Global SMS revenue declines for first time

Global spend on traditional operator messaging services, including SMS and MMS, declined for the first time in 2013, according to research firm Strategy Analytics. The figures suggest mobile operators are beginning to see the effect of adoption of OTT and alternative instant messaging services.

The research firm reported that while the volume of SMS messages remained flat in 2013, operator messaging services revenue decline by four per cent during the year. The firm added that the rise in OTT messaging services, such as WhatsApp and WeChat, will cause a 20 per cent decline in global operator messaging revenue by 2017. The situation is expected to be particularly stark in North America and Western Europe where spend on SMS and MMS services is expected to decline by 38 per cent and 28 per cent respectively by 2017.

A separate forecast from Deloitte suggested that the number of instant messages sent globally in 2014 will be double the volume of SMS messages. In 2012, 11 instant messages were sent for every ten SMS messages.

While the consultancy firm forecasts that instant messages will continue to be the most popular form of mobile communication – with more IMs expected to be sent than SMS, emails or phone calls until 2018, SMS will remain more valuable to operators for the foreseeable future. In 2014, Deloitte expects operators to generate more than £60bn from SMS services in 2014, which represents 50 times the revenue from all instant messaging services globally.

“There are several ways for operators to respond to the negative long-term outlook for SMS,” the firm wrote in a report. “One would be to try and create an operator-owned OTT messaging service to rival the existing providers. For this to work as well as SMS, it would need to be a global standard; if the industry relies on opt-ins on a per carrier basis, adoption is likely to be too slow.”

The firm added that another option is to incorporate instant messaging features into SMS, such as group chat functionality and audio and video attachments.

“A third option would be, rather than compete with mobile IM services, to encourage their adoption, so as to encourage take-up and usage of mobile data,” Deloitte added.