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Operators should be just fine despite iMessage precedent

by Scott Bicheno on 10 June 2011, 13:34

Tags: General Business

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Con texts

In a recent piece of analysis, the WSJ announced: ‘Carriers Sweat as Texting Cools Off'. It's referring to the launch of iMessage, the iOS facility for instant messaging between iOS devices over data networks, which has been compared to the BBM facility on BlackBerry.

The worry worry for operators, or carriers as they're called in the US, is the precedent set by smartphone platforms increasingly allowing users to communicate via instant messaging. This is set to replace good-old text messaging, which is a nice source of revenue for operators and much higher margin than voice.

The WSJ piece even reveals that Google has been working on a similar service for Android, although that hardly comes as a surprise, both as a matter of strategic inevitability and given the activity around Google Talk and IM on Gmail. Nonetheless, it serves as a further indicator of the inevitability of written communications over data networks supplanting texting.

But my feeling is that this has been on the cards for some time, so Apple's announcement surely can't have caught operators unawares. Furthermore the traffic is merely switching from voice to data networks, which the operators also own, so while the margins may not be so great, it's not like they're being cut out of the picture.

Having received some scary mobile phone bills as I exceeded by data allowance by miles, despite being connected to Wi-Fi most of the time, I've learnt to switch off my mobile data connection at all times except when I'm out and about. In fact it's easy to believe that many apps are designed to favour mobile data over Wi-Fi.

I was in town recently and thus activated my 3G, but still kept an eye on my data usage. I was struck by the amount of data being used by predominantly background tasks, and I've tried to be quite diligent about keeping my app count under control. It strikes me that any use-cases that encourage people to use mobile data not only produce revenue for operators directly, but inevitably result in greater mobile data consumption in general.

There are a ton of apps out there that allow people to communicate via data networks, and they all have their pros and cons. With services like BBM and iMessage users can only communicate with people on the same platform. With apps such as CloudTalk, the person you want to communicate with needs to have the app installed too.

SMS is platform and app agnostic, and remains the most efficient way for many people to exchange short messages. Even if its popularity is starting to decline, I suspect there are few people prepared to opt out of being able to use SMS in order to shave a quid or two off their monthly tariff. Texting may be in terminal decline, but that decline is shallow and gives operators plenty of time to develop alternative revenue streams via their expensive mobile data networks.

 



HEXUS Forums :: 12 Comments

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There will always be those who want simple phones only, that can talk/text to anyone... my Dad for example. These people are often on PAYG, which I suspect is where the majority of SMS revenue comes from (10-12p a message, or free IF you top up at least £X a month - i.e. guaranteed revenue) - those of us on contract have been used to more free SMS than we can use for several years now (I get 3000... 100 a day, come on that's like 1 every 10 mins of awake time!), out price plan choice is more about cost, minutes and data with smartphones, SMS are always there thrown in to the deal.

I don't see the demise of SMS revenue until even the simplest of PAYG phones come with cheap always on data connections and cross platform messaging system as simple as SMS - and that is some years away if ever.
kingpotnoodle
I don't see the demise of SMS revenue until even the simplest of PAYG phones come with cheap always on data connections and cross platform messaging system as simple as SMS - and that is some years away if ever
Very true - a lot of PAYG come with no real data allowance (or should that be 'only a few PAYG come with a usable d.a.'?). E.g. my wife's phone (on Three) only get's about 30MB/month.

The other point is that SMS is like 'phone email', because you cast your message into the ether, and the other person picks it up when they can - on the other hand "instant" messaging is exactly that - you've got to be online/active to be able to use it. Plus, as ScottB's article points out, SMS is interconnectable (e.g. Nokia on Voda can easily send/receive to Sony on T-Mobile), IM isn't.

That being the case (personally speaking) it's mobile email that's the threat to SMS, not IM. That said, weren't we all supposed to also be using video calling by now, rather than that "incredibly primitive" voice calling? :rolleyes:
crossy
... weren't we all supposed to also be using video calling by now ...

Indeed we were, and to be riding in hovercars, and have colonies on the moon! Where are the colonies??!?!?! ;)

The disappointing thing for me is just how heavily tarifs are weighted towards calls, and particularly texts, over mobile data. My current tarrif gives me 100 minutes and 500 texts, but "only" 500MB of data. Since I only send about 25 texts a month, I find it very frustrating. And I can't get a plan with a higher data allowance without signing up for 3x - 5x as many minutes and text, when I already have > 10x as many as I need! I think it's about time networks realised that a lot of people are getting their smartphones to use as always-connected PDAs, and did plans accordingly (hell, why not an unlimited data plan with a fixed charge for minutes & texts? I'd sign up to it!)
scaryjim
Where are the colonies??!?!?! ;)

I blame the space Nazis:

http://www.ironsky.net/ [ironsky.net]
scaryjim
Indeed we were, and to be riding in hovercars, and have colonies on the moon! Where are the colonies??!?!?! ;)
Given the state of some of the roads, a hovercar would make a heck of a lot of sense. :(
scaryjim
The disappointing thing for me is just how heavily tarifs are weighted towards calls, and particularly texts, over mobile data. My current tarrif gives me 100 minutes and 500 texts, but "only" 500MB of data. Since I only send about 25 texts a month, I find it very frustrating. And I can't get a plan with a higher data allowance without signing up for 3x - 5x as many minutes and text, when I already have > 10x as many as I need! I think it's about time networks realised that a lot of people are getting their smartphones to use as always-connected PDAs, and did plans accordingly (hell, why not an unlimited data plan with a fixed charge for minutes & texts? I'd sign up to it!)
I don't change my phone very often, but that's something that always annoys - that "smartphones" seem to be subjected by the carriers to the same assumptions as dumbphones. The only notable exception is Three, but then again, they've always been a data-heavy carrier. Not that I'm singing Three's praises, (because their support is d-i-r-e), but I wondered why the other carriers haven't tried to match/exceed their plans.

Hopefully with the rise-and-rise of smartphones, the penny'll eventually drop and we'll get data plans with the option of voice/text rather than voice/text plans with optional data.

Of course, a cynic could argue that the reason that we see "data lite" plans at the moment, is that the carriers realise that their networks would jam up like motorways in bank holidays if they stopped ... "discouraging" ... people from transferring a lot of data.