said, adding that it’s important that technologies change and new business often comes from disrupting the old, as in OTT with players like Google and Facebook. Telecom operators, he added, “will not disrupt themselves.”
Trapp said that in order to spur faster growth in the A2P text messaging space, operators should consider lowering and differentiating their pricing for A2P text messaging. Enterprises and developers, he said, are becoming more interested in plain, old text messaging.
“They are all playing around with mobile apps, but you need to have a distribution program, and maintenance,” he said, adding that text messaging is often used as a back-up plan until people realize that it can offer a simpler, secure communication option without the need for a full-blown mobile application. However, he added, in places such as Europe, carriers tend to think of messaging in terms of their subscriber base, not across carriers or geographies or on an international basis that can be necessary for A2P messaging. Tyntec offers interconnection and roaming for text messaging and provides direct messaging to the handset, as well as analytics information on the messaging that can be used for purposes such as assessing network performance, Trapp noted.
