What the future holds for SMS texting

How many text messages have you sent so far today? SMS texting has been around for 25 years, and it remains an important foundational service for most TSPs. We’ve grown to accept it as an integrated part of our daily communications — but where does it go from here?

Key challenges

For SMS to continue to be relevant, it needs to overcome these challenges, at a minimum:

• OTT apps. Critics of SMS texting are quick to point out the rise of over-the-top (OTT) messaging apps like WhatsApp. These apps rely on transmission through the internet (with a Wi-Fi connection or 4G connection, for example), and can be encrypted to keep user data better protected. However, these apps also come with downsides—because they rely on an internet connection, they may not be available all the time, and connection speeds may be unreliable. Because these accounts can be created and swapped relatively easily, user identity and authenticity become more ambiguous; in other words, you can’t verify someone’s identity using an OTT platform with the same reliability as SMS-based verification.
• SMS texting is more than two decades old, and with a general population hungry for constant technological innovation, it’s starting to seem dated. Granted, traditional phone calls haven’t changed much in the past few decades (despite being more mobile), yet they remain a primary mode of communication.
• Little room for innovation. There isn’t much room for innovation or growth in the SMS space. The infrastructure has already been built, and the basic mode of text-based communication can’t get much more advanced. Accordingly, if SMS is going to change significantly, it’s probably going to be replaced by an entirely new method of communication (and one that hasn’t yet been invented).

Key advantages

However, SMS texting also has some advantages that grant it significant staying power:

• Sheer marketing potential. SMS texting remains one of the most versatile marketing channels for modern businesses. Nearly every phone is equipped with basic SMS features, and because most customers have a phone on them at all times, they’ll be instantly notified when receiving a new message. Because it’s useful for recruiting new customers, advertising deals to existing ones, and streamlining things like appointment scheduling, it’s likely to remain in use for the indefinite future.
• Open rate. Text messages also have a much higher open rate, on average, than email—another simple form of communication that remains unchanged after decades of use—up to 90 percent in some cases. This makes it an extremely reliable form of peer-to-peer communication, as well as a high-return outlet for marketing and advertising. It’s also a secondary indication of its high user adoption; if consumers weren’t relying on text messages regularly, the open rate wouldn’t be nearly this high.
• Low cost. It’s been estimated that it costs carriers about 1/1000^th of one cent to send an SMS message, but the true cost may be even lower than that. Because SMS-related data is piggybacked on existing relays, and the infrastructure is already in place, it costs companies (and consumers) practically nothing to send texts back and forth. This low cost means there’s practically no downside to continuing to offer SMS as-is, even if it faces competition from new modes of communication.
• Consumer identity and authentication. SMS is also a highly reliable way to verify a user’s identity; each consumer is, for the most part, issued one phone number, and that phone number can’t be copied or assigned to another user. Accordingly, if your app needs a way to verify someone’s identity, or ensure a second account hasn’t been fraudulently created, SMS is ideal. SMS texting is also one of several channels ideal for two-factor authentication, a security standard that’s growing more important in today’s world of vigilance in cybersecurity.

The future

SMS texting has little room for evolution, but it doesn’t really need it. Aside for some subtle optimizations to how messages are sent and received, the medium is likely to continue as is for the next several years. Despite little technological innovation, it remains a powerhouse — both for consumers and businesses — and will remain a backbone in the telecom space for years (if not decades) to come.