A2P (Application to Person) messaging refers to the sending of text messages from applications or automated systems to users’ mobile devices. Unlike person-to-person (P2P) messaging, where communication is between individuals, A2P messaging is primarily used by businesses to send notifications, service alerts, verification codes and promotional messages.
This type of messaging is a powerful tool for companies to reach their customers in a direct, efficient and personalised way, and is particularly useful in sectors such as marketing, banking, customer service and cybersecurity.
Telefónica HISPAM commissioned Analysys Mason to carry out a study on the issues facing these services and to make recommendations on how they should be regulated.
The evolution of A2P messaging: from SMS to advanced communication services
The A2P messaging market has evolved significantly since the 1990s, when short text messages (SMS) were introduced. Over time, mobile messaging has diversified to enable communication not only between individuals, but also between mobile devices and enterprises. A2P messaging has continued to grow thanks to the development of new technologies and innovative services that enhance users’ digital experience.
Enterprises can use different technologies and services to communicate with end users. The main types of A2P messaging include SMS, OTT (Over The Top) instant messaging and RCS (Rich Communication Services).
SMS is the traditional method with high delivery and read rates. However, OTT instant messaging, through platforms such as WhatsApp and Facebook Messenger, allows the sending of multimedia content and offers value-added services. Finally, RCS messaging is an evolution of SMS that offers advanced communication features.
The A2P messaging market has grown steadily in recent years. In Latin America, where companies such as Telefónica operate, there is a growing adoption of OTT messaging services, although SMS remains relevant. A2P traffic through OTT platforms is expected to overtake SMS in the coming years.
Despite its benefits, A2P messaging faces a number of technical, economic and social challenges that affect the sector. A detailed summary of these issues is presented below.
Technical problems
One of the main technical issues associated with A2P messaging is the difference in traffic profile compared to P2P (person to person) messaging.
A2P traffic tends to generate sharper peaks, which can overload telecommunications networks. This is because A2P messaging campaigns are often sent at specific times to maximise their effectiveness, resulting in a high volume of messages in a short period of time.
In addition, the store and forward technology used in SMS systems has limitations in terms of the size of store queues and the rate at which messages can be forwarded, which can result in a higher rate of undelivered messages and delays in delivery.
Another significant technical issue is the use of techniques such as spoofing, where the sender’s number is spoofed to make the message appear to come from a trusted source.
This technique is commonly used in phishing and smishing attacks, where recipients are tricked into providing sensitive personal or financial information. Detecting and preventing spoofing requires the implementation of robust systems that comply with local legislation.
In addition, in countries where interconnection is mandatory for A2P services, operators are limited in their ability to determine whether traffic is spam or fraudulent, as this would require reading the content of the message, which is not permitted by either privacy laws or responsible operator business practices.
Social problems
As discussed above, one of the main social problems associated with A2P messaging is the receipt of unsolicited messages, or spam.
The Organisation for Economic Co-operation and Development (OECD) defines spam as unsolicited electronic messages that began as advertisements for products or services but have evolved to include potentially dangerous and misleading messages that can cause network disruption and serve as vehicles for the spread of viruses and other malware. Receiving these messages has a number of negative impacts on society.
A study by the UK telecoms regulator (Ofcom) shows that mobile phone users feel vulnerable to such practices and that many people who have been victims of text message scams feel vulnerable to such practices and that many people who have been victims of text message scams suffer emotional damage, particularly the elderly and other vulnerable groups.
As a result of this ongoing situation, credibility and trust in A2P messaging services are being eroded, affecting not only users but also mobile operators and businesses that wish to make good use of the service.
The International Telecommunication Union (ITU) highlights that spam leads to a significant reduction in user satisfaction with the SMS service, as the constant receipt of unwanted messages interrupts and negatively affects the user experience. In addition, these messages can lead to the spread of misleading or malicious information, increasing social instability and creating mistrust among the public.
Economic problems
The technical and social problems of A2P messaging have a significant economic impact on both end-users and telecom operators. The problem of spam and fraudulent messages generates significant economic losses. For example, in Ireland, it is estimated that sending spam messages via SMS and calls generates an annual economic cost of more than EUR 300 million. In the United States, text message scams cost citizens more than $13. billion in the first half of 2023.
From the operators’ point of view, spam messages also carry a considerable economic cost. Companies that generate this type of traffic seek to pay the lowest possible price to send messages to the greatest number of people, thus maximising their profit. To do so, they often use so-called “grey routes”, a practice whereby A2P messages are sent through channels designed for P2P traffic that are not monitored by a mobile network operator.
These routes involve routing traffic through another, sometimes foreign, operator that routes A2P traffic over interconnect links. This reduces costs for intermediaries, but also represents a significant loss of revenue for operators who do not use these routes. It is estimated that grey routes in A2P messaging will cause a cumulative global revenue loss of USD 37.1 billion between 2020 and 2024.
In addition, regulators in certain countries have established regulations on wholesale prices for the interconnection of A2P services. When these prices are regulated, companies sending A2P traffic have more incentive to generate a higher volume of traffic, including companies sending spam and fraudulent messages. This generates significant cost overruns for telecoms operators, who must size their networks to handle a high volume of messages, even though only a fraction of these messages are actually delivered to recipients.
Regulation of the courier market varies from region to region
In Europe and the United States, there is generally no sector-specific regulation of A2P messaging, but there is regulation of the blocking of unsolicited messages, while in Latin America some countries maintain SMS regulation under a P2P interconnection regime. In theory, regulation aims to balance competition and protect users, but it can also lead to inefficiencies and security issues.
Several recommendations are proposed to improve the A2P messaging market. First, it is suggested that the economic regulation of the A2P market be reduced to allow for greater flexibility and efficiency. In the face of increasing competition, less stringent regulation could encourage innovation and the adoption of new technologies. In addition, it is crucial to improve security by implementing robust cybersecurity measures and ensuring the traceability of messages to prevent fraud.
Cooperation between telecom operators and regulators is essential to ensure that the necessary means are in place to minimise the impact of spam on consumers. It is also recommended to promote fair competition, ensuring that all market players compete on a level playing field and removing regulatory asymmetries. This means that both telecom operators and OTT messaging platforms should be subject to a harmonised regulatory framework that allows for fair competition.
Analysys Mason’s research highlights the importance of A2P messaging as a key tool for businesses. Despite the challenges, the market continues to grow and evolve, driven by new technologies and the introduction of innovative services.
With the right recommendations, it is possible to create a more efficient, fair and secure A2P messaging marketplace that benefits both businesses and end users. A2P messaging offers an effective way to interact with customers at scale, and its development will continue to be a critical factor in a company’s communications strategy.
In summary, A2P messaging has become an indispensable tool for businesses to communicate directly and securely with their customers. The market has evolved significantly since its inception, and while it faces a number of challenges, the opportunities are immense. The adoption of new technologies and the implementation of robust security measures are essential to ensure the growth and sustainability of the market. Analysys Mason’s recommendations aim to address current issues and promote a regulatory environment that promotes efficiency, fairness and security in the A2P messaging market. With the right approach, it is possible to maximise the benefits of A2P messaging for all stakeholders, from businesses to end users.
