Feature Article

October 28, 2013

Can Service Providers Compete with OTT Messaging?

About 7 percent of surveyed U.S. users prefer social messaging to carrier-provided messaging, while 13 percent of respondents in the United Kingdom prefer over-the-top (OTT), third-party messaging apps. For some observers, that will suggest that carriers still have an opportunity to enhance carrier messaging and retain user allegiance.

The issue, perhaps, is just how much operators can afford to invest, and how much better the experience has to become, to wean users off “free or cheap to use” alternatives, especially when the over the top alternatives have obtained the necessary network effects and scale.

Of respondents who prefer to communicate using social messaging applications, the majority in both the U.S. market (43 percent) and U.K. market (39 percent) say they prefer them because they have more enhanced features.

But users who prefer social or over-the-top messaging also prefer the lower costs. Some 34 percent of respondents in the U.S. and U.K. indicated they prefer social messaging applications because they are free or cheaper.


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That suggests an opportunity for service providers to maintain market share if they can enhance the messaging experience, Infinite Convergence Solutions suggests. But users also will consider application prices or fees as a key part of the decision to use a particular messaging mode.

In contrast, 45 percent of survey respondents in the United States prefer mobile operator-provided messaging services for communication, compared to social messaging applications, a bit more than the 42 percent who also prefer mobile operator-provided messaging services.

About 22 percent of U.S. respondents say their preference depends on the situation, and 27 percent in the United Kingdom likewise say preference depends on the use case.

Some 26 percent of U.S. respondents have no preference, as well as 18 percent of U.K. respondents.

Although social messaging applications are threatening mobile operators' revenues and customer base, mobile operators still have an opportunity to provide a more compelling messaging experience to subscribers, argues Infinite Convergence Solutions, a next-generation wireless messaging and mobility solutions provider that sponsored the survey.

The strategy implications are not completely clear. Respondents say both enhanced features and lower cost are attractive. So should service providers work to enhance the experience or simply harvest revenues as long as possible, on the assumption users will gravitate to third party apps in any case?

Or should mobile service providers simply assume users will choose to use both types of services, and simply work to provide the carrier services at low cost, while emphasizing the universality of carrier messaging (everybody can send and receive text messages)?

The study found 35 percent of smart phone owners in the United States and 43 percent in the United Kingdom say the inability to chat with people who aren't using the same social messaging application is their least favorite aspect of using such apps.

Some might argue the third-party apps already have adoption wide enough to make it tough for carriers to regain share.

In the United States, Facebook chat or message threads are used by 60 percent of respondents on their phones. Some 42 percent use iMessage while 25 percent use Skype.

In the United Kingdom, 56 percent of respondents use Facebook messaging features on their phone. Some 36 percent use WhatsApp and 27 percent use Skype.

When asked what feature is most important for mobile messaging, 45 percent of U.S. respondents and 40 percent of U.K. respondents rank the ability to communicate with all contacts regardless of device or carrier service highest.




Edited by Alisen Downey


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