Mobile data revenue to overtake SMS next year – Ovum

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Analyst firm says the increase in popularity of social messaging apps will allow data services to become largest non-voice revenue generator

Mobile data is set to overtake SMS as the largest contributor to non-voice revenues for operators next year, according to analyst firm Ovum.

According to the firm the prevalence of social messaging apps such as WhatsApp, Viber and Facebook’s instant messenger service has eaten away at SMS revenues while simultaneously increasing data revenues.

Ovum forecasts social messaging apps will cost operators £21bn in lost SMS revenues in 2013, rising to £51.6bn by 2020. It also predicts mobile data services will grow in popularity, contributing 43 per cent of non-voice revenue in 2014, with SMS contributing down to 40 per cent.

If the forecasts are correct this will be the first year SMS revenues have not contributed the highest percentage of worldwide operators’ non-voice revenues.

Ovum consumer analyst Neha Dharia said she expects operators to start to partner with social messaging partners to get a share of messaging providers’ subscription costs in return for giving them greater reach.

Dharia said: “There are several reasons for the erosion of messaging revenues, and the rise of social messaging players is a key factor. The bundling of SMS with calling minutes and mobile broadband plans has also contributed to the decline of messaging revenues.

“The period 2013–15 will be crucial in terms of the relationship between telcos and OTT players in the communication space. Ovum expects to see partnerships in this area intensify during the course of 2013. WhatsApp already has a number of operator partnerships, including a roaming pass with Three in Hong Kong and the GSM-based service offered by Reliance Communications in India.

“Facebook has a long history of working with operators, and its new partnership with 18 global operators will allow free or discounted data access to the social network’s messaging platform. Social messaging player Viber’s CEO has stated that the company will be happy to share revenues from paid services once it begins to charge consumers.

“Such operator partnerships help OTT players to broaden their reach, while the operators benefit from the sale of subscription plans.”

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