Alternatives to SMS cut into carriers' revenue
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While those using alternative messaging services still must pay for internet access on their mobile device, the cost for each message is less than if the user signed up for a monthly SMS plan, or paid for each message sent. The carriers in the U.S. are missing out on buckets of money since they charge both the sender and recipient of a text message. European carriers already have seen their financials hurt by lower use of SMS. For example, Dutch carrier KPN blames the increased use of the messaging service offered by Facebook and Twitter for the drop in text messaging revenue the carrier had last year.
To show how wide spread the use of alternative messaging services is overseas, South Korea's Kakaotalk handles 30 billion messages monthly. And there is no reason not to expect this from happening to the same degree in the U.S.; Verizon CEO Lowell McAdam told an Investor's Conference last month that he expects SMS messaging to be under attack in the States. And there is a reason for carriers to be worried. Craig Moffett, an analyst for Sanford Bernstein, called text messaging "the most profitable service known to man." According to the analyst, SMS messaging brings in $1,000 for every MB of data transmitted compared with 2 to 13 cents per MB that comes in from a wireless Internet data plan.
AT&T and Verizon have responded by eliminating some cheaper rate plans for text messaging. AT&T in August eliminated a $10 monthly rate for 1,000 text messages and now offers a $20 per month unlimited plan, or a pay-as-you-go service for 20 cents a message. In November, Verizon removed a $5 monthly plan for 250 texts and is left with a $10 rate for 1,000 texts a month, or a $20 unlimited rate plan.
What helps the carriers retain messaging business is that not every person has a BlackBerry or uses Twitter and Facebook which makes it hard to be able to send messages to all of your friends if they all don't own a BlackBerry or use the same social networking sites that you do. While messages sent on BlackBerry Messenger can't be received on an Android phone, an SMS message sent from that same Berry can reach all of its intended recipients as mobile carriers do have agreements to exchange text messages with each other.
It was the agreement among rival carriers to carry each others text messages that made that form of communication popular. The CTIA says that the number of texts rose from 930 million in June 2002 to 1.5 billion one year later after the carriers reached an agreement on interoperability.
Despite all of the alternatives to SMS, according to Reuters, text messaging currently accounts for 12% of the annual revenue of a U.S. mobile carrier.
source: Reuters
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29 Comments
1. Tyroc posted on 04 Jan 2012, 22:46 5 0
Damn, $10 for 1,000 texts a year, so 83 messages a month limit :)
12. ardent1 posted on 05 Jan 2012, 03:53 1 0
> Damn, $10 for 1,000 texts a year, so 83 messages a month limit
Actually, the article state $10 for 1,000 texts PER MONTH, not a year. That gives Verizon a chance to make $120 a year rather than $10 a year.
Btw, ATT charging 20 cent per text is highway robbery.
17. Tyroc posted on 05 Jan 2012, 11:20 0 0
I know it's per month, I was being sarcastic about the mistake before they corrected it, duh!
26. ZombiesAlso posted on 04 Mar 2012, 07:23 1 0
XMPP: $0 for as many messages as you can send or receive. As n data package is "required" by smart phone carriers xmpp is ideal for reducing monthly mobile costs.
xmpp IS killing sms
xmpp is quickly adopted by youth circles
2. Whateverman posted on 04 Jan 2012, 22:55 0 3
I just wish Apple would allow Whatsapp on the appstore. But since it allows people to send full songs to and from each other (which would cut into iTune profits), so I cant see that happening.
10. Crossblade posted on 05 Jan 2012, 01:09 1 1
and so is Viber, which offers both free (multimedia) messages and CALLS via either 3G or WiFi
24. Whateverman posted on 05 Jan 2012, 15:18 0 0
If tried sharing music on Viber and havent seen any way to do it. But if your sure its possible could you leave the steps, cause I would like to try it. And doesn't any transferring of music redirect you to itunes to purchase the song?
22. Whateverman posted on 05 Jan 2012, 15:03 0 0
Cool! It had been removed for so long I didn't think it would ever come back. I have been using it on my Droid but when I asked iphone friends to download it they would say it wasn't there. But here's the rub...its free on the Android Market, why not the same for iOS?
3. ILikeBubbles posted on 04 Jan 2012, 23:02 0 1
lol well.. when you're sending 5000 txts a month it's worth it for the $20 per month unlimited..
