Carriers lost $13.9 billion in SMS revenue during 2011

By on February 23, 2012, 7:30 AM

Research firm Ovum estimates that wireless providers lost nearly $14 billion in SMS revenue during 2011 due to social messaging. If past trends are any indication, that number is likely to increase moving forward as Ovum warns operators to rework their legacy services in order to remain relevant in the messaging market.

The $13.9 billion hit is up from an estimated $8.7 billion loss in 2010 largely in part to alternative chat methods. Many social networking sites like Facebook have launched messaging apps that allow friends to chat on-the-fly without utilizing SMS. Instant-messaging clients are now accessible on more mobile phones than before and OS-specific features like BlackBerry Messenger and iMessage aren’t exactly helping matters for carriers. 

Although it sounds like a substantial amount of revenue lost (and it is), the figures represent roughly 6 percent of total messaging revenue in 2010 and 9 percent in 2011. With the popularity of Apple’s iPhone and iPad and a full year of iMessage in the pipeline, wireless providers should expect to lose even more money this year.

Of course, carriers are well aware of the changing landscape and many have already taken action to ease the bleeding. In August 2011, an AT&T spokesperson confirmed that the company would no longer offer an introductory 1,000 message bundle. This move forced customers to either sign up for a $20 unlimited plan or accept pay-per-message rates of $0.20 per SMS or $0.30 per media message.

SMS images from Shutterstock.




User Comments: 28

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Guest said:

consumers avoid text messaging due to price and use alternative instant messaging

AT&T counter acts that behavior by increasing the price of text messaging

...is AT&T now run by Obama?

Guest said:

How much does it cost the carrier to actually transmitt an SMS message? How much were they charging the customer for this? No wonder customers moved to alternatives.

Acid said:

It was my understanding that text messages cost phone companies essentially nothing anyway, as the messages piggyback off communications the phone constantly makes with control towers, that would otherwise be filled with blank data (Hence the limited characters per text).

Guest said:

This is great news! I think Obama would be happy to see this money channeled back to the people. Good for him!

Burty117 Burty117, TechSpot Chancellor, said:

iMessage, BBM, Whatsapp, Facebook, FaceTime etc... Txt messaging is dying, first and formost because of the price, I mean, Acid is right, it litterally costs them nothing to send them, 2p would be a reasonable price, but they charge more like 10p? and they put limits on it on contracts, Plus they charge so much for data bundles you kinda want to use it to the max so therefore using an alternative such as the ones i listed use the data plan instead.

Basically, these company's dug themselves a hole and are now surprised by the revenue figures?

Wagan8r Wagan8r said:

Ovum?? Seriously? They named their company Ovum? What next, a research firm called Sperm?

Guest said:

My company is called sperm.

1 person liked this | Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

hahahanoobs hahahanoobs said:

AT&T isn't that bright. You need a Data plan or WiFi to use iMessage and chat messengers. Not sure what BBM uses. Didn't anyone tell AT&T that Data plans are more expensive than SMS plans?

It's funny this story came out the same day I found an app called Dell Voice (Canada Only) that allows free incoming and outgoing calls, caller ID, call waiting, 911 service, voicemail, can be used to call cell phones and landlines, gives you a local number, works over 3G/4G or WiFi, and doesn't require the other person to have the app. For free SMS over 3G/4G or WiFi, I have an app called Text Me that also doesn't require the receiver to install the app. I may drop my Voice and SMS plans for a Data only plan if this Dell Voice continues to impress me, and doesn't kill my battery having it run in the background 24/7. Cell phone providers can suck it. They've robbed us long enough.

Guest said:

Does anyone else find it Ironic that Text Messaging killed the Instant Messenger on the computer and now the Instant Messenger is on the cell phone is killing Text Messaging?

captainawesome captainawesome said:

Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

+1 BRILLIANT comment !

Wendig0 Wendig0, TechSpot Paladin, said:

Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

Best guest quote I've seen on this site! You win 1000 internets, sir.

dikbozo said:

Guest said:

How much does it cost the carrier to actually transmitt an SMS message? How much were they charging the customer for this? No wonder customers moved to alternatives.

The cost per message transmission is in the realm of thousands per penny, due to the size limit.

http://gthing.net/the-true-price-of-sms-messages

"A standard SMS message contains up to 140 bytes (1120 bits) of data - this takes care of the 160 characters allowed in your text message. This might not make sense at first, until you realize that SMS uses 7 - not 8 - bit characters - leaving you with 128 possible character values instead of the normal 256. So 1120bits/7bits = 160 characters. So our total message length is about a tenth of a kilobyte (.13671875 Kbytes)." as per above.

In and out data charges per month on a network, almost ANY network, are much much lower than via SMS.

The concept of carriers 'losing money' on these things is equivalent to the movie and music studios losing money due to file sharing. Both are not happening and these are being used to inflate prices for those who do use them.

veLa veLa said:

Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

You are a saint among men.

Ranger1st Ranger1st said:

I believe the averaged markup on SMS/text messaging is ~ 6000% here in Canada, I suspect it's very similar in the US. So that ' billions' should be closer to a few million in actual service cost plus system upkeep. the rest is gouging.

Guest said:

Quote:

Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

You are an intensely beautiful human being. That quote is so incredible and grossly incandescent that I, for a second, thought my eyes were deceived by some spell. You have taken letters and words and turned it into something gloriously divine; for this i thank you and balm your feet.

dikbozo said:

"Muggers don't lose income when the robbery isn't successful."

This quote should also be applied to RIAA and MPAA.

Guest said:

From a linguistic perspective it is interesting to see how cuss words develop. In the future the I think expressions like RIAA and MPAA will be banned from schools; much like fu?/ and as is today.

You don't want to spit chewing gum on the streets of Singapore, much like you would not want to utter "RIAA" in the company of legends like Mahatma Gandhi.

Guest said:

Is this like PIRACY? Where the user selected an alternative route to the same thing which doesn't cost anywhere near as much? Or was that Fair Use? Maybe AT&T should launch a campaign against REVENUE THEFT. Or pass laws against ALIENATION OF REVENUES. That should bamboozle Congress into greater inaction. I'm sure the boys on K Street could make some serious "donations" to make that real.

Guest said:

Texting should be free...Just raise the monthly cost like they will do anyways,

Guest said:

QFT

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

+1

p51d007 said:

Same thing is going to happen with DATA. They are screwing consumers on data now, just like they did with SMS messaging.

bexwhitt said:

text message charges are theft, especially in the states where they have to pay to receive them as well. It costs the mobile companies virtually nothing to provide a text message service so they can just suck it up as far as I am concerned.

ramonsterns said:

Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

You sir.

Yes, you.

You are a gentleman and a scholar.

Guest said:

I have been so rigorously touched by THE quote that I almost feel violated. As if the unearthly being who composed it has peered into the very core of my mortal existence and left something akin to magic; a remnant of the unearthly creature itself.

negroplasty negroplasty said:

Guest said:

I prefer to think that cell phone owners saved $13.9 billion in 2011. Muggers don't lose income when the robbery isn't successful.

Exactly.

MrAnderson said:

They kind of earned this since they were ripping people off anyway.

Using such a high margin and also not proving additional and competitive services on top of it... txt is premative and they have done nothing to make it worth what they have been charging. And the 2 way thing is just getting old. Charge the reciever and the receiver doese not have the option to choose if he wants it or not.

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