Telcos brace for $2.8 billion loss as OTT authentication takes hold

A new study from Juniper Research, the foremost experts in telecommunications markets, found operator revenue from SMS traffic, used for authentication, such as MFA (Multi-factor Authentication), will represent over 70% of global mobile authentication spend by 2025.

The research predicts that, despite market pressures, including rising SMS fraud and increasing termination charges, SMS will remain enterprises’ most used technology to authenticate and identify their users over the next five years. The new research, which assessed technologies including SMS, flash calling, verification APIs and mobile identity solutions, forecasts SMS traffic will reach 1.4 trillion messages by 2025; growing from 1.2 trillion in 2023.

Operators Face Challenges from Third-party Services
The report identified the launch of third-party authentication services over OTT apps as the biggest threat to operators’ authentication SMS revenue. As SMS prices continue to rise, the value of the service amongst enterprises will decline, with some businesses already migrating their authentication traffic to OTT messaging applications.

Over the next five years, the report forecast operators will lose $2.8 billion of authentication revenue to OTT channels, including WhatsApp and Viber. To minimise losses, operators must urgently reassess SMS pricing against competing channels, including OTT messaging apps, or risk losing further authentication revenue.

Majority of Operators Choose to Block Flash Calling
Flash calling, in which a missed call replaces a monetisable SMS message, has experienced significant traction over the past two years. However, operators now block this through partnerships with third‑party messaging firewalls with the aim of keeping authentication traffic over established SMS channels, further increasing the reliance on SMS for authentication. Juniper Research