U.S. A2P SMS and CPaaS Market

T-Mobile raised its carrier fee on each outbound business text sent over 10DLC and toll-free numbers from USD 0.0030 to USD 0.0045 in January 2026, a 50% rise, and from USD 0.0025 to USD 0.0045 on short codes, Twilio’s carrier fee notice shows; American banks, pharmacies and delivery apps keep sending one-time passwords at scale all the same. The U.S. A2P SMS and CPaaS market covers application-to-person text messages and the programmable communications platforms (CPaaS) that send them: transactional and one-time password (OTP) SMS, promotional SMS, conversational messaging and Rich Communication Services (RCS) APIs, voice and video APIs, verification and identity APIs, and email and other channel APIs, valued at what U.S. businesses pay, including carrier fees passed through. Douglas Insights sizes it at USD 21.5 billion in 2025, from 603 million wireless connections at USD 35.62 of business messaging and API spend each, and at USD 32.1 billion in 2035, a revenue CAGR (compound annual growth rate) of 4.11%. The study is the United States share of the matching row in our worldwide A2P SMS and CPaaS Market report, sits beside our U.S. Mobile Value Added Services (MVAS) Market and Mobile Value Added Services (MVAS) Market studies inside our information technology coverage, and every figure follows the Douglas Insights research methodology.

Which A2P SMS and CPaaS products earn the most: one-time passwords, promotions or conversational APIs?

Transactional and OTP A2P SMS earn the most, 46.0% of 2025 value, USD 9.88 billion, a Douglas Insights estimate. Conversational messaging and RCS APIs grow fastest, 8.50% a year, from USD 2.79 billion to USD 6.31 billion by 2035.

Transactional and OTP texts lead at USD 9.88 billion because every bank login, prescription-ready alert, ride-hail arrival and parcel update is still sent as plain SMS that reaches any handset. The share is below the 52.6% in our worldwide model because American buyers spend more on email, voice and verification APIs on top of plain texts. The product grows 3.00% a year to USD 13.3 billion: message counts rise slowly, but each text carries higher carrier fees. Promotional texts, USD 4.30 billion or 20.0%, grow only 2.40%, because consent rules and carrier vetting make marketing campaigns slower and dearer to launch, a Douglas Insights estimate.

Conversational messaging and RCS APIs, USD 2.79 billion, grow fastest at 8.50% a year as brands move two-way customer service, branded sender profiles and rich cards into RCS and chat apps. Verification and identity APIs, USD 1.50 billion, grow 7.50% a year on silent network authentication, SIM swap checks and passkey fallbacks that replace or protect SMS codes. Voice and video APIs, USD 1.93 billion, grow 3.20%; email and other channel APIs, USD 1.07 billion, grow 4.30%. Product values for 2035 sum to USD 32.4 billion, 0.89% above the USD 32.1 billion headline, inside our 2.5% tolerance. The consumer side of the same phones, paid add-ons sold to subscribers, is sized in our U.S. Mobile Value Added Services (MVAS) Market report.

Spend by delivery model and end user

By delivery model, self-serve CPaaS APIs carry about 58% of 2025 value, USD 12.5 billion, aggregator routes about 30%, USD 6.44 billion, and direct operator connections about 12%, USD 2.58 billion, Douglas Insights estimates. By end user, banking and financial services carry about 27% of value, retail and e-commerce 24%, healthcare 12%, technology and software platforms 21%, and government, logistics and others 16%. Financial services hold the most because every card transaction alert and two-factor login is a billable message.

What drives U.S. A2P SMS and CPaaS spend up 4.11% a year?

U.S. A2P SMS and CPaaS spend grows 4.11% a year because connections add 1.80% and spend per connection adds 2.27%, lifting the average from USD 35.62 in 2025 to about USD 44.58 in 2035, Douglas Insights estimates.

Three forces lift spend per connection and two lift the connection base, all Douglas Insights estimates unless a source is linked. On price, carrier fee pass-through adds 0.95 points, the move to RCS and conversational APIs 0.80 points and verification and fraud-prevention APIs 0.52 points, which sum to 2.27 points. On volume, phones, wearables and connected devices add 1.80 points of connections.

Carrier fees lift the price of every text: 0.95 points

Carrier fees add 0.95 points a year. On long codes, U.S. carriers now charge USD 0.0035 per outbound SMS at AT&T, USD 0.0045 at T-Mobile and USD 0.005 at Verizon and US Cellular, on top of a Twilio base price of USD 0.0083 per segment, Twilio’s U.S. SMS pricing page, current as of October 2026, lists; carrier fees are thus 30% to 38% of the price of a text. Twilio warned in its 2025 annual report on Form 10-K that “recent increases to A2P messaging fees charged by major U.S. mobile carriers are expected to create a modest headwind” to its margins. Those fees are passed to the brands that send the texts, so they raise market value even when message counts stand still.

