Dmitry Sumin: What to Do About Flash Calls, the New SMS Replacement

Chances are you’ve received several flash calls this week when registering for a new app or verifying a transaction. Flash calls are almost instantly dropped calls that deliver one-time passcodes to users, verifying their phone numbers and actions. Many prominent apps and companies, such as Viber, Telegram, WhatsApp, and TikTok, use flash calls as a cheaper, faster, and more user-friendly alternative to application-to-person SMS.

With the flash call volume expected to increase 25-fold from 2022 to 2026, from five to 130 billion, it’s no wonder they’re a hot topic in the telecom industry.

But what’s the problem, you may ask?

The problem is that there is currently no way for operators to bill zero-duration calls. This means operators don’t make any termination revenue from flash calls, which overload networks. What’s more, operators lose SMS termination revenues as businesses switch to flash calls. SMS business messaging accounts for up to five percent of total operator-billed revenue in 2021, so you can see the scale of potential revenue losses for operators.

In this article, I’ll discuss why flash calls are on the rise, why it’s difficult to detect and monetize them, and what operators can do about this.

Why are flash calls overtaking SMS passcodes?

Previously, application-to-person SMS was a popular way to deliver one-time passwords. But enterprises and communication service providers are increasingly switching to flash calls because they have several disruptive advantages over SMS.

First and foremost, flash calls are considerably cheaper than SMS, sometimes costing up to eight times less. Cost of delivery is, of course, a prime concern for apps and enterprises.

Second, flash calls ensure smooth user interaction, which boosts user satisfaction and retention. On Androids, mobile apps automatically extract flash call passcodes. This makes the two-factor authentication process fast and frictionless. In comparison, SMS passcodes require users to read the SMS and sometimes insert the code manually.

Third, on average flash calls reach users within 15 seconds, while SMS sometimes take 20 seconds or longer. The delivery speed of flash calls also improves the user experience.

The problem: Flash calls erode operators’ SMS revenues

While offering notable advantages for apps, flash call service providers, and end users, flash calls create numerous challenges for operators and transit carriers.

As we discussed before, flash calls erode operators’ SMS revenues because much of the new flash call traffic will be shifted away from current SMS business messaging. The issue is only going to become more pressing as the volume of flash calls grows.

So from the operator’s standpoint, flash calls reduce revenue, disrupt relations with interconnect partners, and overload networks. However, there is still no industry consensus on how to handle flash calls: block them like spam and fraudulent traffic or find a monetization model for this verification channel, like for application-to-person SMS.

Accurate detection of flash calls is a challenge

The first crucial step that gives operators the upper hand is accurately detecting flash calls.

This is difficult because operators have no way of discerning legitimate verification flash calls from fraud schemes that rely on drop calls, such as wangiri. The wangiri fraud scheme uses instantly dropped calls to trick users into calling back premium rate numbers. In addition, flash calls need to be distinguished from genuine missed calls placed by customers.

The problem is that even advanced AI-powered fraud management systems struggle to accurately differentiate between various zero-duration calls. The task requires AI engines to be trained on large volumes of relevant traffic coupled with analysis of hundreds of specific call parameters.

Dedicated anti-fraud solutions are the answer

There are only a few solutions on the market that are capable of accurately distinguishing flash calls from other zero-duration calls. Dedicated fraud management vendors have made progress on this difficult task.

The highest accuracy of flash call detection now available on the market is 99.92 percent. Such tools allow operators to precisely determine the ranges from which flash calls are sent. As a result, operators can make an informed decision on how to treat flash calls to maximize revenue and can proactively negotiate with flash call providers.

Flash call detection creates new opportunities

Our team estimates that flash calls make up to four percent of Tier one operators’ international voice traffic. Without accurate detection and a billing strategy, this portion of traffic overloads operators’ networks and offers no revenue. However, with proper detection flash calls offer a new business opportunity.

Now is a crucial time for operators to start implementing flash call detection into their system and capitalize on the trend.

There are a few anti-fraud solutions on the market that give operators all the necessary information to negotiate a billing agreement with a flash call provider. Once an agreement has been reached, all flash calls coming from this provider will be monetized, much like SMS.

All flash calls not covered by agreements can be blocked automatically. This will help to restore SMS revenues. Once a flash call has been blocked, subscribers will most likely receive an SMS passcode sent as a fallback.

Moreover, modern solutions don’t affect any legitimate traffic because they only block selected ranges. This also helps to prevent revenue loss.

Essentially, the choice of how to handle flash calls comes down to each operator. However, without a powerful anti-fraud solution capable of accurately detecting flash calls in real time, it’s nearly impossible to monetize flash calls effectively and develop a billing strategy.

Dmitry Sumin is the Head of Products at the AB Handshake Corporation. He has more than 15 years of experience in international roaming, interconnect and fraud management. Since graduating from Moscow State University, he has worked for both vendors and network operators in the MVNO and telecommunications market. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.