February 22, 2012 at 03:54 AM EST
Alert: Social Media Is Eating Into Carrier Revenues, And It’s Only Getting Worse
Twitter, Facebook and other social networks have long counted on the rise in smartphone usage to help fuel their growth: that trend, however, seems to also be taking a toll on mobile carriers -- specifically in the form of revenues. The analyst firm of Ovum, part of the Informa Group, has estimated that operators lost $13.9 billion in SMS revenue in 2011, as a result of their customers using services like Twitter and Facebook to message each other instead of the carriers' own text messaging services -- a big rise on the $8.7 billion Ovum estimates was lost in 2010. A separate report from mobile analytics firm Bytemobile has also charted huge growth in the use of social media on mobile -- with operators getting virtually no benefit as a result.
whatmeworry

Twitter, Facebook and other social networks have long counted on the rise in smartphone usage to help fuel their growth: that trend, however, seems to also be taking a toll on mobile carriers — specifically in the form of revenues.

The analyst firm of Ovum, part of the Informa Group, has estimated that operators lost $13.9 billion in SMS revenue in 2011, as a result of their customers using services like Twitter and Facebook to message each other instead of the carriers’ own text messaging services. A separate report from mobile analytics firm Bytemobile has also charted huge growth in the use of social media on mobile — with operators getting virtually no benefit as a result.

Bytemobile, using data it gathers from its tier-one carrier customers, found that the average mobile user spends around nine minutes per day each on Facebook and YouTube on mobile. YouTube, being a video service, generates 300 times more traffic on data networks. In both of those cases, it notes, neither service generates any mobile operator revenue.

There is a caveat, of course: carriers

It’s questionable, though, whether that incremental data revenue for tweets, status updates and check-ins, and the more substantial data usage from services like YouTube, are able to offset the loss from the more lucrative messaging services that operators built up and still count on for revenues.

It appears that the figure is gradually growing: Ovum points out that a $13.9 billion loss works out to some nine percent of messaging revenues for carriers worldwide, a rise from the six percent of revenues lost in messaging revenue to social messaging in 2010, when carriers lost $8.7 billion in SMS revenues to social media messaging.

Ovum’s suggestion? For carriers to work more closely on making their messaging and other services more collaborative — that is, more partnerships with social networks so that they use the carrier infrastructure to underpin their own communication tools.

There is some of that happening already, particularly in developing countries. France Telecom-owned operator Orange last week announced that it would be launching a new way of accessing Facebook in developing markets, using USSD functionality on GSM devices. It is offering this as an extra paid service to users.

But by and large, operators have missed the boat in more developed markets, where smartphones and mobile apps are the order of the day.

There is still an opportunity in those advanced markets. Carriers, if they got the lead out, could act as mobile app developers and make their own clients to access those social networks, which link in better with the services they already have in place — say for messaging or billing services. That’s something that has been relatively untapped so far.



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