OTT pressure not major threat to SMS

While traditional SMS revenues are under pressure from rich messaging apps such as WhatsApp, iMessage and others, mobile operators will still generate a total of $722.7bn in revenues from SMS between 2011 and 2016, according to research released this week.

James Middleton

May 29, 2012

3 Min Read
OTT pressure not major threat to SMS
Time for telcos to get the message

While traditional SMS revenues are under pressure from rich messaging apps such as WhatsApp, iMessage and others, mobile operators will still generate a total of $722.7bn in revenues from SMS between 2011 and 2016, according to research released this week.

According to research house Informa Telecoms & Media, there will not be a uniform decline in mobile operators’ SMS traffic and revenues as a result of the adoption and use of over-the-top messaging services.

Pamela Clark-Dickson, senior analyst for Mobile Content & Applications, at Informa, instead believes, “Factors such as the operators’ pricing strategies, and the penetration of smartphones and mobile broadband in a market will determine how quickly and to what extent substitution occurs.

“For example, operators offering integrated tariffs that include a balanced proportion of voice, SMS and mobile data, are continuing to see growth in their SMS traffic and less impact on their SMS revenues.”

While Informa is forecasting either slowing growth or even a small decline in person-to-person SMS revenues in some developed regions and countries, total global SMS revenues will increase at a compound annual growth rate of three per cent over the next five years. Western Europe will generate the highest amount of SMS revenues globally between 2011 and 2016, totalling $174.1bn, followed by Asia Pacific’s developing markets, where SMS revenues will total $173.8bn between 2011 and 2016.

Globally, Informa forecasts that SMS traffic will total 9.4 trillion messages by 2016, up from 5.9 trillion messages in 2011. However, SMS’s share of global mobile messaging traffic will fall from 64.1 per cent in 2011, to 42.1 per cent in 2016. At the same time, global mobile instant messaging traffic will increase from 1.6 trillion messages in 2011 to 7.7 trillion messages in 2016, doubling its share of global messaging traffic from 17.1 per cent in 2011 to 34.6 per cent in 2016.

Informa also forecasts that, by 2016, mobile operators globally will still be generating a higher proportion of revenues from mobile IM than the third-party providers of OTT messaging services will, at $8.7bn or 54 per cent of total IM service revenues. However, the OTT messaging service providers’ share of IM revenues will climb from 37 per cent of total revenues in 2011, to $7.4bn or 46 per cent of total revenues in 2016.

MMS remains a lucrative service for mobile operators, punching above its weight in terms of revenues. While global MMS traffic is expected to represent just 1.7 per cent of global messaging traffic in 2016, at 387.5 billion events, global MMS revenues will represent 10.6 per cent of global messaging revenues within the same timeframe, at $20.7bn.

However, mobile email will be the second highest-revenue generator for mobile operators by 2016, generating $32bn in revenues, or 16.3 per cent of total global messaging revenues. “Mobile email is an important revenue-generating service for mobile operators, largely because they offer it as a service bundled with a mobile data plan,” said Clark-Dickson. In addition to Research in Motion’s BlackBerry services, mobile operators also generate revenues from their own-brand mobile email services and from offering data plans that are specifically tied to mobile email services that their subscribers can independently access on their devices.

About the Author

James Middleton

James Middleton is managing editor of telecoms.com | Follow him @telecomsjames

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