The A2P (Application to Person) messaging market has evolved significantly over the past few decades, establishing itself as a key tool for communication between businesses and end users. This type of messaging, primarily used to send notifications, alerts, verification codes, and promotional messages, is transforming how companies interact with their customers. However, despite its potential, the market faces social, technical, and economic challenges that require immediate attention.
A Growing Industry
The report commissioned by Telefónica Hispanoamérica and developed by Analysys Mason highlights that A2P messaging is a constantly growing market. It is projected that by 2027, nearly half of the global A2P messaging traffic will be routed through OTT (Over The Top) platforms, while traditional SMS will lose relevance. Additionally, RCS (Rich Communication Services), an evolution of SMS that includes advanced capabilities like geolocation and multimedia content sharing, also shows promising growth.
In Latin America, the A2P messaging market reflects trends similar to global ones, with significant growth in the adoption of OTT services. Platforms like WhatsApp Business are widely used by companies for user authentication, transaction notifications, and marketing campaigns.
Social and Technical Challenges
One of the major issues associated with A2P messaging is spam. Unsolicited messages, including fraudulent attempts, are eroding user trust in these services. International studies, such as those by ComReg in Ireland, reveal that up to 84% of users receive spam messages regularly. This problem also affects Latin America, where governments and operators are implementing strategies to combat it, such as sender registration and prior user consent.
From a technical perspective, the current infrastructure faces significant challenges. The “store and forward” technology used for SMS has capacity limitations that hinder the timely delivery of large volumes of messages. Furthermore, spikes in traffic due to mass campaigns create an added burden on the networks.
Economic Issues
Spam also has a considerable economic impact. Gray routes, used to send A2P messages through unregulated channels, result in millions of dollars in losses for operators. It is estimated that these practices caused a cumulative loss of USD 37.1 billion globally between 2020 and 2024. At the same time, regulated tariffs in some Latin American countries have encouraged the entry of intermediaries, increasing market complexity.
Regulation and Best Practices
In Europe and the United States, the trend is toward deregulation, allowing tariffs to be freely negotiated between operators. In contrast, some Latin American countries, such as Chile and Colombia, have set regulated tariffs for A2P messages. This has generated regulatory asymmetries and complicated competition with OTT platforms.
To address these issues, Analysys Mason recommends:
- Reduce sector regulation: Allowing bilateral agreements between operators and businesses could foster healthier and more efficient competition.
- Implement robust cybersecurity tools: Systems to prevent spoofing and ensure message traceability are essential to protect users.
- Promote regulatory harmonization: Equalizing conditions for operators and OTT platforms will ensure fair competition.
Future of A2P Messaging
The transition toward OTT platforms and services like RCS represents an opportunity to modernize the market. However, achieving a balance between efficiency, equity, and security requires a collaborative approach among regulators, operators, and businesses.
A2P messaging remains a powerful tool for enterprises, but its sustainability will rely on how current challenges are addressed. Investment in technology, along with a regulatory framework tailored to market needs, will unlock its full potential for the benefit of businesses and users in Latin America.
Source: Telefónica