Conversational and RCS messaging: 0.80 points

Richer messages add 0.80 points. Google said on 13 May 2025 that more than a billion RCS messages were being sent a day in the United States on a 28-day average, its Android blog post states, and Twilio said on 17 October 2025 that its RCS Business Messaging now reached AT&T numbers, completing coverage of the three national carriers, its product announcement states. A branded RCS message with buttons and images costs a brand more than a plain text, and a two-way support conversation bills several messages for each customer question, a Douglas Insights estimate.

Verification, fraud and the connection base: 0.52 and 1.80 points

Verification adds 0.52 points. Vonage, part of Ericsson, launched Silent Authentication and SIM Swap network APIs across all major U.S. carriers on 17 November 2025, its release states, and Twilio closed its purchase of authentication company Stytch on 14 November 2025, its announcement confirms. The connection base adds 1.80 points: CTIA counted about 603 million U.S. wireless connections in 2025, up from 579 million in 2024, a 4.1% rise, its 2026 Annual Survey highlights of 10 September 2026 show; we take less than half of that rate because new connections are mostly watches, tablets and machines that receive few business texts. Together, (1.0180 x 1.0227) minus 1 gives the 4.11% revenue rate.

What holds back U.S. A2P SMS and CPaaS: fraud, consent rules or app messaging?

Three restraints slow U.S. A2P SMS and CPaaS spend: text fraud that makes carriers filter harder, tighter consent and registration rules, and the shift of codes and alerts to apps and passkeys, Douglas Insights estimates.

Fraud is the largest brake on trust in the channel. Americans reported losing USD 470 million to scams that started with a text in 2024, more than five times the 2020 figure, the Federal Trade Commission’s data spotlight of 16 April 2025 reports. In 2025 consumers reported 3 million frauds and USD 15.9 billion of losses, against 2.6 million reports and more than USD 12 billion in 2024, and text message was the most reported contact method, the FTC told Congress’s Joint Economic Committee in its testimony of 25 March 2026. Each wave of scam texts pushes carriers to block more traffic and raise vetting costs, which takes about 0.40 points a year off message growth on our estimate.

Registration rules take about 0.30 points. From 17 February 2026 toll-free verification requests must carry a business registration number, the Employer Identification Number for U.S. firms, or they are denied with error code 1112, Bandwidth’s support notice states; small senders that cannot register drop out. Apps and passkeys take the last 0.35 points: banks and retailers that move one-time codes into push notifications and passkeys stop paying per text, a Douglas Insights estimate. These restraints are already netted into the 1.80% connection leg and 2.27% price leg above. The worldwide picture of the same pressures is in our A2P SMS and CPaaS Market report.

Where in the United States is A2P SMS and CPaaS spend highest: the South, West, Midwest or Northeast?

The South spends the most, USD 8.16 billion or 38.0% of 2025 U.S. A2P SMS and CPaaS value, a Douglas Insights estimate, and grows fastest, 4.40% a year, to USD 12.6 billion by 2035.

We count value where the recipient’s phone is registered, not where the sending company sits. The South leads because it holds the largest share of U.S. population and wireless connections, along with fast-growing retail, banking and health-system customers in Texas, Florida, Georgia and North Carolina; it grows 4.40% a year as people keep moving there. The West, USD 5.15 billion, grows 4.30% on California’s software platforms and app-based delivery and travel services, which send many notifications per user.

The Midwest, USD 4.30 billion, grows 3.70% because its population grows slowly, though insurers, retailers and health systems in Ohio, Illinois and Minnesota are heavy senders of appointment and claims alerts. The Northeast, USD 3.87 billion, grows 3.80%: New York’s banks and brokerages send many security codes, but the region adds few new residents. Regional values sum to USD 22.4 billion in 2026, 0.02% above the headline, and USD 32.2 billion in 2035, 0.20% above it; in the data table the row labelled Global holds the United States total.

Who leads U.S. A2P SMS and CPaaS: Twilio, Bandwidth or Sinch?

Twilio holds the largest share of U.S. A2P SMS and CPaaS value, about 15.0% of 2025, USD 3.22 billion, Douglas Insights estimates. Sinch, Bandwidth and Vonage follow; the top four hold about 29.0%.

