Operators may struggle to compete with WhatsApp even with reduced A2P SMS pricing

WhatsApp penetration is increasing worldwide, reaching over 90% in some countries (Figure 2). In these countries, operators may struggle to compete in the application-to-person (A2P) messaging services market with WhatsApp even if they lower their pricing. The improved functionality of the Meta service simply makes it more attractive than SMS for many consumers. 

Compared to SMS, WhatsApp offers increased security through end-to-end encryption, multimedia messaging, cheaper business pricing and more sophisticated customer service capabilities. It has similar penetration to SMS in some countries.

Operators have limited room for manoeuvre. They cannot compete on features (at least, not without rich communication services (RCS), which has failed to get traction, largely because it lacks Apple’s support). However, they may be able to explore different pricing models to reduce the gap between their prices and WhatsApp’s prices (especially for conversations). Finally, while WhatsApp has high penetration, it does not have and never will have the ubiquity of SMS.