The BaaS model: Making SMS flourish in 2016

Date: Tue, 02/09/2016 - 19:05 Source: By Silvio Kutic, CEO, Infobip

The first text message was sent in 1992. Since then, SMS technology has steadily evolved from a simple service information channel into one of the most significant communication platforms to ever exist. This well-established technology now readily connects the world’s population and its success has been the inspiration behind a wave of OTT person-to-person (P2P) messaging services, including industry giants like WhatsApp and Line

The BaaS model: Making SMS flourish in 2016

Silvio Kutic, CEO, Infobip

Image credited to Infobip

In recent years, the growth associated with app-based messaging platforms has unsurprisingly led to a significant decline in P2P SMS traffic for operators. However, contrary to popular belief, the revenue potential behind SMS for operators is not only still alive but is thriving, driven by huge demand for application-to-person (A2P) messaging traffic instead. The meteoric rise of A2P is happening across the world, and in 2016 operators will be in an even better position to take advantage of it as they move to adopt the Business-as-a-Service (BaaS) model of running the A2P SMS business.

The use cases for SMS
The potential associated with A2P SMS is expected to skyrocket in the next few years, driven by the needs of mobile, online service providers, and apps for a reliable service channel, and as a communication medium for a range of businesses and the public sector. This growth is largely being driven by the fact that SMS technology is ubiquitous and capable of running on practically any device, from the latest smartphone to a basic feature phone.
Combine widespread availability with a low cost of delivery and it’s no surprise SMS has become such an incredibly useful tool for businesses. For banks, online or via mobile services,A2P SMS can add an extra layer of security, and for brands SMS lends itself as a powerful marketing tool. This technology also makes it possible for government institutions to send alerts to the public, which has proven itself as a valuable life-saving tool in emergencies.

The operator partnership potential
Evidently, the tremendous volume of A2P SMS messages being sent across networks worldwide has the potential to translate into significant revenues for mobile operators, especially as demand for P2P messaging continues to decline in the wake of data-based alternatives. However, this will only be a reality for operators that are in a position to take advantage of it through innovative cooperation models that open new opportunities for A2P SMS.
Despite the opportunity associated with A2P SMS, operator focus lies elsewhere. Despite the resources at their disposal, A2P SMS is often seen to be not worth the investment or workforce allocation. The end-to-end management of A2P SMS is both a time consuming and resource-heavy task, but this investment can reap significant rewards. To make this a reality, however, the right approach to the market, knowing its requirements and priorities, as well as having access to specialised technical support and integration teams are crucial for a professional messaging service. Unsurprisingly, messaging providers have seen tremendous growth as a result, driven by innovation and demand for their services which has led to large investments being made to improve the technology behind it and resulted in billions of A2P messages being sent across these channels each month.

Although, to date, this relationship has been vital in allowing operators to benefit from A2P SMS, it is now shifting to give operators an advantage through the Business-as-a-Service model. Mobile messaging providers are no longer in the position of mere SMS delivery vendors. Instead, they are starting to look after the entire A2P SMS businesses model on an operator’s behalf, helping them to boost revenues. In the case of A2P SMS, the Business-as-a-Service proposition not only means that a specialist will provide the entire messaging platform, manage and upgrade it, but also bring a dedicated sales force and specialised support teams as the necessary elements for sustainable growth.
The BaaS model also links two established partners – enterprises and mobile operators, who share their user base – mobile subscribers – and gives them a new avenue of cooperation. Bringing in existing enterprise clients under the BaaS model means better messaging services for them, and the introduction of steady, verified messaging traffic for sustainable SMS revenue. 

Driving the growth of A2P
Until now, operators and mobile messaging specialists have worked side by side as separate entities. Now, however, the future of A2P SMS lies in establishing direct partnerships between the two. Not only does this approach give operators access to the infrastructure the messaging provider offers, it gives them access to a messaging specialist’s significant expertise. In turn, this allows an operator to run a world-class A2P messaging service with virtually no outlay. It’s a win-win situation.
SMS has unparalleled reach as a means of connecting the world’s population. Its flexibility enables a range of innovative services that will drive traffic growth for the foreseeable future. 2016 will be the year operators reassert themselves as an integral part of the SMS market, focusing on A2P messaging through the BaaS model.


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