OTT apps eat SMS revenue


OTT mobile apps boost mobile data usage and cannibalise SMS revenue

Mobile email and over the top (OTT) mobile apps such as Whatsapp, Viber and iMessage have been altering the underlying behaviours of mobile end users, according to a new study.

ABI Research stated that in the first quarter of 2012, minutes of use (voice) per user showed the greatest declines in North America (minus 5.3%), Asia-Pacific ( down 0.6%), and Western Europe ( decreased by 0.4%). 'The only region with any meaningful positive growth is the Middle East with a 3.5% increase,' said Ying Kang Tan, research associate at ABI Research.

Sent message volumes are also experiencing a slow down, but more so in emerging markets than developed markets according to ABI. Latin America, Africa, and Asia-Pacific demonstrated minus 5.8%, minus 0.7% and minus 0.2% declines quarter on quarter respectively.

A number of operators, such as Singtel and Vodafone, have started to counter OTT apps such as Whatsapp by increasing the quota of bundled SMS their end users are allocated.

Such initiatives may come across as closing the stable door after the horse has bolted, said ABI. However, there are indications that OTT messaging platforms eclipse SMS in all aspects. Often Whatsapp end users only use the messaging platform for a select number of contacts in their Whatsapp list. There have been privacy concerns regarding contact lists held on the Whatsapp server, slow delivery times when data coverage is sparse, as well as contributing to maxed out data quotas if the user is on a limited data plan.

In contrast, mobile data traffic continues its rapidly ascending arc. 2012 is expected to close out the year with 69% growth to 13.4 Exabytes. 'While there is considerable interest in 4G, 3G subscriptions continue to grow because most low-tier and mid-tier handsets are 3G, whereas 4G will remain a premium product for the next couple of years. However, 4G traffic will grow disproportionately to its subscriber base as LTE will encourage greater use of high definition streaming and adoption of rich media/video social networking services,' commented Jake Saunders, VP for forecasting at ABI Research. 'Over the forecast period, 4G has a CAGR of 120% compared to 60% for 3G.'


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