4. QWIKSTRIKE posted on 04 Jan 2012, 23:06 4 0
carriers must realize that a phone should not cost the average user over 100.00 monthly for all inclusive. People don't think that they should have to give up 100+ for service and then get nickel and dimed for texting. Stop trying to nickel and dime customers and satisfy customers, and churn would stay low, and stocks will move up because of volume and service. When a carrier tries to find ways to rip money from the consumer the consumer always fights back to cut rates. Carriers just don't get it. You can't satisfy stock holders and keep a customer base by f'ing the customer with nickel and dime fees.
5. Droid_X_Doug posted on 04 Jan 2012, 23:14 1 1
@Tyroc - PA made a boo-boo. VZW is offering 1,000 texts/month for $10.
7. ILikeBubbles posted on 04 Jan 2012, 23:33 0 0
then again i'm kind of surprise that they're making any revenue off of sms messaging..
27. ZombiesAlso posted on 04 Mar 2012, 07:26 1 0
considering it costs them nothing to receive sms, but only to send sms
xmpp ftw
14. mctcm posted on 05 Jan 2012, 07:16 2 1
why is this thumbed down? a text is several BYTES, with each character being 1 byte
a megabyte is 1,310,72 bytes
verizon charges $2 per megabyte for data overage. from a text message perspective, lets assume each text is 20bytes
at their verizons data rate, one would be able to sent 65,000 text messages before using another megabyte. however, per text charge overages are 20 cents per text? they are f**king stealing from people
15. hunted posted on 05 Jan 2012, 10:45 0 1
a megabyte is 1024 bytes. What are you referring to?
16. hunted posted on 05 Jan 2012, 10:46 0 0
Sorry mctcm ignore that from me. I know thats irrelevant to you, but was thinking something else to post you
18. mctcm posted on 05 Jan 2012, 11:51 0 0
my error, i had the unit measurements all confused
"At 7 bits per character, that's 1120 bits or 140 bytes. Without a text messaging plan, those 140 bytes run you $.15 (fifteen cents), according to Verizon's website.
Compare that to the rate for data transfer (like when you would use your cellphone as modem). That rate is $.015 (one point five cents) every 1024 bytes.
That's $.015 per data kilobyte versus $1.09 per text message kilobyte. In other words, a markup of 7314%. Other cellphone companies charge comparable rates."
28. ZombiesAlso posted on 04 Mar 2012, 07:31 1 0
use existing internet data plan:
xmpp : $0
why pay TWICE to communicate by TEXT??
paying more than $0.0067 per sms is folly
paying to RECEIVE sms is imbecilic
9. snowgator posted on 05 Jan 2012, 00:53 0 0
I feel so 15 minutes ago. Everyone in my circle just still sends text messages, and I do not know anyone who texts that doesn't have unlimited. Wouldn't want the poor carriers to have to go without money.
11. Bluesky02 posted on 05 Jan 2012, 03:25 0 0
There is this app
JaxtrSMS you can send free sms downside is it crash
29. ZombiesAlso posted on 04 Mar 2012, 07:32 0 0
and it's probably the adware flavor of malware
13. ibap posted on 05 Jan 2012, 06:21 2 0
Follow the money. If the carriers weren't so greedy about SMS, these other avenues wouldn't even exist. The whole structure of charges, voice vs. sms vs. data is totally out of whack.
19. squeeb posted on 05 Jan 2012, 11:57 0 1
Gchat all the way..been using it for years, since my old blackberry. And I've successfully converted most of my friends who I "text" to use it as well :)
f**k the carriers and their bottom line.
20. willywill_evo posted on 05 Jan 2012, 12:20 1 0
ooo sh!t its the HTC WING in the pic, bring back memories when i used to send 5k text a month now i send 400 lol
21. beefsupreme posted on 05 Jan 2012, 14:33 0 0
Who the heck actually uses BBM? I've had a blackberry for over 5 years and have still not bothered to set it up.
25. ZombiesAlso posted on 04 Mar 2012, 07:17 1 0
@AlanF
Are you high? Jabber as alternative to sms:
Why have you excluded XMPP, the sms killer, from mention? XMPP (Jabber) is the ideal replacement to sms on smartphones, tablets, laptops, desktops.
ONE Jabber ID (xmpp account) can manage all other IM and even legacy sms from ALL devices.
Jabber IS the text communication option that will DECIMATE the carriers customer rape policy
interweb:
wiki.xmpp.org/web/FAQ
:grrr:
ALL the smart phone contact book has existing capability for Jabber. gtalk, however, is bastardized xmpp. google is also not a fan of e2e (end to end encyrption) as they would not be able to profit from violating your privacy as they do with every other "free" product.
Long live prosody.im
xmpp (Jabber)
$0 setup
$0 messages
$0 client
$0 TCO
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