Technology Spectator reports that Ovum, a technology analysis firm, has taken a survey which shows mobile carriers losing as much as $14bn revenue in the past year, thanks to the rise of social messaging services like Apple’s iMessage.
The revenue loss is explained as the impact of users abandoning Short Messaging Services (SMS), or text messaging, which is traditionally amongst the most profitable services for mobile providers. The cost of transmitting a 140 character message across a network is almost nothing, but carriers charge up to 25c for the privilege. With the rise of smartphones like the iPhone, which have fully integrated email clients, SMS took a hit.
RIM, the makers of the Blackberry, had an even more impressive service in their Blackberry Messenger, which looked and felt like text messaging, but allowed Blackberry users to chat with their internet connection, rather than paying per message.
But it’s the release of iMessage which has really cost the providers. iMessage, available on all devices running iOS (the operating system on iPhones, iPads and touch-enabled iPods) allows full featured messaging that includes group chat, pictures, videos and other content, all over your internet connection. With over 150 million iDevices out there, that’s a lot of lost SMS customers.
Android, the open source mobile operating system developed by Google and featured on almost every black rectangle that isn’t an iPhone, has a number of iMessage like clients, such as GoChat. Windows Phone, Microsoft’s own mobile platform that is still in the early stages of a worldwide rollout (and expected to go big this year), will no doubt integrate MSN Messenger, still one of the most widely used chat clients. There are also chat clients for Facebook, Skype and Yahoo Chat available on all platforms. With Blackberry suffering from a downturn in its fortunes, some suspect that BBM will be rolled out onto other platforms before too long.
Lost SMS revenue is a good indicator for a phenomenon called “naked pipe", which is considered the next evolution for telecommunications. The idea is that with more and more of our services travelling digitally, we should only be really paying for the raw cost of transferring that data, rather than inflated prices for specific services. So for example:
A service provider charges (roughly) 10c per megabyte of data.
An SMS transmission takes about 50 Kilobytes of data to transmit.
There’s 1000 kilobytes of data in a megabyte, or the equivalent of 20 SMS messages.
The real cost of sending a text message should be one twentieth of 10c, or 0.5 cents. By charging 25 cents for a message, that’s an equivalent rate of $5 a megabyte!
Of course, this is just one example to illustrate a point. Some services DO cost more to provide, and SMS messaging is widely compatible around the world and across every platform. But as internet-based messaging services improve, and as smartphones get into more pockets, expect SMS to become cheaper, or extinct altogether.
Cap plans also erase the big profit margins previously enjoyed on text messaging. Optus (1300 279 414) offers free standard text messages on all of its cap plans over $59, and Virgin (1300 881 097) offers free text to other Virgin customers on plans as low as $29 a month.
In the meantime, check out our iPhone and BlackBerry pages to find the best handset deal for your needs, or call us on 1300 850 518 for help in finding the best plans.