Chapter 1 | Grey Route Traffic: lost revenue and
Grey route traffic is the biggest cause of lost revenue in the A2P messaging sector.
Some estimates suggest up to 45% of all A2P messaging is being sent via these routes, with MNO’s missing out on billions of dollars in revenue.
Further on in this guide we will come to solutions to address this issue, but for now it is important to state the reasons for the growth in grey route traffic, and also its impact.
What is Grey Route Traffic?
Grey route traffic is essentially non-monetised messaging that is passing across your network.
Grey route traffic typically utilises commercial loophole routes onto an MNOs network, carrying A2P traffic via connections usually meant only for P2P (person-to-person) traffic. The big difference is that while P2P traffic usually only involves one message being exchanged with one person at a time, with A2P grey route, messages are sent from one number or originator to multiple users at the same time.
This kind of traffic isn’t necessarily illegal – in reality it can only take place because of the way MNOs manage (or don’t manage) their SMS traffic and bundles – however it is illegitimate. It’s illegitimate for a number of reasons. Firstly, because when brands send their customers (or potential customers) messages in this way, they bypass the termination rates MNOs should be receiving for hosting this commercial traffic. Secondly, then, done in this way through SIM farms (or SIM boxes) it’s also out-of-policy usage.
Thirdly, though, it also bypasses elements of security – MNO’s or their trusted aggregator partners – are not involved in vetting this traffic before it reaches customers – posing risks to those end users. An area we’ll come onto in a minute.
What damage does grey route traffic cause?
So, the grey route traffic is now on the network, but what damage is it actually causing?
Sadly, there are a number of areas.
Let’s return to the MNO revenue issue we began with.
A2P sent through grey routes avoids paying the termination rate for each message to the network operator – leading to the huge revenue leakage we are still seeing across the industry. Research by HAUD shows many MNOs are missing out on as much as 50% of the revenue they are entitled to from international A2P, for example.
Secondly, there is the risk of fraud to end users. To be clear, while that risk exists across full monetised connections too, the higher cost in those connection routes means fraud is far higher on grey routes.
Illegitimate traffic can include smishing messages, links to malicious apps, spyware or software, or misleading information, all of which puts the customer at risk of a form(s) of cyber crime. That customer will likely level some, if not all, of the blame at their network operator for enabling that traffic to reach them – resulting in serious detrimental brand damage to the MNO.
These are significant individual threats, however taken together they also pose a significant risk to the long term viability of the channel. If fraudulent messaging continues to reach the end customers, and they are impacted by it, it both harms the reputation of the MNO itself (causing churn issues) and damages the efficacy of SMS as a secure channel – which will degrade the number of brands using it – thus reducing revenue further.
In that scenario the likely winner will be the OTT players, with MNO’s simply reduced to dumb pipe status.
MNOs are missing out on as much as 50% of international A2P revenue
In the next chapter we look at the challenges of pricing structures and the impact on revenue growth
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