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Social Messaging Apps Cost Mobile Operators £8.8bn in SMS Revenues

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Services such as BlackBerry Messenger, WhatsApp and Facebook are costing networks dear says Ovum

The increased use of social messaging applications cost mobile operators $13.9 billion (£8.8bn) in lost SMS revenues in 2011, according to a new report.

Researchers at Ovum said that they expect this trend to continue but that networks should see it as an opportunity – if there is industry-wide collaboration and co-operation.

SMS SOS

Last year witnessed a nine percent decline in SMS revenue, compared to six percent in 2010 when losses amounted to $8.7billion (£5.5bn). The report gathered statistics from social messaging apps such as WhatsApp, BlackBerry Messenger and Facebook Chat as well as popular local variants, but did not factor in the extra income received from increased internet usage.

“Social messaging has disrupted traditional services, and operators’ revenues in this area will come under increasing pressure,” commented Neha Dharia, consumer analyst at Ovum. “This threat will drive telcos to consider alternative sources of revenue, such as mobile broadband.”

“Tapping into the creativity of app developers, forming industry-wide collaborations, and leveraging their usage data and strong relationships with subscribers are the key ways for operators to ensure that they hold their ground in the messaging market,” she added.

She said that networks were in a position of strength as they controlled to entire messaging structure, through to the user’s phone number as well as an established billing relationship. However she also warned that changing revenue schemes alone would not be enough to win the war against social messaging and that there should be a greater deal of co-operation across the industry.

Co-operation game

“Operators must remain open to partnering with app developers, sharing end-user data with them and allowing integration with the user’s social connections,” she said. “Working closely with handset vendors will also be important; they control some of the most popular social messaging apps, and can also provide preloaded applications.

“The most important factor, however, will be co-operation between telcos. They are no longer competing merely among themselves, but must work together to face the challenge from the major Internet players,”

BlackBerry Messenger has proved to be popular among BlackBerry users and has inspired a number of similar applications such as cross-platform messenger WhatsApp. Apple launched its own messaging service for iPhone and iPad users, iMessage, which was released as part of iOS 5.0, while Facebook released a free messaging app for iPhone and Android last year.