The shares are Douglas Insights estimates because platforms do not report U.S. messaging revenue alone. Twilio’s revenue was USD 1.56 billion in the third quarter of 2026, up 20% reported and 16% organic, its results of 29 October 2026 show, and USD 997.3 million of that, 64%, came from the United States against USD 830.7 million a year earlier, its quarterly report on Form 10-Q states. Twilio’s 2025 revenue was USD 5.07 billion, up 14%, with more than 402,000 active customer accounts at 31 December 2025, its full-year release of 12 February 2026 shows. On 24 March 2026 Twilio announced direct 10DLC connections to AT&T, T-Mobile and Verizon and cited more than 2.5 trillion interactions in 2025, its release states.

Bandwidth’s revenue rose 22% to USD 234.0 million in the third quarter of 2026, from USD 191.9 million, and to USD 662.7 million in the first nine months, its Form 10-Q shows; we place USD 752 million of 2025 U.S. A2P SMS and CPaaS value with Bandwidth, a Douglas Insights estimate. Sinch’s Americas segment earned net sales of SEK 4.46 billion in the second quarter of 2026, up 9% organically, about 66% of group gross profit, its interim report of 22 July 2026 shows. Consolidation favours platforms that own carrier connections and identity tools, because carrier fees squeeze resellers that only route traffic.

What does a U.S. business text cost, and how much of the price goes to carriers?

A U.S. business SMS on a long code costs about USD 0.0118 to USD 0.0133 at list price in October 2026, Twilio’s base price plus carrier fees, and carriers take 30% to 38% of it.

The fees and base price come from Twilio’s U.S. SMS pricing page, current as of October 2026; the totals are our arithmetic. Large senders pay less than list, often USD 0.006 to USD 0.009 a segment before carrier fees, a Douglas Insights estimate, but carrier fees are the same for everyone, so they make up a bigger share of a large sender’s bill. Spend per connection rises 2.27% a year, from USD 35.62 in 2025 to USD 36.43 in 2026 and about USD 44.58 in 2035. A one-tenth of a cent rise in every carrier fee, on our estimate of about 1.2 trillion billable business texts a year, would add about USD 1.20 billion of annual market value.

Which rules shape U.S. A2P SMS and CPaaS: the FCC consent orders, the vacated one-to-one rule or carrier registration?

Three rule sets shape U.S. A2P SMS and CPaaS: the Federal Communications Commission (FCC) consent-revocation rules under the Telephone Consumer Protection Act, the court ruling that struck down one-to-one consent, and carrier 10DLC and toll-free registration.

The FCC’s consent-revocation rules took effect on 11 April 2025 and let consumers stop texts with any reasonable message such as “stop” or “end”, which senders must honour within 10 business days. The part that would apply one opt-out to all of a sender’s message types was delayed to 31 January 2027 by the FCC’s Order DA 26-12 of 6 January 2026, while the Commission considers changing it. Platforms must keep opt-out lists in step across channels, which adds compliance software spend.

The one-to-one consent rule, which would have required separate consent for each seller on lead-generation sites, was vacated by the Eleventh Circuit Court of Appeals on 24 January 2025 in Insurance Marketing Coalition v. FCC, three days before it was due to take effect, Wiley Rein’s summary of the ruling reports; insurance and mortgage lead texts kept flowing. Carrier registration is the third layer: from 17 February 2026 toll-free senders must supply a business registration number, Bandwidth’s notice states. Together the rules cut low-quality promotional traffic and raise the value of each compliant message, which is the shape of our forecast.

What if carrier fees stall or RCS takes off: where does U.S. A2P SMS and CPaaS spend land in 2035?

The U.S. A2P SMS and CPaaS market ends 2035 between USD 27.8 billion and USD 37.3 billion across our three cases, around a base of USD 32.1 billion. Carrier fees and RCS adoption set most of the spread.

In the slower case carriers freeze fees after 2026, banks move most one-time codes to passkeys by 2030, and scam filtering blocks more marketing traffic, taking 0.60 points off connections and 0.87 points off spend. In the faster case RCS business messaging becomes the default for brands, verification APIs replace SMS codes at higher prices, and connected cars and devices receive more alerts, adding 0.60 points to connections and 0.93 points to spend. One extra point of yearly revenue growth adds about USD 3.22 billion to 2035 value; one point less removes about USD 2.96 billion.

Our 4.11% sits below the 5.05% in our worldwide A2P SMS and CPaaS Market report, because emerging economies add mobile users faster than the United States, where almost every adult already has a phone.

