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Smartphone msg app to lose operators $54bn by 2016

04 Jan 2013

By 2016 operators will have lost $54bn in SMS revenues due to the increasing popularity of social messaging services on smartphones, over double the $23bn they are expected to have lost by the end of this year.

Global tech analysts Ovum believes collaboration with handset manufacturers is imperative if operators are to remain relevant and competitive in the messaging industry.

Addressing how operators can counteract the social messaging threat from over-the-top (OTT) players, Ovum's report highlights the rapid increase in the number of OTT players, demonstrating 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.

Dharia 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,” Dharia says.