SMS scarcely feeling the heat from over-the-top
The operators' cash cow will keep growing until at least 2017, although its share of the burgeoning messaging space will fall
Published: 30 May, 2012
Prophecies of doom about the cellcos' SMS cash cow may be overplayed, according to new studies. Despite the rising popularity of over-the-top messaging applications like iMessage and WhatsApp, conventional SMS will still see annual growth of 3% a year for the next five years, delivering $722.7bn in operator revenues worldwide between 2011 and 2016.
These are the findings of a report from analysts at Informa, which forecasts that SMS traffic will reach 9.4 trillion messages by 2016, up from 5.9 trillion last year. However, as consumers' appetite for instant communications mushrooms and more emerging market users gain webphones, SMS's share of all global mobile messaging traffic will nosedive, from over 64% in 2011 to just over 42% in 2016.
Total mobile IM traffic will increase from 1.6 trillion messages to 7.7 trillion messages in the same period, doubling its share of the market from 17.1% to 34.6% - though it may be less clear who monetizes all this activity, and how, than in the SMS world.
On that point, the analysts believe that mobile IM will generate higher revenues than third party OTT messaging services in the period of the study, generating $8.7bn worldwide, although OTT service revenues will climb to $7.4bn by 2016.
"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," said Informa senior analyst Pamela Clark-Dickson. "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."
Both mobile IM and OTT services will continue to lag behind mobile email, which will drive operator revenues of $32bn by 2016. "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.