Apps such as WhatsApp are more popular than SMS, threatening operator revenues
The number of messages sent via free messaging services such as WhatsApp and iMessage has exceeded those sent via SMS for the first time, according to Informa.
The research firm said that during 2012, an average of 19.1 billion messages were sent every day through over-the-top services compared to 17.6 billon SMS messages.
The volume of SMS messages is expected to grow in the coming years, but not as fast as instant messaging as smartphone adoption continues. Shipments of higher end devices beat feature phones for the first time during the first quarter of 2013, while lower-end phones are increasingly becoming compatible with free messaging services.
SMS revenues threatened
It was estimated that social messaging applications cost mobile operators £8.8 billion in SMS revenue during 2011 and Informa warns that the migration of users to alternative services could result in a long term decline in income.
Some operators have reacted by releasing their own applications, such as O2 Tu Go, while others have offered unlimited texts alongside their data bundles. European operators traditionally rely on voice and text revenues more than their US counterparts who profit from data, but many of these services often bypass the network entirely if used over a Wi-Fi connection.
It has been suggested that the rollout of 4G services in the UK could allow operators to charge more for data services, but Three has already said that it does not plan to make LTE any more expensive than its current Ultrafast product.
Instead, many operators have sought revenue sharing deals with instant messaging services. WhatsApp has agreed a number of carrier deals with networks around the world, contributing to annual revenues of more than $100 million. This has led the company’s CEO to claim that it was bigger than Twitter and resulted in speculation that Google was preparing a $1 billion takeover bid.
Are you up to speed on 4G? Try our quiz!