Alternatives to SMS cut into carriers' revenue

Alternatives to SMS cut into carriers' revenue
According to Reuters, alternatives to SMS (short message service) are cutting into the profits of Stateside mobile carriers. BlackBerry Messenger, iMessenger and Facebook's mobile messenger service are three of the names mentioned by Reuters as messaging services that are taking revenue away from the carriers. And some of the alternatives to SMS are able to add many of the same features that the carriers offer.

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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36 Comments

1. Tyroc

Posts: 5; Member since: Oct 20, 2011

Damn, $10 for 1,000 texts a year, so 83 messages a month limit :)

12. ardent1

Posts: 2000; Member since: Apr 16, 2011

> 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

Posts: 5; Member since: Oct 20, 2011

I know it's per month, I was being sarcastic about the mistake before they corrected it, duh!

26. ZombiesAlso

Posts: 8; Member since: Mar 04, 2012

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

Posts: 3295; Member since: May 17, 2009

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.

6. biophone

Posts: 1994; Member since: Jun 15, 2011

Whatsapp is on the appstore

10. Crossblade

Posts: 224; Member since: Apr 21, 2005

and so is Viber, which offers both free (multimedia) messages and CALLS via either 3G or WiFi

24. Whateverman

Posts: 3295; Member since: May 17, 2009

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

Posts: 3295; Member since: May 17, 2009

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?

36. davliscious

Posts: 7; Member since: Jul 28, 2013

XMPP is in every market xmpp texting is truly free: no malware, no client lock-in, no phone device required

3. ILikeBubbles

Posts: 525; Member since: Jan 17, 2011

lol well.. when you're sending 5000 txts a month it's worth it for the $20 per month unlimited..

35. davliscious

Posts: 7; Member since: Jul 28, 2013

NO unlimited XMPP texting always $0

4. QWIKSTRIKE

Posts: 1459; Member since: Mar 09, 2010

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.

34. davliscious

Posts: 7; Member since: Jul 28, 2013

"whatever the market will bear" YOU are apparently bearing it. STOP paying to text. STOP using old-timey-sms texting XMPP texting: $0 XMPP is an Open Standard so no client lock-in like false-free malware apps (like whatsapp, textplus, pingertextfree, viber, etc). XMPP texting allows any xmpp app, any xmpp server, any xmpp domain Help end nickle&diming: Liberate your peers with XMPP texting knowledge also free texting Open Standard: SIP iChat uses xmpp texting and sip video You probably use either xmpp or sip right now in your life. Expand your use and reduce your costs

5. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

@Tyroc - PA made a boo-boo. VZW is offering 1,000 texts/month for $10.

33. davliscious

Posts: 7; Member since: Jul 28, 2013

1,000,000,000,000,000 XMPP texts is $0 paying to text is FOOLISH using legacy sms texting is IGNORANT

7. ILikeBubbles

Posts: 525; Member since: Jan 17, 2011

then again i'm kind of surprise that they're making any revenue off of sms messaging..

27. ZombiesAlso

Posts: 8; Member since: Mar 04, 2012

considering it costs them nothing to receive sms, but only to send sms xmpp ftw

8. tuminatr

Posts: 1123; Member since: Feb 23, 2009

i am not it has almost no cost to them

14. mctcm

Posts: 204; Member since: Oct 19, 2011

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

Posts: 403; Member since: Sep 21, 2011

a megabyte is 1024 bytes. What are you referring to?

16. hunted

Posts: 403; Member since: Sep 21, 2011

Sorry mctcm ignore that from me. I know thats irrelevant to you, but was thinking something else to post you

18. mctcm

Posts: 204; Member since: Oct 19, 2011

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

Posts: 8; Member since: Mar 04, 2012

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

Posts: 3621; Member since: Jan 19, 2011

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.

32. davliscious

Posts: 7; Member since: Jul 28, 2013

compare that phone plan without legacy sms texting to itself. the plan without "unlimited" is MUCH LESS costly legacy sms texting is NOT free xmpp texting IS really free

11. Bluesky02

Posts: 1439; Member since: Dec 05, 2011

There is this app JaxtrSMS you can send free sms downside is it crash

29. ZombiesAlso

Posts: 8; Member since: Mar 04, 2012

and it's probably the adware flavor of malware

13. ibap

Posts: 867; Member since: Sep 09, 2009

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.

31. davliscious

Posts: 7; Member since: Jul 28, 2013

IRC existed long before legacy sms texting $0 XMPP texting was IRC inspired The ignorant suffer these expenses. Liberate your peers with knowledge.

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