There are a myriad of different factors to consider when evaluating operator lost revenues, as free IP-based instant forms of communication gain traction over traditional SMS text messaging. A new report from Ovum predicts that the social messaging trend is going to deprive mobile operators of over $23 billion worth of SMS revenue, so how can operators claw back their position in the mobile arena beyond being just a ‘dumb pipe’ providing data for OTT services to run?
1. Exploiting their ‘pipe’ status
Operators may be afraid of becoming ‘dumb pipes’ required only for providing a data infrastructure, but the point is the pipe is an unavoidable piece of the equation for OTT services and social messaging – data is currency in the mobile arena. This position is something the operators can leverage which we’ve seen reflected in consistently growing data tarrifs.
The massive future data requirements predicted will put pressure on operators to properly monetize their investments in new technologies like LTE and spectrum acquisitions so that they maintain their pivotal position in the mobile ecosystem.
2. Making SMS relevant
When the three day BlackBerry outage occurred last October causing RIM’s BBM service to falter reports found an 85% boost in SMS usage suggesting that text-based messaging has become a staple form of communication and customers were willing to substitute one text-based service for another if forced to.
In Ovum’s “The Casualties of Social Messaging” report it was found that although operators lost $13.9 billion in SMS revenue in 2011, they still earnt a total of $153 billion from the text based service. Although it’s a revenue stream under threat it is still sound. Industry thought leaders suggest that SMS will never be truly replaced by social messaging as there will always be a need for it for example sending official notifications from banks and other institutions via SMS. The question for operators is how they make SMS stay relevant.
3. CDNs – the weapon against OTT?
Content Delivery Networks (CDNs) are predicted to become a significant revenue opportunity for mobile operators and may be the weapon they need in the battle for OTT service revenues. CDNs will offer mobile operators the capability to deploy multi screen delivery of video to smartphones, tablets, laptops and TVs using premium content services with differentiated Quality of Service (QoS) to OTT providers.
This is a value-based response which should allow operators to challenge the dominance of OTT providers, as operators will become not only the pipe for blind OTT services but also the provider of value added CDN services. The hope for operators is that the CDN market will exhibit a positive ‘network effect’ with additional users joining to send and receive high quality media content.