Telecoms: Free SMS apps like Whatsapp losing us $23bn a yr

Global telecom operators are expected to lose US$23 billion in SMS revenues by the end of 2012 as smartphone users shift to free messaging applications, an industry report said Thursday. Technology research company Ovum forecast the losses would more than double to US$54 billion by 2016 as the traditional Short Messaging Service (SMS) gives way to Internet-based platforms such as WhatsApp.

This compares with estimated losses of $8.7 billion in 2010 and $13.9 billion in 2011.

http://www.chinapost.com.tw/news_images/20091119/p5a.jpg
Telecom companies: We are losing money fast

“Social messaging is becoming more pervasive and operators are coming under increased pressure in the messaging component of their communications business,” said Neha Dharia, consumer telecoms analyst at Ovum. “Operators need to understand the impact of free social messaging apps on consumer behaviour, both in terms of changing communication patterns and the impact on SMS revenue, and adjust accordingly to suit.”

Ovum cited the increasing popularity of WhatsApp, which allows smartphone owners to exchange messages for free using wireless Internet links, bypassing SMS gateways that charge users per message or for a monthly quota. “Ovum believes this level of growth will continue as smartphone and mobile broadband penetration increases,” the report said.

Urging telecom operators to innovate, Ovum said the increase in the number of players offering social messaging services is not a short-term trend but a sign of a “shift in communication patterns”. Text messaging started as a way to use spare telecoms capacity but soon became a key cash generator for operators while offering users a cheap way to keep in touch with friends and family without having to spend on phone calls.

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Traditional SMS to go extinct?

Dharia told AFP on Thursday that SMS contributed 49 percent of non-voice revenues for telecom companies globally last year, but is expected to fall to 45 percent this year and to 35 percent by 2016. It for example, still generates an estimated 12 percent of the service revenue for U.S. operators.

I do expect SMS to be under attack, Verizon Chief Executive Lowell McAdam told the audience at an investor conference in the U.S., noting that some European carriers have already seen texting alternatives hurt their financials. In particular Dutch operator KPN blamed the messaging services of social networks such as Facebook and Twitter for a dramatic drop in text messaging revenue in 2011.

In South Korea one alternative service, Kakaotalk, now handles 30 billion messages a month, eating into traditional texting traffic at the country’s three mobile network carriers including SK Telecom. Every major wireless operator is seeing some substitution for text messaging, said Mark Lowenstein, the head of wireless consulting firm Mobile Ecosystem.

Craig Moffett, an analyst for Sanford Bernstein, said carriers have a huge cause for concern as he described text messaging as the most profitable service known to man.

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Free text messaging apps like Whatsapp save you from paying expensive SMS

Consider the markup: SMS texts are limited to 160 characters because they in effect piggyback on a secondary data channel necessary to coordinate voice communications. Computer science professor Srinivasan Keshav at the University of Waterloo in Ontario estimated that it only costs the carriers three-tenths of a cent ($0.003) to process an SMS message. If the operators charge $0.05 for each SMS sent, that would amount to nearly 1,600 percent in profit margin.

Source:

http://sg.news.yahoo.com/free-message-a … 47859.html

http://timesofindia.indiatimes.com/tech … 766762.cms?

http://m.theglobeandmail.com/technology … ice=mobile

http://phys.org/news/2012-10-free-messa … s-bln.html

http://articles.chicagotribune.com/2010 … s-industry

http://www.banglanews24.com/English/det … 2101155400

http://www.i4u.com/2012/10/ipad/cost-23 … ms-apps-yr

Good. SMS is stupidly expensive.

Mobile Internet prices might be increased then I presume :frowning:

Well, I use Nokia 1100 so yeah, normal SMS. =3

Malaysian phone charges are already cheap even after you consider the country’s cost of living/wages.

I dont see the need to SMS someone when you can just call haha.

well, sms could be cheaper than whatsapp.

Olden days, when i just use Rm 30 per mth for prepaid reload. Now, needa pay rm80++ per mth inclusive of data and call+sms package. But then, the amount of message using whatsapp drastically increased compared to the amount i would message using sms. Hahaha cheapskate bah!

You do make a valid point haha.
Unless of course we make use of the abundance of free WIFI hotspots around Miri. Then again the hassle of looking for one everytime u need to send a msg is troublesome haha

very dangerous for telco to do that…

[quote=“teamGD”]well, sms could be cheaper than whatsapp.

[/quote]

That really depends. For me, I use a whatsapp sending text and photos (50 sen per MMS on mind you), long term at least for me, whatsapp saves a lot. I even have free limited voice and SMS/MMS to go along with my current plan.

So far managed to keep my bill around RM50 with data plan. I’m sure if I use pre-paid I would have spent over RM80 per month. On top of that, receive emails, yahoo/msn/facebook messages.

I don’t think I can ever see myself going to normal voice/SMS only.

@whatman
Care to share what plan you using?

use whatsapp and Line better leh…can group chat, send pictures,videos,music to your friend…also can send your coordinate to your friend to ask them come quickly…hell lot better than traditional sms…

also saves more…

I’m still using my good old nokia 6500s. So yeah, still use normal sms.

How about Viber application, anyone here using the free call services? :roll:

[quote=“Eugene91”]@whatman
Care to share what plan you using?[/quote]

I think it was exec i68.

Sms is actuall almost free bcos it piggyride on data send to telcos tower

Datby it got limit bcos the data/string can only transmit dat size

[quote=“haroldz”]Sms is actuall almost free bcos it piggyride on data send to telcos tower

Datby it got limit bcos the data/string can only transmit dat size[/quote]

Very true also. In fact the smartphone that remains idle is still sending/receiving data that probably takes more data than a single SMS.

So far I use WhatsApp as most people I know use this app more so than Viber or Line.

Too bad WhatsApp can’t do voice call but I prefer it over Line service which can often be slow.

For those who use WhatApps, please read ;
http://www.h-online.com/security/news/i … 08545.html
and
http://www.h-online.com/security/news/i … 16912.html

I believe users of WhatApss have the right to know about this issue and make their informed judgement.

[quote=“JohnLai”]For those who use WhatApps, please read ;
http://www.h-online.com/security/news/i … 08545.html
and
http://www.h-online.com/security/news/i … 16912.html

I believe users of WhatApss have the right to know about this issue and make their informed judgement.[/quote]

Well SMS user should also have the right to know about the security issue with regular SMS don’t you think?

http://www.h-online.com/security/news/i … 01668.html

http://www.h-online.com/open/news/item/ … 60200.html

[quote=“whatman”][quote=“JohnLai”]For those who use WhatApps, please read ;
http://www.h-online.com/security/news/i … 08545.html
and
http://www.h-online.com/security/news/i … 16912.html

I believe users of WhatApss have the right to know about this issue and make their informed judgement.[/quote]

Well SMS user should also have the right to know about the security issue with regular SMS don’t you think?

http://www.h-online.com/security/news/i … 01668.html

http://www.h-online.com/open/news/item/ … 60200.html[/quote]

Indeed. :lol:
With all those insecurities, it is a wonder that many of us still place full reliance on such an old mobile phone / smartphone technology.

It sure remind me of the early day when users complained about paying for the sms services they never signed for…