Telcos will lose US$54B in SMS revenues by 2016

Posted on October 10, 2012 12:10 pm

Global technology analyst Ovum has released forecasts for SMS business between now and 2016 where mobile service operators will have lost US$54bil in SMS revenues due to the increasing popularity of social messaging services on smartphones like WhatsApp, Facebook and Twitter. It is one of the report I have been looking forward to this last quarter of 2012.According to the report which I have read,mobile network operators are expected to lose US$23bil this year. The report indicates that collaboration with handset manufacturers is imperative if the operators are to remain relevant and competitive in the SMS business. While reading the report,it was clear that social messaging is becoming more pervasive, and mobile network operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses as has been the case over the last decade.Mobile operators in Europe and Asia-Pacific will be affected the most, and should be vigilant with respect to OTT messaging activity. The report also addresses how operators can counteract the social messaging threat from over-the-top players and highlights the rapid increase in the number of over-the –top players, and demonstrates that social messaging is not a short-term trend, but a shift in communication patterns.

Mobile network operators need to understand the impact of social messaging apps on consumer behavior, both in terms of changing communication patterns and the impact on SMS revenues, and offer services to suit.Last week,I came across a research that shows over-the-top 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.There is no doubt the importance of industry-wide collaboration cannot be underestimated as operators look to a Rich Communication Suite platform to provide consumers with features such as filesharing, video calls, and Internet Protocol-based messaging. RCS, is not however not expected to reach the mass market before the next two years, so for the time being I think mobile network operators will have to rely on innovative pricing strategies, partnerships, and launching operator-branded IP-messaging services to keep up with the changing demand.Network operators that want to take advantage of RCS in 2014, they will have to have a strong market presence which means they need to move to social messaging now in order to make sure over-the-top players are not in a better position to take advantage of future opportunities.

Contador Harrison