Ovum says social messaging to cost telcos billions

Research company Ovum reports social messaging services – like WhatsApp – will cost telecommunications carriers US$86 billion a year by 2020.

Ovem analyst Neha Dharia talks about the changing relationships between network operators and the so-called over-the-top OTT companies that duplicate telecoms services like calling and messaging.

Social messaging services are often free or come as part of cheap packages, making them attractive to users. They reduce a carrier’s ability to charge for services making them less profitable.

Make that nominally free. Usually the social media companies providing messaging services require users to hand over personal data that can be used to target advertising.

Mobile carriers can't clip the social messaging ticket

When a user sends a Facebook message or makes a Skype call there’s a small data use cost, but carriers don’t earn SMS or call revenue.

We’re already seeing falling SMS use. Another research outfit, Informa, says internet message traffic recently went past SMS traffic.

Texting – which had its 20th birthday in December – was a cash cow for carriers. It costs them almost nothing to provide the service – until recently a simple message of a few characters could cost as much as NZ 25 cents for 128 bytes of data – that equates to tens of thousands of dollars per GB of data.

Carriers offset the loss from messaging by selling expensive mobile data bundles – the price per mobile data GB is still high when compared to data delivered over copper or fibre. However, OTT services can bypass mobile data and send messages using much cheaper, sometimes even free, WiFi connections.