Traditional SMS destroyed by BBM and WhatsApp IM apps

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With BBM, WhatsApp, Skype and Viber who needs traditional SMS?

Mobile phone use around the globe has exploded over the last decade, and mobile messaging has become one of the killer apps of the industry. At the end 2012, SMS traffic has reached 10 trillion globally, with SMS revenues growing to a US$150 billion industry for carriers around the world.

However, with the advancement of cross-platform instant messaging apps, the future of SMS might be bleak. Cross-platform app usage is expected to increase 50 percent by 2016, according to Gartner. Ovum predicts that carriers around the world will lose US$32 billion in SMS revenue by this year, and this loss will grow to US$86 billion by 2020.

To illustrate, let’s take into account Europe’s five telecom giants today: Telefónica, Vodafone, Orange, Telecomitalia, and Telekom. These companies have set strong footholds across its consumer base of customers who frequently travel across Europe. They offer unique advantages for everyone even for business customers who need seamless connections across different countries and low cost international billing for calls and messages.

Cross-platform apps are on the rise, though. Let’s look at the numbers. Currently, Whatsapp has 300 million users. Viber and LINE have 200 million each. Facebook has almost a billion users globally, which is the potential user base for Facebook Messenger. Chinese-developed WeChat has 400 million users in China alone. While these are free apps, companies earn from premium services like stickers, PSTN calls, incoming direct dial numbers and the like.

Come the emergence of VoIP and messaging apps, telecom networks have expanded their offerings to cloud computing, IT solutions, and multiple forms of communication access such as mobile, wired telephone service, and broadband access. However, with all these efforts to sustain their market, modern consumers are now shifting from regular texts and SMS to cross-platform messaging apps. Why? Because everything is supposedly free.

Feature-rich messaging apps on the rise

About 82.7 percent of mobile audiences in Europe (age 13+) are using SMS, while 14.2 percent use instant messaging. Although the figures of IM are still low compared to SMS, a recent report from Informa Telecoms and Media said that over-the-top (OTT) messaging traffic is set to double by the end of the year. Some predictions were also stated that before 2014, an estimated number of 41 billion OTT messages will be sent daily, compared to 19.5 billion peer-to-peer (P2P) SMS messages.

Performance issues of mobile networks and native SMS

Though text messaging is a viable option to communicate with friends and family, the SMS allocations are still a huge issue for many when sending messages internationally. However, while proprietary messaging solutions, such as Apple’s iMessage or BlackBerry Messenger (BBM) offer rich features that SMS does not support, odds are that you cannot communicate with friends who don’t have the same mobile platform you are using. Cross-platform apps offer a better way to communicate with all OS platforms.

Cross-platform messaging apps are downloadable applications

All you need is an internet or Wi-Fi connection to download and install your chosen app. A few of the most used cross-platform messaging apps today are LINE, Viber, Facebook Messenger, Skype, Google Hangouts, and WhatsApp. Some of these apps are even accessible via mobile web, such as Facebook Messenger (through the mobile Facebook app) and Imo, which offers access to popular chat networks like Google Talk, Yahoo Messenger and Jabber.

Communication is (supposedly) 100 percent free

Mobile users need not pay per-SMS fees anymore to communicate with friends and family all around the word. VoIP-enabled chat apps like Viber and Skype also let users call without paying for voice charges. These companies earn from premium services like calls to regular phones or stickers – those cute icons you can attach to your messages. But the core chatting and calling services are free, outside of incidental data charges.

What networks are doing about it

Although networks are being threatened with a huge loss in revenue due to the fact that less and less people are using SMS and talk-time credits because of these cross platform apps, they are still confident that they have an edge, mostly because they own the infrastructure.

Networks control the pipes, so to speak, although the argument today is whether communication providers should remain as ‘dumb pipes’ or whether they should offer richer services, too.

Data plans and usage

One thing that keeps carriers afloat today are data access and data subscription plans. Wi-Fi signals are not always available, and it is very inconvenient to have to look for a wireless hotspot just to send a message or to make a call.

Cross-platform messaging apps will require persistent data connections in order to be effective in delivering messages. To this end, carriers are experimenting with data caps and many have done away with ‘unlimited’ data allocations, mindful of users’ tendency to abuse unlimited data packages, which can result in network congestion.

Rich Communication Service (RCS)

The GSM Association (GSMA) has launched a new standard for messaging and communication on digital networks called RCS. Designed to replace circuit-switched technology (calls and SMS, for instance) with IP-based ones, the RCS standard is now marketed under the ‘joyn’ brand.

Carriers that offer joyn services to date include the Vodafone Group, Telefonica, Orange, Deutsche Telekom and MetroPCS. RCS offers messaging, group chat, IP-based calls, video-conferencing, file-sharing and social presence indicators.

Network OTTs

Networks are not exactly new to the OTT space, and many have even ventured into launching their own OTT services to better compete against cross-platform ones.

Telefonica has its Tu Me and Tu Go services. Orange has Libon. In the U.S., T-Mobile runs its own Bobsled. Carrier OTTs operate on the same principle as third-party ones, sometimes even offering free access without an existing data plan. However, it’s not always a rosy picture for network OTTs, which are struggling to gain traction. Telefonica’s Tu Me is shutting down in September 2013.

Partnerships with OTT providers

Some carriers prefer to partner with OTTs rather than compete head-on. The mix of services is aimed at offering consumers a richer mobile experience. In Southeast Asia, SingTel has partnered with Viber, and offers unlimited Viber chats via SMS in certain pre-paid markets. SingTel also partnered with Whatsapp to offer cheap access without the need to subscribe to more expensive data plans.

The rise of MVNOs

There is a rising trend in the use of prepaid services and virtual networks, even in the U.S., where the post-paid business model is the established norm.

Mobile virtual network operators (MVNOs) are companies that essentially buy data, call and SMS allocation from established carriers in bulk and re-sell these to users cheaply – think Tesco Mobile and GiffGaff in the UK.

In the US, Straight Talk runs on the network of AT&T, T-Mobile, Verizon and Sprint, and offers pre-paid call and messaging bundles that are both affordable and do not need stringent documentary requirements.

Unlimited minutes and SMS services offer a good alternative to ‘free’ chat apps. Granted that while OTTs offer a richer chat experience, if a user’s concern is volume without the cost, then MVNOs are a good alternative.

The future of messaging in Europe

Despite the difficulty among networks and mobile operators to provide consumers with better messaging apps, they are by no means limited in exploring other options. To stay in the competition, they must play the game to maintain critical relationships with their customers.

However, although there are options to win their subscribers back, according to the new report presented by the Telco 2.0 team, network revenue in Europe is said to drop 4 percent per year in the next five years (that is about 20 billion Euros). By 2020, their annual revenue will fall by 30 billion Euros. Worse, many operators are not likely to exist by 2020.

The way to ensure relevance in the future is to offer new digital services and business models, such as partnerships with OTT providers, alternative messaging services and a focus on delivering improved services through faster data pipes.

 

 

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Soy Periodista del sistema informativo de Radio ciudad del Mar, en la provincia de Cienfuegos, Cuba.
Esta entrada fue publicada en ciencia y técnica y etiquetada , , , . Guarda el enlace permanente.

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