The A2P SMS $8 Billion Crisis

The mobile telecommunications industry is currently facing an unprecedented crisis in Application-to-Person (A2P) SMS monetization. At the recent Connected Europe conference in London, industry experts revealed the staggering scale of a problem that continues to grow despite the widespread use of traditional security measures.

If you are a Mobile Network Operator (MNO), here is the current state of the market and why the old ways of protecting your revenue are no longer enough.

The Massive Scale of A2P Revenue Loss

The data shared in London paints a stark picture of the financial impact of fraud on the global telecom industry:

• $8 Billion Annual Loss: Fraudulent activity is costing the MNO industry billions every single year.
• Widespread Impact: Approximately 70% of mobile operators report losing up to 10% of their annual A2P SMS revenues, with some seeing losses as high as 20%.
• Daily Drain: On a global scale, this translates to roughly $21.6 million lost every day.
• Average Operator Impact: The typical mobile operator is losing an estimated $10.5 million annually.

Understanding the Fraud Mechanisms

To combat the problem, operators must first understand the sophisticated tactics used by modern fraudsters. The conference highlighted three primary categories of attack:

1. Artificial Inflation of Traffic (AIT): Now the most severe threat, AIT involves injecting fraudulent messages into the network. This can happen through “Counterfeit Fabrication” (injecting traffic in transit), “Amplification Bots” (triggering OTPs on brand websites), or “Masquerade Parasites” (using fake CPaaS accounts).
2. Grey Route Fraud: This involves bypassing authorized channels to avoid termination fees. Common methods include masking A2P as P2P traffic, using “SIM Boxes” with prepaid SIMs, or using local aggregators to avoid official market rates.
3. Smishing and SMS Pumping: Large-scale attacks involve hundreds of millions of deceptive messages. Sophisticated groups like ‘Smishing Triad’ now use call centers as hubs to trigger these attacks.

The Internal Security Challenge: The “Blind Eye”

A critical revelation from Connected Europe is that fraud isn’t just an external problem; it is frequently facilitated from within the operator’s own walls.

• Departmental Conflict: A2P teams work to stop grey routes, but P2P teams are often evaluated on raw volume, creating a lack of incentive to address illegal messaging.
• Blind Eye Practices: This includes willful ignorance of suspicious traffic patterns and delayed responses to known fraud indicators.
• Collusion and Kickbacks: In some cases, staff or management receive illicit rewards or kickbacks from fraudulent aggregators to facilitate grey route operations.

Why Traditional Firewalls are Failing

One of the most critical takeaways from the conference is that traditional SMS firewalls are proving ineffective against these modern tactics.

• Advanced Techniques: Traditional systems cannot detect sophisticated AIT patterns or GT scanning.
• Internal Bypass: Because internal fraud originates from within the network, it often bypasses firewall controls entirely.
• Stagnant Defenses: One-third of operators who have firewalls do not regularly update their rulesets, leaving them vulnerable to evolving techniques.

The Shift in Enterprise Trust

A case study from Spain showed that nearly 30% of enterprise authentication traffic has moved away from legitimate SMS channels.

While some has moved to secure platforms like WhatsApp and RCS, a massive 77.4% of that diverted traffic still flows through unregulated “grey routes”. This creates a “trust liability” for enterprises, as grey route OTPs often look identical to phishing attempts.

A Path Forward: Beyond the Firewall

The consensus from Connected Europe is clear: a firewall-only approach is insufficient in 2026. To protect their position, operators must evolve.

Hacom Technologies, an ISO 27001:2022 certified leader, offers a solution that provides 95% additional protection over traditional firewalls. By utilizing real-time AI and Machine Learning, operators can identify internal threats and eliminate the AIT schemes that traditional systems miss.

With an implementation time of 12 weeks, operators can see a payback period of less than three months and a 5-year ROI exceeding 1,200%.

Would you like to schedule a comprehensive fraud audit? Hacom Technologies can quantify your current revenue leakage within four weeks. Contact us and our team of experts will make your A2P revenues grow again.