Wireless Carriers Worried About Use of OTT Apps

As over-the-top (OTT) messaging apps like Skype, WhatsApp and MessageMe continue to gain popularity among mobile users, many mobile operators have been vocal about the drain this has on traditional SMS revenue. In fact, a new survey of carriers conducted at the Competitive Carriers Association (CCA) Global Expo in April by Smith Micro Software has confirmed carriers' concerns regarding OTT use.

Indeed, 82 percent of respondents said they aren't effectively monetizing OTT social messaging apps, while 62 percent are worried about the impact such apps will have on revenue.

"Ovum predicts that operators will lose $32 billion in SMS revenue to OTT social messaging apps in 2013, and that this number will increase to $86 billion in 2020. As our survey results confirm, operators are feeling the pain," said Jim Mains, senior vice president of global products and programs at Smith Micro. "The fact is operators are in an excellent position to raise the bar with today's social messaging services. They offer a more secure, trusted and reliable service; whereas with OTT apps, do you really know who has access to your messages and personal information?"

In an age where many consumers are willing to hand over personal information in exchange for free services, Mains' point about privacy isn't the only point worth considering. Aside from the cost savings that OTT apps offer users compared to SMS, they also offer a more complete chat experience with group messaging, integrated media sharing and much more.

Operators have addressed this with rich communication services (RCS), marketed by the GSMA under the joyn brand, which combines instant messaging, video sharing and file transfer with voice and SMS. However, with users getting further entrenched in OTT apps as time passes — according to data collected by Informa Telecoms & Media, OTT messaging traffic volume will be twice that of SMS messaging by the end of the year — operators have a long road ahead in capturing market interest.

Meanwhile, according to Smith Micro's survey, 53 percent of operators don't offer any form of advanced visual messaging.