Ever since I have started using my Nokia N-8 my mobile bill has dropped significantly. It is down by more than 40%. When I analyzed this month’s bill I suddenly realized that I had much fewer calls and the number of SMS’s has dropped drastically as well.
Though my conversations though my phone have increased, the channels have become more diverse. I use G talk, Whats App and Skype to talk to my close friends, Office Communicator to connect with my current and former colleagues. Facebook chat to talk to my trusted network. All these have eaten into the mobile operator’s share of my wallet.
So am I the only one feeling this way?
Not exactly, in a recent report the management consultant firm Ovum estimates that mobile operators lost about $13.9 Billion due to social messaging. The number was close to $ 8.7 billion in 2010. Same is the current upcoming trend in India. So clearly this is a global phenomenon which is adding on to the woes of the mobile operators resulting in a further decline in ARPU (Average revenue per user).
Internet Protocol-based social messaging is cutting into the profitable revenue streams generated by SMS and Multimedia Messaging Service (MMS).
This loss today represents almost 9 % of the total revenue from messaging. Applications like Blackberry messenger, G talk, Skype, Facebook Chat, ChatOn and Whats App, Tweeter are eating into the SMS revenues of most operators globally. The new web-based apps also allow users to group chat, have 1:1 conversations, and supports attachments, emoticons and more.
As users lap up mobile internet services, the web giants are strengthening their relationships with consumers, while the telcos are finding their connections with customers reduced to a monthly bill and an occasional handset upgrade. The operators complain that the web giants are hitching a free ride on the networks in which they are investing billions, while free services like Facebook Messenger are eating into the SMS text revenues.
Adding to this, TRAI has made many changes in SMS delivery policies taking up daily SMS limit to just 200 SMS hence raising operator concerns.
Today in little more than a decade the social network apps have almost started what would be the end of the SMS. Mobile operators need to relook at their services in order to stay competitive in the future. But it said it is questionable whether in the short term that incremental data revenues for tweets, status updates and check-ins, and the more substantial data usage from services like YouTube, can offset the loss from the more lucrative messaging services that operators built up and still count on for revenues.
So what can mobile operators do to reverse the situation?
1. Concentrate on data services: Most operators’ today focus more on voice and messages, but with the rise of smart phones it is data services that would drive revenue. A good example is the increase in data services revenue for NTT DoCoMo in Japan after the advent of smart phones.
2. Mobile broadband: With launch of 3G services the faster mobile internet experience would be through broadband and this is yet another area of growth for mobile operators.
3. Collaboration with App developers: Currently the apps built for various platforms are the ones that will eventually eat into the operator revenues. Working with these developers, operators can co-create apps that would keep the users on the mobile operator’s network. For example if I had a choice between the Airtel Live and a App from Wall Street Journal, the user experience of the WSJ app is far superior to Airtel Live, hence despite being an Airtel customer for over a decade, I have not spend more than an hour till date on Airtel Live.
4. Value added services: Increasingly many transactions are shifting to the mobile phone. Services like mobile banking, mobile commerce and mobile ticketing would become the norm rather than the exception. It is time that the operators work collaboratively with this increased ecosystem and enhance their services. With decrease in SMS use in P2P (Person to Person) developers are more concentrating on A2P (Application to Person) and P2A (Person to Application). Many machines are now working on SMS platforms which in future will be shifted to apps based platforms.
But this is just the tip of the ice-berg. What are the other strategies that operators can run to leverage the growth of social media and smart phones?