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How much is social messaging costing telcos?

22 Feb 2012

Social messaging is costing the world’s telcos a fortune in lost SMS revenue, according to a new report from industry analysts Ovum.

Consumers have for some time been enjoying bypassing the calling and SMS rates of their telcos by using social messaging via networks like Facebook and Twitter, where the only cost is the minute amount of data.

However, the cost in lost revenue is mounting, Ovum putting the worldwide figure at US$13.9 billion in 2011, up from US$8.7 billion in 2010.

Ovum says it’s time for network operators to start re-thinking their legacy services, or wait for further drops in revenue.

Neha Dharia, consumer analyst at Ovum, says operators’ revenue is only going to come under more pressure as more consumers adopt smartphones.

However, the problem is also an opportunity, with partnerships with app developers providing the key.

"Operators must remain open to partnering with app developers, sharing end-user data and allowing integration with the user’s social connections,” Dharia says.

 "Operators are in a position of strength because they control the entire messaging structure through their access to the user’s phone number and usage data. The established billing relationship is a great advantage, as is the fact that operators control to a great extent the services to which the user is exposed.

"The most important factor, however, will be co-operation between telcos. They are no longer competing merely among themselves, but must work together to face the challenge from the major internet players.”