A report published today by Enea and Mobilesquared reveals that mobile network operators (MNOs) could generate up to USD 29.4 billion in additional revenue over the next five years by adopting value-based pricing for application-to-person (A2P) SMS.
A2P SMS volumes are declining primarily due to rising international termination fees, resulting in lower operator revenues. The report outlines how shifting from flat-rate pricing to a value-based model can reverse this trend.
Key findings from the report:
Traffic sensitivity to pricing: Mobilesquared estimates that for every $0.01 increase above $0.10, A2P SMS traffic decreases by 2.9% under the current flat-rate pricing model.
Improved A2P SMS volumes: The report demonstrates that value-based pricing significantly slows the decline in A2P SMS traffic. With this model in place, Mobilesquared projects traffic losses to be less than half of those expected under flat-rate pricing.
By optimising pricing per message category, MNOs can increase revenues by over 130%, as brands are projected to spend $29.4 billion more on A2P SMS over five years.
Rising international termination fees have reached levels that make it difficult for brands to justify A2P SMS costs, especially for non-critical messages. Flat pricing models overlook message value differences, resulting in overpricing of lower-value categories.
Value-based pricing differentiates SMS charges based on the criticality of the message. Implementing value-based pricing enables operators to maximise revenue per message category without risking overpricing the channel. To implement this, operators must understand the purpose of the messages. AI-driven SMS firewalls, such as the Enea Adaptive Messaging Firewall, provide per-message insights, enabling accurate billing and enforcement of pricing policies. Enabling MNOs to unlock revenue aligns with Enea’s strategy to help customers monetise their services, maximising revenues and improving profitability.
“We’ve reached a tipping point where every price increase leads to a sharp drop in A2P SMS traffic. Our research shows that value-based pricing can slow this decline and help operators monetise their traffic more effectively,” said Nick Lane, Chief Messaging Officer, Messagologist, & Founder, Mobilesquared, and the principal author of the report.
“We’ve successfully deployed message categorisation with customers for years. It’s a powerful and concrete application of AI, and this research confirms its potential to help operators unlock billions in
revenue annually,” added John Hughes, SVP and Head of Network Security at Enea.
Report Availability
The full report “Lost in Termination: How Smarter A2P SMS Pricing can Recover Operator Revenue”, is available for download at:
