Consolidation, IoT, and the advancement of 5G technology have dominated industry news in 2015, but what does 2016 have in store? HAUD's Marko Skomersic shares his predictions for 2016.
A2P traffic growth
Most operators have now accepted that while P2P SMS is in decline, A2P messaging still presents a monetisation opportunity. Operators will be keen to report growth in A2P SMS volumes to validate the move to focus on it as a revenue stream, however these figures need to be taken with a pinch of salt.
Operators report annually the amount of A2P SMS traffic they receive, however they can only report what they detect. While operators will likely report a large rise in A2P SMS traffic, this will owe much to finally having the tools in place to detect the traffic. Since more MNOs are introducing measures such as SMS firewalls and SS7 analysis, the level of detection will increase rather than it being a true reflection of growth.
In reality, A2P SMS aggregators are stabilising the levels of traffic they produce. Therefore, while we do anticipate a rise in traffic, the figure will likely to be smaller than that reported by MNOs.
Consolidation of SMS aggregator market
Over the last few years we have seen huge growth in the amount of A2P SMS aggregation globally. But as the market matures and continues to be profitable, market consolidation will squeeze out many of the smaller players. We expect Mobile Operator groups and SCCP providers to see the growth potential of the A2P SMS market, which will lead to an aggressive increase in competition as market leaders position themselves amongst the wide range of aggregators working internationally.
SCCP providers will look to offer value added services to MNOs through the provision of SS7 firewalls and A2P SMS traffic delivery into the networks. It should be noted that the SS7 filtration offered by carriers will only offer partial and short-term protection however, since in most cases MNOs utilise more than one SCCP provider, and local bypass is feasible.
While market forces have the potential to strengthen the rapport between SCCP carriers and MNOs, new challenges will emerge from a more consolidated aggregator space operating on a global level within the next five years. Therefore we will soon see a new playing field where consolidated aggregators and SCCP carriers are most likely to partner with consultant companies or vendors that will ensure protection from SMS grey routes. This will ensure a consistent and reliable service, as well as improved revenue protection.
EU operators will need to replace revenue lost by the abolition of EU roaming charges
The abolition of roaming charges across the EU was seen as a victory for consumers, but international operators working across the continent will need to find a way to balance the revenue streams affected by this change. As operating costs are likely to stay the same, operators will need to find ways to make up the shortfall in income caused by the change.
One potential outcome is the cutting of maintance budgets, which ironicaly could result in poorer quality service for customers. Shrewd operators will look to fill the budget gap by investingating new revenue schemes such as A2P SMS, which is an increasingly attractive option.
Large operators will begin to reorganise: Operations will separate infrastructure & diverse end-user services and apps
MNOs’ core operations are still extremely profitable – mobile connectivity is a necessity for many, and the regulatory landscape and high entry costs means that competition is limited in this area. Where operators are facing the greatest challenge is at the apps and services front. OTT offerings have effectively hijacked networks’ connectivity and are eroding traditional revenue drivers, such as messaging and voice.
While it will be somewhat of a longer evolution, expect some of the larger global operators to begin reorganising their businesses in 2016, creating distinct infrastructure offerings, while also investing heavily in user apps and services in order to claw back some territory from the OTT players.
Infrastructure will continue to be profitable, driven by content such as 4K video which consumers will be prepared to pay a premuim for. This will also lead to a much wider varition of service levels and price tags.
The side of business focussed on new services and apps will be less easier to define, especially as the operators find their feet. Expect VC-style funding of start-ups, acquisitions of mature platforms, incresased investment in R&D as well as strategic partnerships with large Internet companies. The endgame will not only give the operators more control over the user’s mobile experience, but also develop new, profitable businesses in their own right.
Marko Skomersic is the Chief Solutions Officer at HAUD.