Mobile Providers Losing Billions to Social Messaging

Social networks have the potential to disrupt any number of established industries, and indeed are already doing so, with big negative impacts already being felt by mobile network operators, according to research outfit Ovum.

Specifically, free social media message services that compete with short message services (SMS) cost mobile network operators some $13.9 billion in lost SMS revenue in 2011 alone, Ovum estimates. The list of rivals includes Facebook chat, Blackberry Messenger, and Whatsapp. And the continuing proliferation of smartphones means that this threat to SMS revenues will only become more pervasive.

Of course, mobile operators stand to make a certain amount of revenue from mobile data costs associated with social media apps; however Ovum didn’t offer an estimate for revenue gains from mobile data fees associated with social media usage.

In any event the global mobile network business is probably big enough to sustain some revenue losses. In 2011 the total mobile data market probably grew 22.5% to $314.7 billion, according to a separate estimate from Gartner released in August 2011; and in October of last year Machina Research predicted total mobile data revenues could grow to $660 billion by 2020.  

Meanwhile Portio Research estimates that the global text messaging business generated $179.2 billion in revenue for cellular service providers in 2010, including $114.6 billion from SMS alone, with the latter category predicted to increase to $159 billion by 2015. Whether these forecasts stand up in the face of the mobile social messaging trend remains to be seen.

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