Research from XConnect and Mobilesquared suggests that over 50% of telecom service providers, including Asia, expect an increase in SMS fraud by 2025. This comes at a time when the average cost to send an SMS internationally has skyrocketed by more than 85% between 2020 and 2024.
The report, titled How Do We Create a Sustainable Future for A2P SMS?, indicates that total SMS traffic is anticipated to decline by 25.9% from 2024 to 2029. This drop is largely attributed to the deteriorating health of the SMS marketplace. A major factor driving up international termination rates (ITR) is the exclusivity agreements between aggregators and mobile operators, which have led to inflated costs for sending messages across borders.
“After the meteoric growth and global adoption of SMS over the last decade, the channel has faced challenges typical of maturing markets: over-monetisation, price hikes, interconnect fraud, and artificially inflated traffic,” said Tim Ward of XConnect. “To restore trust in SMS, it’s crucial to identify high-risk destinations and implement real-time checks to ensure the safe passage of traffic.”
The research highlights that Asia is among the regions with the most favourable conditions for SMS fraud, alongside Africa and the Caribbean. Markets in Asia are reportedly experiencing a high percentage of failed or invalid Number Information Service Queries (NISQ), with averages exceeding 20%. This situation presents an urgent need for telecom operators to enhance their fraud protection mechanisms while still maximising SMS revenues.
“Our analysis shows that while harmful traffic has plagued the SMS landscape since 2021, the overall state of the SMS market is improving,” stated Nick Lane, chief messaging officer at Mobilesquared. “Despite the challenges, SMS remains the preferred business messaging channel, enabling brands to build rich messaging offerings for the future.”
The report categorises markets into ‘good’ and ‘bad’ based on NISQ growth and ITR. Notably, 67% of North America and 60% of Western Europe fall into the ‘good’ category, which accounts for 84.2% of total A2P SMS traffic in 2024. In contrast, ‘bad’ markets, characterised by excessive NISQ growth and high ITR, represent only 3.58% of total traffic.
The findings underscore the need for telecom operators to adopt more efficient routing strategies and implement robust fraud protection measures. By addressing these issues, the industry can work towards a more sustainable and trusted future for A2P SMS communications.