SMS firewall revenue to see 346% revenue growth to $4.1trn by 2026

A 346 percent rise in revenues is projected for the short message service (SMS) segment of the global telecommunication industry in five years, according to a new report by Juniper Research.

The evolution of messaging fraud across the globe is creating revenue losses for operators, necessitating steps being taken towards the development of SMS firewall to enable the real monitoring of network traffic and the capabilities to block the fraudulent traffic.

The new research calls for the implementation of advanced SMS filtering solutions by operators with artificial intelligence and machine learning capabilities to mitigate the constantly evolving tactics of fraudulent players. With the first commercially available SMS firewall solutions launching in 2010 and at the early stages of firewall implementation, there were a select number of vendors offering commercially available solutions. A number of these specialist vendors have grown in conjunction with the market, adapting to new trends and challenges.

This increase in SMS messaging traffic and a growing prevalence of fraudulent SMS activity during the pandemic has highlighted the importance of operators securing, and maintaining consumer trust in, SMS communication channels. A failure to protect subscribers from fraudulent SMS activity will damage consumer confidence in operator-led messaging, ultimately driving enterprises towards alternative communication channels and damaging operator revenue.

According to the Juniper study, the volume of business messaging traffic monitored by SMS firewalls will increase from 3.1 trillion in 2021 to 4.4 trillion in 2026; representing an absolute growth of 45 percent, as operators increase their investment in advanced analytics, such as natural language processing abilities, that enable the efficient identification of business use cases in the content of the message.

Scarlett Woodford, the research author remarked that “SMS firewall solutions will limit the possibilities of grey routes by elevating the prices associated with concealing fraudulent traffic, in order to avoid network detection. This will make paying for traffic termination via legitimate routes a more cost-effective option, as fraudulent players will struggle to justify the increased costs associated with grey route transmission.”

It also asserts that SMS firewalls will reduce operator losses to grey route traffic [the concealment of lucrative business messaging traffic within the less profitable channel of P2P messages]. By minimising the profit to be made from the successful transmission of grey route traffic, SMS firewall implementation will reduce operator losses to fraud from $5.6 billion in 2021 to $922 million by 2026.

In addition, SMS firewall solutions will limit the possibilities of grey routes by elevating the prices associated with concealing fraudulent traffic in order to avoid network detection. This will make paying for traffic termination via legitimate routes a more cost-effective option, as fraudulent players will struggle to justify the increased costs associated with grey route transmission.

The research also highlights ways by which operators must act in order to put a stop to diminishing revenues citing that operators must implement advanced SMS filtering solutions, with artificial intelligence and machine learning capabilities to mitigate the constantly evolving tactics of fraudulent players. A failure to adopt firewalls with these capabilities will leave operators open to diminished revenue from business messaging, as fraudsters mask business messaging traffic to avoid termination fees.