While many say A2P SMS is in decline, the reality is more nuanced. Yes, traffic is falling in high-priced markets—but in regions with rational pricing, volumes remain strong. As fraud rises and OTT channels gain ground, CEO of HAUD Kristian Järnefelt explores why now’s the time to rethink pricing, reclaim control, and rebuild a healthier, more sustainable messaging ecosystem.
Across the messaging industry, there seems to be a general consensus: the global A2P SMS market is in decline. Fraud like Artificially Inflated Traffic (AIT), trashing, and grey routes are persistent and growing.
Meanwhile, rich messaging alternatives such as RCS and WhatsApp have gained traction, especially for content-heavy communication. Flash calls and even email continue to chip away at SMS use cases. On top of that, the rise of network APIs threatens the dominance of SMS for authentication with one-time passwords (OTPs), which make up a large share of A2P traffic.
So is it all doom and gloom for SMS?
Not at All
Yes, the global market is contracting, but that decline is concentrated in a small number of large countries, countries where SMS pricing has reached unjustifiably high levels. Price elasticity applies to messaging too: as prices rise, demand eventually falls. This shouldn’t surprise anyone.
Conversely, in markets where pricing has remained reasonable, SMS has held its ground or even grown. Volumes in North America and much of Europe remain stable or are increasing.
At HAUD, these conversations with our customers and prospects are becoming more frequent. There’s a real appetite to do things differently and better. And we can help MNO’s with building and enforcing healthy and intelligent pricing models that turn the tide back from OTT to A2P SMS.”
Firewall and A2P Monetisation vendors like HAUD play an essential role in protecting against grey route fraud. But once traffic migrates to channels like WhatsApp where filtering is impossible and this protection loses effectiveness, the Mobile Network Operator (MNO) loses visibility and control.
The Enduring Role of SMS
While rich messaging platforms bring real value to brand marketing and customer engagement, SMS remains the most ubiquitous and accessible messaging channel, especially for simple transactional use cases. The value of delivering a six-digit OTP or a basic bank withdrawal notification doesn’t require flashy rich content; it lies in reach. And SMS still reaches every mobile phone.
Moreover, platforms like WhatsApp and RCS are end-to-end encrypted, which has both pros and cons. While encryption protects content from prying eyes, it also prevents filtering of malicious activity. With the right solution in place, Mobile Network Operators (MNOs) can still detect and block smishing and spam via SMS firewalls, which is not possible in encrypted environments. Ironically, the richer the message, the more credible a scam can look. You can even argue, that in these encrypted channels, it is the scammers, that are safe as nobody can detect or touch malicious content such as smishing!
So yes, SMS still has a critical role to play.
The Elephant in the Room: Price, Fraud, and Misaligned Incentives
Too often, high prices and fraud are the direct result of unsustainable commitments in exclusive aggregation deals. In some regions, the A2P SMS business has drifted away from a solid wholesale model and toward speculative, risk-heavy gambling like business model.
This shift has made it difficult for aggregators who prioritize governance and ethical practices to compete. The inflated prices also mean fraud like AIT, trashing and grey routes has become even more lucrative. The higher the price is, the bigger the reward of fraud.
The root problem? Short-term thinking. If you’re focused only on the next 3 or 12 months, rather than the next five years, you’re likely to end up destroying what was once a profitable business.
So Where Do We Go From Here?
There’s widespread agreement on the problems but how can we turn things around and rebuild a sustainable, healthy A2P SMS ecosystem?
- Value Based Pricing
Recovery starts with rationalizing pricing in inflated markets. Without this, the A2P business will continue to erode. This doesn’t mean slashing prices indiscriminately. Instead, MNOs and aggregators need to get strategic: consider tiered and differentiated pricing models and other approaches that can help win back lost traffic without undermining existing revenue. WhatsApp’s changed pricing model is an opportunity too for A2P SMS, session-based pricing is out and per-message billing model is in. But it is clear, that A2P SMS cannot be much more expensive than WhatsApp for Business messaging, a significant price gap will lead into significant erosion. No doubt about that.
- MNOs Must Reclaim Control
Operators should take back control of their pricing and monetization strategies. That means owning their firewall and monetization stack and tools they can govern directly. From there, they can re-engage with aggregators through a more traditional, stable wholesale model that prioritizes long-term value.
- Reduce the Incentives for Fraud
When prices become more reasonable and transparent, the incentive for fraud drops. That also opens the door to reclaiming legitimate traffic that has been lost to other non-monetizable channels, bypass methods and grey routing.
A Shift in Sentiment
Things often need to get worse before they can get better. A few years ago, we were talking about a threat of SMS decline. That threat has now become a reality. But the upside of pain is that it often sparks change. And I’m starting to hear more people in the industry talking seriously about rebuilding a healthier model.
At HAUD, these conversations with our customers and prospects are becoming more frequent. There’s a real appetite to do things differently and better. And we can help MNO’s with building and enforcing healthy and intelligent pricing models that turn the tide back from OTT to A2P SMS.
Perhaps the pendulum is finally starting to swing in the right direction.
