Business SMS Revenue to Grow Only 5 Percent in 2024

A new study from Juniper Research found that operators’ revenue from business SMS traffic will grow by only 5% in 2024. This represents a large decline in growth from the previous year, in which operators experienced a 23% growth in global business SMS revenue. This reduction in growth is primarily due to a reduction in demand from enterprises, following significant SMS price increases from operators.

To restore significant growth in the market, the study urges operators to make substantial cuts to SMS termination costs; ensuring that the average termination cost does not exceed $0.10 per message. Without these price reductions, the study predicts that the market for SMS business messaging will become unsustainable due to high termination costs causing a lack of return on investment for enterprises. In turn, operators risk losing revenue-generating traffic to other mediums, such as APIs or OTT business messaging.

The study also assessed the threat from OTT messaging apps, such as WhatsApp, to operators’ business messaging revenue. It found that there will be considerable growth in OTT business messaging traffic which will cannibalize operators’ business messaging revenue; most notably for authentication traffic such as OTPs (one-time passwords) and MFA (multifactor authentication).  “Operators are expected to lose $3.1 billion in business messaging revenue to OTT messaging channels over the next five years and to mitigate these losses, operators must look to support new technologies, such as APIs, to retain high levels of mobile messaging traffic in its ecosystem,” added research author Molly Gatford.