The increasing use of IP-based social messaging services by consumers cost telecom operators $8.7 billion in potential SMS revenues in 2010 and $13.9 billion in 2011, according to a new report by Ovum.
Ovum defines social messaging as messaging that occurs through platforms other than SMS, MMS, or e-mail, and which is either tied to a social network or has a social component attached. Social messaging players include mobile apps, mobile social networks and even some mobile instant messaging platforms.
In its report “The Casualties of Social Messaging,” Ovum reveals that it expects the decline represented nearly 6% of total messaging revenue in 2010 and 9% in 2011, and that it will continue as the popularity of messaging apps continues to grow. Ovum has warned operators to rework their legacy services if they want to secure their future position in the messaging market.
“Social messaging has disrupted traditional services, and operators’ revenues in this area will come under increasing pressure,” says Neha Dharia, consumer analyst at Ovum and author of the report.
“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,” Dharia added.
However, despite the threat to messaging revenues, the research company believes that the strong presence of social messaging should be looked upon as an opportunity.
According to Dharia, this threat will drive telcos to consider alternative sources of revenue, such as mobile broadband. And now that the market has been tested, operators know what types of messaging services work.
“In addition, operators are in a position of strength because they control the entire messaging structure through their access to the user’s phone number and usage data. The established billing relationship is a great advantage, as is the fact that operators control to a great extent the services to which the user is exposed,” Dharia added.
However, offering innovative messaging services and aligning revenue schemes with models in the social world will not be enough to win the battle against social messaging. Industry-wide collaboration and cooperation will be the key to growth in the messaging realm, the research company believes.
“Operators must remain open to partnering with app developers, sharing end-user data with them and allowing integration with the user’s social connections. 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,” Dharia concludes.
The report also highlights the importance of cooperation between telecom companies since as a group they also face a formidable challenge from the major Internet players.
