ANALYSIS: Three’s recommendation to use OTT messaging applications to avoid its charges isn’t for philanthrophy, its for business
On the face of it, Three’s decision to raise MMS charges from 17.4p to 40p doesn’t seem very ‘Three’. This is, after all, the operator whose entire marketing message centres on a fist pumping puppet called Jackson that crusades against ‘things that suck’ and pledges to ‘make it right’.
But look a little deeper and the issue epitomises both the challenges and opportunities faced by the mobile industry.
The first is that the MMS charges, no matter what they cost, can simple be bypassed by using over the top (OTT) services like Skype. This isn’t exactly news.
Most users with a smartphone will have access to at least one OTT messaging application – WhatsApp, Skype or iMessage – and know they can send messages in excess of the SMS character limit, images and videos without paying a penny.
Indeed, in 2013, the number of mobile messages sent via OTT apps exceeded SMS for the first time. This is eating into operators’ traditional revenue streams to the tune of tens of billions of pounds each year.
But intriguingly, Three is actually advising customers to use OTT applications to evade the higher cost of MMS.
“There are other ways to send multimedia messages whilst keeping the costs at bay,” said the network. “Mobile applications are probably the most popular method. In fact some of them, like Skype are preloaded on most of our phones.”
Why? Well it hopes to monetise this appetite for data by moving customers onto more expensive tariffs with bigger data allowances.
This is its exact rationale behind ‘Feel at Home’, its roaming offer which lets its customers use their UK allowances in a number of countries. While this obviously eats into roaming revenue, it does mean customers are more likely to use their phone abroad rather than switch it off or use free Wi-Fi networks.
Juniper Research estimates that roaming revenues will fall by 28 percent once additional fees are abolished in the European Union in 2017, but will rise again in the medium term as people become used the idea of using their phones abroad.
Three’s price hike means its MMS charges are roughly the same as competitors EE, O2 and Vodafone, so it’s hardly breaking the bank, but its decision to actively encourage customers to use messaging apps will not only generate goodwill, it could also increase data revenues.
For the operator that says its network is built for data, it makes perfect sense.