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Guest View: Setting foot into a new era of mobile communication

Joby Babu | June 11, 2013
Partnership between a mobile operator and a messaging app provider allows the mobile operator to compensate loss of SMS revenue with high data usage.

The basic needs of society are often triggers for innovations in the technology and telecom space across the world. While there might be several million phones out there in the market, one thing that binds all of them together is their ability to help users stay connected with each other. Similarly, mobile messaging applications equip users to not only reach out to their personal and professional connections but allow them to do this at a much lesser cost.

The success of messaging applications or external communication platforms as I like to call them is creating a series of creative disruptions in the telecom space. A relatively new concept just a year ago, today there exists over 15 messaging applications. The simple fact that you can now connect with anyone in the world, whenever you want is gaining such popularity that it's making a 20-year-old concept, the SMS, almost obsolete.  With the overwhelming uptake by consumers, it is easy to see why these apps are so popular - they come bearing many advantages - they are free to download, messages are not limited to 160 characters the way text messages are and they allow for creative expressionism.

Its tremendous popularity especially in the Asian market, however, has become a major concern for mobile operators who have had to give up a huge portion of their SMS revenue. However, this disruption has brought high value to consumers who no longer have to shell out huge amounts to call or message people they would like to reach out to, especially if interstate or international.  Research firm Ovum estimates that by 2016, instant messaging apps will cost telecom carriers about $54 billion in revenue. Using Hong Kong as an example, the country reported that 10.9 million and 19.8 million SMS messages were sent and received on 1 January 2013, plunging 58.9 percent and down 44.4 percent respectively from a year earlier.

While we question the existing state of SMS and the relative revenue it generates, we cannot deny that smart telecom operators are seeing the potential and making the run towards data. It is obvious that this increase in messaging applications correlates to the increasing number of smartphones globally, and with more affordable mobile Internet access, as well as the introduction of a variety of data plans, it is an attractive sector for telcos to tap into, thereby gaining revenue lost through the decline of SMS.

Capitalising on the consumer shift

Partnerships with communication platforms allow telecom operators to drive data usage among their existing users like never before. Tie-ups with mobile Internet companies give operators the added benefit that they missed out on during the PC era when social networks constricted themselves only to the mercy of the computer. Telcos are aggressively looking to capitalise on the consumer shift from PC to mobile to grow their existing customer base. According to recent Nimbuzz data, there are more than 1 billion minutes of calls made per month and more than 102 billion messages sent and received per month, which is much more than that of some (or any) of the biggest global operators.

 

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