Giving direct connections to high numbers of A2P SMS partners causes unnecessary price competition for traffic volume that ultimately drives down revenue for the operator

Dialogue Group today tells MNOs (Mobile Network Operators) that granting high numbers of A2P SMS partner connections creates pressure between those partners to sell to enterprises on price alone, resulting in dog fights over volumes and ultimately forcing prices down for the operator. If MNOs are looking to thrive and not simply survive, they need to review their connectivity partner practices and resist creating these pressures, says the A2P messaging specialist.

The A2P SMS ‘Pie’ is a fixed and specific volume on any given day – so signing more A2P partners cannot generate higher revenues for operators – all it does is cause A2P SMS volumes to move from one connectivity partner to another at ever lower prices. The greater the number of partner connections any operator grants, the greater the price competition in the marketplace created between those partners and the greater the price pressure ultimately exerted on the operator itself.

Perry Offer, CEO of Dialogue Group, explains: “By selecting just a limited number of ‘good’ connectivity partners, operators free those partners to sell on factors other than price. This results in those partners who provide the most value to the market bringing in the traffic, preventing the commoditisation of SMS, and creating a sustainable business model.”

Fierce price competition can also lead to ‘partners’ seeking to use low cost grey routes in order to secure volume. Here again, MNOs play a vital part in helping create an orderly A2P SMS market place by only allowing legitimate routes to terminate A2P SMS on their network and blocking any fraudulent traffic. One of the key ingredients for achieving this is selecting an ‘ethical, experienced and trusted’ A2P SMS partner who is focused on creating a ‘win win’ arrangement.

“It is important for MNOs to establish a partnership that will be based on trust – they need to be sure that a partner will terminate A2P SMS traffic via a legitimate route (also known as on-net SMS traffic delivery), and not via grey routes to them at the same time” adds Offer. “Working with ‘trusted’ A2P SMS partners, operators can increase market rates which means new and sustainable revenues can be generated, volumes of unwanted messages reduced, and consumers protected.”

“Partners to be avoided are the ‘spot’ buyers who are only interested in selling on price and have no scruples regarding the use of grey routes or SIM farms, despite having a direct connection with the MNO itself. In granting connectivity to these types of A2P providers, MNOs are effectively rewarding those seeking to defraud and undermine operators’ efforts to monetise their A2P messaging. This type of activity also creates price wars amongst the A2P players as these low cost, non-legitimate routes become available and MNOs lose out on generating revenues and providing a poor customer experience for their subscribers.”

In order for operators to form good partner relationships there has to be a mind-set shift from the belief that quantity is better than quality and that more partner connections equals more revenue. Rather than looking to increase the A2P partner portfolio, MNOs need to instead create sustainable volume without the additional admin costs, extra invoicing and credit control management that comes with using a large number of partners. This in turn will support the long-term interests of all parties. The revenue potential is substantial and by taking a simple approach and scaling back on the number of partners, operators will be rewarded with financial gain, so by getting the business model right, operators could have an incredibly lucrative business.

For successful monetisation, MNOs need a single or a couple of A2P SMS partners that are committed to 100% on-net delivery, financially stable and trusted and experienced in this market. To hear more from Perry Offer, Dialogue’s CEO, click here to watch an exclusive interview.

To find out more on how to select the right partner, go to this article. For media information, please contact Dana Hare at dana.hare@proactive-pr.com or Sian Borrill at sian.borrill@proactive-pr.com or call +44 (0) 7899 914168. For more information about Dialogue, please visit the website at www.dialogue.net or follow @dialogue_tweets on Twitter.