Ronnie05's Blog

SMSs: In the way of the Dodo

Posted in Industry updates, Mobile Data & Traffic, Revenues and Monetization by Manas Ganguly on September 30, 2013

SMS is going the way of the Dodo- as per Nielsen’s latest Mobile Insights. In last 2 years in India- SMSs have lost 71.5% of the ground declining from 9 per day per user (2011) to 2 per day per user (July 2013). This isn’t a one of trend – SMSs are declining in usage in countries like China as well, where SMS usage has fallen by 15% in a year.

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Mobile chat applications are taking over registering a 285% increase in usage minutes over the last 2 years. OTT is beginning to take its toll on Operator revenues. The spot of bother is also that voice calling seems to have hit the plateau as well.

Thus telcos in India are really being cornered on data as the only revenue driver. A case in point is Airtel which in its June 2013 quarter results reported 90% increase in data usage and a corresponding 3% drop in SMS revenues (from 11% to 8%). Idea reported a 92.2% increase in mobile data traffic in last year.

The shift from SMS to Social Messaging through smartphone apps is only but a substitution effect.While the rates for SMS vary from Re 1 for local messages to Rs 1.50 for national and Rs 5 for international, data services usage can be unlimited after paying a fixed fee. Moreover, most social messaging services are either free or based on discounted plans.

The operator VAS business would thus be facing the squeeze. While data usage is on the rise, revenue is shifting from high value VAS to data only. Operators are under the pressure to look for more revenue oasis than ever.

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