SMS firewalls key to protecting $58bn messaging revenues opportunity – report

• Mobile operator revenues from SMS business messaging are set to grow significantly over the next few years, according to a new report from Juniper Research
• Telcos have the potential to generate $58bn in revenues from business messaging by 2027
• But if they are to reap such benefits, operators need to ensure they have implemented the necessary security measures, such as SMS firewalls

The deployment of SMS firewalls will be crucial if telcos are to secure their networks and unlock as much as US$58bn in revenues per year from business messaging services by 2027, a new Juniper Research study has suggested.

In its SMS Firewalls: Future Outlook, Regional Analysis & Market Forecasts 2023-2027 report, the analyst house predicted that operators’ revenue from SMS business messaging will reach $46bn this year, and that it will grow by 26% over the next four years, hitting $58bn by 2027.

According to the analyst firm’s estimates, more than 1 trillion business text messages will be sent over the next four years for authentication purposes, including one-time passwords (OTPs) and multi-factor authentication. The report’s authors identify this as “a highly demanded use case, in which operators can charge premium prices for traffic termination”.

This growth potential, though, is dependent on the deployment of certain supporting technologies, according to the Juniper Research team, most notably SMS firewalls that can ensure the safe delivery of the text traffic and help to prevent fraud and other security threats. The deployment of such tools will be critical in helping the mobile operators to convince customers of the “cleanliness” and trustworthiness of their networks, especially at a time when the telcos are facing increasing competition for business messaging services from rivals that offer device-based biometric authentication and over-the-top (OTT)-based business messaging.

The telcos are once again advised to be very mindful of the rivalry from digital services rivals, with Juniper Research having previously warned that messages sent via OTT channels will ‘cannibalise’ SMS business messaging in the coming years – see OTT business messaging growth set to cannibalise SMS – report.

“SMS firewalls are the key solution to allow operators to protect their networks against fraudulent SMS traffic and the emergence of these cost-effective alternatives for authentication. Not only has the rise of 5G networks necessitated new technologies, such as diameter protocols, [but] it has also driven the complexity of messaging-based fraud,” noted report author Elisha Sudlow-Poole.

According to the research firm, deploying SMS firewalls can be beneficial for identifying, monitoring, filtering and blocking fraudulent traffic, such as grey route (sending bulk SMS that exploits a vulnerability of mobile phone networks) and SMS spoofing fraud (hacking into SMS technology and changes sender information to impersonate a reputable business).

“A failure to protect subscribers from fraudulent SMS activity will damage consumer trust in operator-led messaging, ultimately driving enterprises towards the aforementioned alternative channels and reducing operator revenue from SMS business messaging,” the report added.

Juniper Research also described diameter protocols as “critical” to protecting the 30% revenue growth for telcos, as it supports routing and analysis of traffic over 5G networks: That will be increasingly important as, noted the analyst firm, the proportion of global mobile subscribers on 5G networks is set to reach 45% by 2027.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV