Home Industry Strategy Social messaging to cost telcos $30 billion in lost SMS revenues

Increased usage of social messaging is forcing down usage of SMS, depriving carriers around the globe of substantial revenues.

Analyst group Ovum forecasts that social messaging cannibalisation of SMS revenues will grow from US$32.6 billion in 2013 to over US$86.0 billion in 2020. Operators will partner more with OTT (over the top) social messaging players, leading to a substantial shift in revenue splits.

“The period 2013–15 will be crucial in terms of the relationship between telcos and OTT players in the communication space,” Neha Dharia, consumer analyst at Ovum.

“We expect to see partnerships in this area intensify during the course of 2013. WhatsApp already has a number of operator partnerships, including a roaming pass with 3 in Hong Kong and the GSM-based service offered by Reliance Communications in India.

“Facebook has a long history of working with operators, and its new partnership with 18 global operators will allow free or discounted data access to the social network’s messaging platform. Social messaging player Viber’s CEO has stated that the company will be happy to share revenues from paid services once it begins to charge consumers. Such operator partnerships help OTT players to broaden their reach, while the operators benefit from the sale of subscription plans.”

Dharia says aocial messaging will move toward content platforms. “Most social messaging services are currently either free or based on discounted plans. In 2013 we will see a large number of social messaging companies begin to grow into content platforms.

KakaoTalk and Line already have growing revenue streams from games, emoticons, and marketing channels. Social messaging’s viral growth, high level of engagement, and sticky nature make it a strong foundation on which to build a content platform.”

Ovum also believes mobile broadband revenues will outpace SMS revenues after 2013. “SMS growth rates fell from 14% in 2011 to 8% in 2013, and SMS revenues have fallen since the emergence of social messaging. After 2013 mobile broadband revenues will form the bulk of operators’ non-voice revenues (contributing 43% of revenues in 2014).

“hey will outpace revenues from SMS, with messaging forming a smaller proportion of data revenues (40% in 2014). Indeed, 2013 will be the last year that SMS brings in the largest proportion of non-voice revenues, and by 2015 SMS revenues will begin to plateau. The rise of social messaging players is a key factor. The bundling of SMS with calling minutes and mobile broadband plans has also contributed to the decline of messaging revenues.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

 

 

 

 

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