iphone-texting

Research firm Ovum recently published a report that suggests social messaging apps, such as WhatsApp, will cost wireless carriers as much as $54 billion by 2016. That's a staggering figure, however, and we wonder if Ovum took into consideration that carriers, such as AT&T and Verizon, have moved to a data-focused approach to billing and now provide unlimited text messaging with most plans.

"Social messaging is becoming more pervasive, and operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses," says Neha Dharia, consumer telecoms analyst at Ovum. "Operators need to understand the impact of social messaging apps on consumer behaviour, both in terms of changing communication patterns and the impact on SMS revenues, and offer services to suit."

Ovum suggests that carriers work closely with social messaging providers in order to balance out the loss of revenue. However, I think we'll see global carriers move to a data-focused approach, as we've seen in the United States, instead.

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Ovum figures indicate that operators will lose US$54bn by 2016 due to smartphone messaging apps

For immediate release.

London, 11 October 2012 – Ovum forecasts that by 2016 operators will have lost US$54bn in SMS revenues due to the increasing popularity of social messaging* services on smartphones, more than double the US$23bn they are expected to have lost by the end of 2012. The global technology analysts believe that collaboration with handset manufacturers is imperative if operators are to remain relevant and competitive in the messaging industry.

In a new report addressing how operators can counteract the social messaging threat from over-the-top (OTT) players, Ovum highlights the rapid increase in the number of OTT players, and demonstrates that social messaging is not a short-term trend, but a shift in communication patterns. Operators in Europe and Asia-Pacific will be affected the most, and should be vigilant with respect to OTT messaging activity.

"Social messaging is becoming more pervasive, and operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses," says Neha Dharia, consumer telecoms analyst at Ovum. "Operators need to understand the impact of social messaging apps on consumer behaviour, both in terms of changing communication patterns and the impact on SMS revenues, and offer services to suit."

WhatsApp, one of the more prominent social messaging brands, has seen its levels of penetration increase in markets such as Singapore and the Netherlands.  Ovum believes this level of growth will continue as smartphone and mobile broadband penetration increases, and expects smaller players such as textPlus, Pinterest, and fring to cause further disruption in the messaging space.

"OTT players are changing consumers' messaging preferences, and the pressure they are exerting on operators' messaging services is forcing them to offer increased SMS bundles and to experiment with messaging pricing models, further dampening revenue growth," comments Dharia.

According to Ovum, the importance of industry-wide collaboration cannot be underestimated as operators look to a Rich Communication Suite (RCS) platform to provide consumers with features such as file sharing, video calls, and IP-based messaging. However, RCS is not expected to reach the mass market before 2014, so for the time being operators will have to rely on innovative pricing strategies, partnerships, and launching operator-branded IP messaging services to keep up with the changing demand.

"In order to take advantage of RCS when the time comes, operators will have to have a strong market presence. This means that they need to move to social messaging now in order to make sure OTT players are not in a better position to take advantage of future opportunities," concludes Dharia.

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