Texting revenues hit by web services

The growth of smartphone applications such as WhatsApp and Viber, and messenger services on handsets from BlackBerry and Apple, have eroded the use of text messaging in many countries.

Telecom operators lost almost $14bn in revenues in 2011 from a decline in text messaging owing to the rise in use of social messaging services provided free over the internet on smartphones, research has shown.

Ovum, the independent technology analyst, said that the $13.9bn loss represented nearly 9 per cent of total messaging revenues in 2011, and came on the back of an $8.7bn loss of SMS revenues in 2010.

The growth of smartphone applications such as WhatsApp and Viber, and messenger services on handsets from BlackBerry and Apple, have eroded the use of text messaging in many countries. Operators such as KPN of the Netherlands have already blamed the fall in text revenues for a drop in profits as customers move to free web-based services.

This has mostly affected countries that still charge for each message rather than bundle them into a broader tariff package. [More: French telecom battle heats up]

Ovum warned that operators need to revise such “legacy services” to secure their future position in the messaging market. Neha Dharia, consumer analyst at Ovum, said: “Social messaging has disrupted traditional services, and operators’ revenues in this area will come under increasing pressure.”

The findings by Ovum were supported by research on Tuesday by Informa, the consultancy, which found that the increase in smartphone penetration will cause voice and messaging revenue loss of 3.9 per cent and 1.6 per cent in western and eastern Europe, respectively.

Informa estimates that every 10 percentage points increase in smartphone penetration could cost western European operators $1.19bn in voice and messaging revenues and $306m in eastern Europe – or between 0.5 per cent and 0.6 per cent of service revenues from voice and messaging.

It said that operators also need to provide internet-style communication services to remain relevant to customers. [More: Drop in texting heralds industry shift]

However, Talmon Marco, founder of Viber, a free messaging app, said: “In the not too distant future, the majority of communication services – voice, messaging and video – experienced by users will be provided by [non-SMS] services. We expect carriers to focus on building the best networks.”

Ms Dharia said that social messaging could also be an opportunity if it drives operators to providing the mobile broadband needed for such applications. She said that operators were also 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,” she said.

Additional reporting by Tim Bradshaw

  • COMMENT: Xenophobia rears its ugly head in Singapore once more 17 hours ago
    COMMENT: Xenophobia rears its ugly head in Singapore once more

    Kirsten Han is a Singaporean blogger, journalist and filmmaker. She is also involved in the We Believe in Second Chances campaign for the abolishment of the death penalty. A social media junkie, she tweets at @kixes. The views expressed are … Continue reading →

  • Driving a $900,000 Porsche 918 Spyder to the future 19 hours ago
    Driving a $900,000 Porsche 918 Spyder to the future

    It’s more than just its inherent speed, or the whooshing noise that fills the cabin like a school choir jamming with James Hetfield. It’s what it represents in an industry full of skeptics. It’s a portal into the future – a time capsule left by some mad scientist born decades too soon. It’s something that shouldn’t exist. And yet it does.

  • 919 reasons to love: Flickr photo of the day 20 hours ago
    919 reasons to love: Flickr photo of the day

    We've brought you the drive video of the $900,000 Porsche 918 Spyder -- an 887-hp hybrid supercar with two electric motors working in harmony with a big 4.6-liter V-8. But how about this? Porsche's hybrid Le Mans racer -- the 919 Hybrid, sent to us by Kevin Leech. Get on board with electrification, folks. Because it's taking over the world.

  • COMMENT: Xenophobia rears its ugly head in Singapore once more
    COMMENT: Xenophobia rears its ugly head in Singapore once more

    Kirsten Han is a Singaporean blogger, journalist and filmmaker. She is also involved in the We Believe in Second Chances campaign for the abolishment of the death penalty. A social media junkie, she tweets at @kixes. The views expressed are … Continue reading →

  • Singaporeans slam NEA's $120 licence requirement for tissue sellers
    Singaporeans slam NEA's $120 licence requirement for tissue sellers

    Singaporeans on social media reacted angrily to news that tissue sellers at hawker centres and street corners are being required to pay for an annual licence.

  • Arrest warrant sought for S. Korea ferry captain
    Arrest warrant sought for S. Korea ferry captain

    South Korean prosecutors sought arrest warrants Friday for the captain and two crew members of the ferry that capsized two days before with hundreds of children on board, a coastguard official said. The captain and most of his 28 crew managed to escape the ferry, and have been criticised for abandoning the ship when so many were still trapped on board. Tracking data from the Maritime Ministry showed the ferry made a sharp turn just before sending its first distress signal on Wednesday morning. Prosecutors said Friday that preliminary investigations showed that captain Lee Joon-Seok had handed the helm to his third officer before the ferry capsized.