Douglas Exclusive: the Carrier Toll Ledger

The Carrier Toll Ledger is a Douglas Insights model built from 8 inputs in 7 company and government documents dated November 2025 to October 2026. It tracks how much of each business text now goes to carriers.

The finding, a Douglas Insights estimate: the average carrier fee on a long-code text across the four carriers is about USD 0.0045 in October 2026, on Twilio’s pricing page, so carriers take about 35% of a USD 0.0128 list-price message. Weighting by our estimate of carrier subscriber shares and holding the other carriers’ fees at their October 2026 levels, the T-Mobile change alone lifted the average fee by about 11% between 2025 and 2026, while platform base prices held flat. That one change lifts the price of a list-rate text by about 3.9% in a single year; with the further fee rises we expect, carrier fees supply 0.95 points a year of the 2.27% rise in spend per connection.

The ledger changes how to read the market. Platform revenue growth, such as the 16% organic rise Twilio reported for the third quarter of 2026, overstates message growth because part of it is carrier fees passed through at low margin. Platforms that own carrier connections, sell verification and RCS, and charge for software rather than per text keep more of each dollar; those that only resell routes lose margin with every fee rise.

How does the methodology turn 603 million connections into USD 21.5 billion of U.S. A2P SMS and CPaaS?

Our methodology multiplies about 603 million U.S. wireless connections in 2025 by USD 35.62 of business messaging and API spend per connection to reach USD 21.5 billion. Connections come from CTIA; spend comes from six product builds.

The model covers 4 census regions, 6 products, 3 delivery models and 5 end-user groups, and uses 96 data points, 21 sourced and 75 modelled. Arithmetic: 603 million x USD 35.62 = USD 21.48 billion; USD 21.48 billion x (1.0180 x 1.0227)^10 = USD 32.13 billion, the USD 32.1 billion headline. Connections reach about 614 million in 2026 and 721 million in 2035; spend per connection reaches USD 36.43 in 2026; 2026 value is USD 22.4 billion.

Two cross-checks agree. First, the parent row of our worldwide A2P SMS and CPaaS Market model that contains the United States is USD 24.1 billion in 2025 and USD 36.1 billion in 2035, and our U.S. figure is 89.0% of it in both years, with the other country in that row holding the rest. Second, Twilio’s 2025 Form 10-K puts 36% of its USD 5.07 billion 2025 revenue outside the United States, leaving about USD 3.24 billion at home, in line with our USD 3.22 billion Twilio estimate. AI tools help draft the text and automated checks test the arithmetic and links; the Douglas Insights research desk chooses the sources, builds the model and approves publication, as our editorial standards explain.

Sources

1. Twilio Twilio announces third quarter 2026 results (2026)
2. Twilio / SEC Twilio Form 10-Q, quarter ended 30 September 2026 (2026)
3. Twilio Twilio fourth quarter and full year 2025 results (2026)
4. Twilio / SEC Twilio Form 10-K 2025 (2026)
5. Twilio Support T-Mobile messaging carrier fee changes, January 2026 (2026)
6. Twilio U.S. SMS pricing and carrier fees (2026)
7. Bandwidth / SEC Bandwidth Form 10-Q, quarter ended 30 September 2026 (2026)
8. Sinch Sinch interim report Q2 2026 (2026)
9. CTIA CTIA 2026 Annual Survey Highlights (2026)
10. Federal Communications Commission FCC Order DA 26-12 (TCPA revocation rule delay) (2026)
11. Federal Trade Commission FTC testimony: the rising scam economy (2026)
12. Federal Trade Commission New FTC data spotlight on text scams (2025)
13. Google A billion RCS messages a day in the U.S. (2025)
14. Vonage Vonage launches fraud prevention network APIs across all major U.S. carriers (2025)

What counts in the U.S. A2P SMS and CPaaS market, and what is excluded?

The U.S. A2P SMS and CPaaS market counts business-to-person messages and programmable communications APIs bought by organisations to reach U.S. phone numbers, including carrier fees. Person-to-person texting, retail phone plans and contact-centre software seats are excluded.

The by-product split covers the six products above; the by-delivery-model split covers self-serve APIs, aggregator routes and direct operator connections; the by-end-user split covers financial services, retail and e-commerce, healthcare, technology platforms, and government and others; the by-region split covers the four census regions. Value is counted where the recipient’s phone is registered. Paid services sold to the same subscribers are sized in our U.S. Mobile Value Added Services (MVAS) Market report.