Mobile phone operators can no longer depend on the revenue from SMS text messaging. Margins are being impacted by “chat-apps” from over-the-top (OTT) providers like Skype, WhatsApp and Viber, which entice customers to their services with free deals and unlimited talk times.
Globally, more than 19.1 billion messages were sent daily using chat apps in 2012, as compared to 17.6 billion SMS messages in the same year, according to research firm Informa. In particular, the number of OTT users reached a record high in 2013 and this is anticipated to increase dramatically in the next few years.
As much as consumers like using their phones for voice calls, texting has clearly become the standard communication method for many demographic groups, and even more so when interactive features such as sharing images, stickers and voice recordings are made available on the same platform.
OTT providers can provide a range of services, trading messaging, video and photos online just like the mobile providers -- but at a fraction of the cost or free of charge to the end user -- by supporting their revenue models with in-app advertising. This is of concern to operators globally, having built, invested in and continually maintaining the network infrastructure that OTT players are taking advantage of.
Operators in Singapore are witnessing a decline in the popularity of SMS, mirroring a trend that has been witnessed in developed markets within the region. According to Frost & Sullivan, developed markets like Japan and Australia started to see a decline in SMS as early as four to five years back while emerging markets like Malaysia started noticing the decline in 2013.
Worldwide, WhatsApp boasts over 450 million users while Skype sees over 250 million monthly users. The popularity of OTT providers will not disappear any time soon, and operators are no doubt rightfully worried about the impact this will have on traditional voice and text revenues.
In Singapore, SingTel proposed charging OTT providers like WhatsApp and Skype for the use of its network, in a move to monetize demand from users for chat-apps. StarHub is said to be considering a model that will charge OTT players on a monthly basis.