RCS may not help now: OTT to cause $54 billion SMS revenue loss to telecoms by 2016

Telecom Lead India: Over-the-top (OTT) is set to disturb SMS revenue of operators. Telecom operators will lose $54 billion in SMS revenue by 2016 due to social messaging services on smartphones.

Neha Dharia, consumer telecoms analyst at Ovum

According to Ovum, the $54 billion SMS revenue loss is more than double the $23 billion operators are expected to have lost by the end of 2012.

To curb the loss, collaboration with handset manufacturers is importa

The increase in the number of OTT players demonstrates that social messaging is not a short-term trend. Operators in Europe and Asia-Pacific will be affected the most, and should be vigilant with respect to OTT messaging activity.

“Social messaging is becoming more pervasive, and operators are coming under increased pressure to drive revenues from the messaging component of their communications businesses,” said Neha Dharia, consumer telecoms analyst at Ovum. “Operators need to understand the impact of social messaging apps on consumer behavior, both in terms of changing communication patterns and the impact on SMS revenues, and offer services to suit.”

WhatsApp, a social messaging brand, has increased its penetration in markets such as Singapore and the Netherlands. Ovum expects smaller players such as textPlus, Pinterest, and fring to cause further disruption in the messaging space.

OTT players are changing consumers’ messaging preferences, and the pressure they are exerting on operators’ messaging services is forcing them to offer increased SMS bundles and to experiment with messaging pricing models, further dampening revenue growth.

Since Rich Communication Suite (RCS) is not expected to reach the mass market before 2014, mobile operators will have to rely on innovative pricing strategies and partnerships.

Recently, TelecomLead.com reported that mobile network operators need to collaborate with content partners and over-the-top (OTT) players if they want to avoid the risk of uncontrolled revenue loss.

A research report suggest that mobile operators are coming under pressure to improve mobile telecom service profit margins as well as bring in new services to counter the competition from Over the Top services such as Skype, Viber, Whatsapp, and FaceTime. Mobile operators have had limited options with 3G but 4G LTE should give the mobile operators some new tools.


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