Carriers see high-margin SMS business slow down

By on June 10, 2011, 10:00 AM

For years wireless carriers in the U.S. have been making a good chunk of revenue from text messaging, charging anything from around 20 cents a text to $20 a month for an unlimited texting plan. But growth in the volume of text messaging is slowing down as smartphones with access to messaging apps and email continue to rise.

According to the wireless trade organization, 'only' 1 trillion texts were sent in the second half of 2010. And while that still represents an 8.7% increase from the prior six months, it's also the slimmest gain in the past decade.

The trend will likely to continue with services like BlackBerry's Messenger and the yet to be launched iMessage from Apple. Interestingly, the Wall Street Journal says that Google is also working on its own instant messaging service for Android -- though they already have Google Talk. Whatever the case, AT&T believes that high demand for texting plans will persist for a long time because they are not locked down to a single platform.

Instant messaging apps from WhatsApp to Kik let people exchange text and photos across different platforms without being charged extra, but the fact remains that a vast majority of people are still using so-called feature phones where these apps aren't available. That's going to change over time as smartphone adoption continues to grow, and we're not only going to see a decline in SMS usage but also in regular voice calls as people start using VoIP.

Unfortunately, some carriers will likely charge customers more for data use to make up for the decline.

In my case I haven't had the need to pay for a texting plan in a while since $30-40 plans already come with an unlimited SMS allowance where I live, and even so I still rely more on WhatsApp -- or BlackBerry Messenger before I switched phones. I'm guessing this will vary significantly from countries and carriers. Are you still paying for SMS?

User Comments: 11

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treeski treeski said:

Platform specific messenger apps are a huge step backward. I'll stick to text messaging and/or other IM services.

Win7Dev said:

Technically I am. I have the nationwide talk and text plan from verizon. I still have another year left on my contract, and I think I'm going to renew it as the same one. I'm thinking about upgrading to a droid though once my contract is up.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

I've been a user of Trillian for years... I can use it seamlessly on PC, Mac, Blackberry, Android, iPhone. And it connects to all the major chat networks, making it even more universal. It's recently become my go-to messaging app, since our office has diverged from an exclusively Blackberry user base. Up until then, it was usually equal parts Trillian and Blackberry Messenger, with the occasional SMS thrown in.

Punkid said:

i get 1200 text message, valid for 7 days, for 7 ruppees which is almost 0.081 USD ....that boils down to 0.000068 USD per sms.....i consider that to be free :P

Kralnor said:

I still own a dumbphone (smartphones are just sill too expensive for my taste) and I pay ~0.03 USD per text message.

Guest said:

The problem I have with SMS is what a rip off it is for the consumers who are "paying" on the per message basis...not sure you can even do that anymore, but, it costs the carriers ABSOLUTELY NOTHING to send or receive a text message.

Oh the states, there are pretty much just two carriers left, so you don't have a choice.

AT&T, Verizon...after at&t gobbles up t-mobile, and Verizon will (have to) make a play for Sprint, it will be just those two left. Prices will continue to go up, and choice in phones will continue to for the iphoneX, droid whatever and maybe two or three other phones.

People in the states have little choice over phones & carriers anymore.

cyrusjumpjet cyrusjumpjet said:

People actually use Blackberry Messenger?

fpsgamerJR62 said:

I use a cheap Samsung feature phone with a prepaid SIM card so voice calls and SMS are pretty much my only options. I haven't felt to urge to upgrade to a smartphone yet because companies here have pretty stiff data charges and current smartphone models practically need to be recharged daily compared to my dumb phone which only needs to be recharged every 5-6 weeks because of its 2000 Mah battery.

Guest said:

Yeah, I find it funny that the carriers make so much money off of text messages. The data is already being sent whether or not a text is in it or not:

so it's not like they are loosing money, they just aren't making as big a profit

coolazeem said:

I pay Rs.98(~$2.19) for 15000 sms's per month here in India...

Guest said:

I agree that smart phones are having an influence on the level of texts being send but I honestly thing that <a href="">sms for business</a> will still remain strong. Since I've had my Iphone alright fair enough I'll admit that I've downloaded whatsapp but I still continue to use text messages because I don't think app are reliable. Especially when I want to send something really important, I always make sure that I send it via text instead. So it's a valid point but I have to say that I disagree on the extent of the outcome.

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