Businesses and consumers are more connected than ever. We communicate through video chat, SMS messaging, and services available via APIs.
“Companies use a whole suite of communications technologies to provide customer marketing and customer support,” says Steve Lacoff, General Manager of Avalara for Communications. “AI turbocharges that and makes it more effective. Businesses can use AI to mine customer data and generate strategies. It can help fuel growth. However, AI also requires companies to be responsive, keeping up with the pace at which they are communicating to their customers and vice versa.”
The proliferation of communications platform as a service (CPaaS) is a great example of this. Companies use CPaaS to send their customers appointment reminders, purchase confirmations, and order tracking notifications. B2B software-as-a-service (SaaS) providers use CPaaS to add voice calling, video chat, and messaging into their CRM and marketing automation platforms. IDC forecasts the worldwide CPaaS market to swell from $14.3 billion in 2022 to $29.7 billion in 2026 at a 15.8% CAGR.
More businesses are using application-to-person (A2P) messaging to communicate with their customers. Historically, SMS has been the preferred means for reaching a wide audience. But as more customers spend time on their cell phones, brands are embracing mobile-friendly technologies like chat apps and social media apps. Business spending on A2P messaging worldwide is predicted to grow from $32 billion in 2022 to $43 billion in 2027.
CPaaS, SaaS, and unified communications as a service (UCaaS) are among countless cloud-based technologies complicating the communications tax landscape. Together, they’re part of a huge family of technologies collectively known as everything as a service (XaaS). The global XaaS market is projected to grow from $699.79 billion in 2023 to $3.22 trillion by 2030 at a 24.4% CAGR.
“As these services grow, the government may conclude that internet revenues are just too significant to forgo indefinitely,” says Toby Bargar. “Could tax policy changes follow? Perhaps. Policymakers could see data as a utility.”