A new study from Juniper Research, the foremost experts in telecommunications, has found that rapidly rising SMS business prices and emerging fraudulent tactics will diminish the demand from enterprises for SMS-based authentication.
As such, operators will only experience 4% growth in traffic in 2024, compared to average annual growth of 10% over the previous five years.
The rise of AIT (Artificially Inflated Traffic), where enterprises pay for SMS authentication traffic for users that do not exist, will be a key driver of rising SMS prices. This is leading enterprises to explore alternative authentication technologies, such as one-time passwords over OTT messaging apps and flash calling.
Growing Usage of Telco APIs
Over 50% of SMS traffic will be attributable to authentication use cases in 2024. To combat slowing SMS traffic growth, operators must promote authentication APIs such as Number Verify and SilentAuth, to keep demand for authentication services within operator-controlled environments. If operators are unable to reduce prices and fraud on their messaging networks, they risk losing vital authentication traffic and revenue to other channels.
Open Standards Will Accelerate API Roll-out
The GSMA Open Gateway, launched in 2023, will enable operators to swiftly develop and deploy API-based authentication solutions, eliminating the need for user authentication, silently authenticating at the SIM-level instead. This will provide a frictionless experience for mobile users whilst retaining the use of telecoms networks.
Research author Rosie O’Connor commented: “With high prices and unreliable SMS termination, enterprises are beginning to lose faith in SMS authentication. Operator APIs offer an opportunity for operators to ensure that authentication remains on operator networks.”