Messaging apps affecting SMS revenue

Messaging apps that enable smartphone users to send unlimited free messages to their friends are cannibalizing SMS revenue and changing the way mobile users communicate with their peers.

The use of third party apps such as Whatsapp and Viber, plus native platform specific apps such as Apple's iMessage are also boosting data use says market analyst ABI Research in a new study on Mobile Subscriber Usage and Traffic Market Data.

ABI also links the trend with a decrease in the number of voice minutes people are consuming. "In 1Q-2012, minutes of use (Voice) per user showed the greatest declines in North America (-5.3%), Asia-Pacific (-0.6%), and Western Europe (-0.4%), said Ying Kang Tan, research associate at ABI Research. "The only region with any meaningful positive growth is the Middle East (3.5%)."

In February analytics firm Ovum calculated that free messaging apps cost carriers approximately $13.9 billion in lost SMS revenue during 2011.

ABI revealed that emerging markets experienced larger decreases in SMS sent than developed markets with Latin America, Africa, and Asia-Pacific reporting -5.8%, -0.7% and -0.2% declines quarter-on-quarter respectively.

Data use, on the other hand, has grown rapidly. By the end of 2012 mobile data traffic is predicted to increase by 69% to 13.4 Exabytes.

"While there is considerable interest in 4G, 3G subscriptions continue to grow because most low-tier and mid-tier handsets are 3G, whereas 4G will remain a premium product for the next couple of years. However, 4G traffic will grow disproportionately to its subscriber base as LTE will encourage greater use of high definition streaming and adoption of rich media/video social-networking services," commented Jake Saunders, VP for forecasting. "Over the forecast period, 4G has a CAGR of 120% compared to 60% for 3G."