Tuesday, February 25, 2014

AT&T Adds "No Incremental Cost" International Text Messaging

Starting February 28, 2014, AT&T's Mobile Share and Mobile Share Value plans will include unlimited text messaging from the United States to more than 190 countries worldwide and unlimited picture and video messaging to more than 120 countries around the globe. Both new features come at no extra cost.

In doing so, AT&T joins T-Mobile US and Verizon Wireless, both of which had added “no incremental cost” international text messaging on some popular plans. Verizon More Everything plans and T-Mobile US Simple Choice plans feature no incremental cost global text messaging.

T-Mobile US also features no incremental cost Internet access when roaming, on it Simple Choice plans.

The new capabilities illustrate the trend of declining revenue opportunities for mobile and fixed network service providers in the voice and messaging application areas, as well as the growing use of substitute products such as WhatsApp.

As recently as 2005, voice revenues represented 73 percent of total revenues. By 2013, voice had dropped to just 43 percent of total revenues.

The average length of a local call has fallen more than 50 percent over the last decade to 1.8 minutes, according CTIA-The Wireless Association.

And consumer email traffic fell nearly 10 percent between 2010 and 2012, according to Radicati Group.

Over the top messaging, meanwhile, is growing at triple-digit rates. WhatsApp recorded an all-time high of 10 billion outgoing messages in a single day in June 2013, which equated to an average of more than 30 messages per user per day, according to Stephen Sale, Analysys Mason principal analyst.

“We estimate that the total volume of messages sent from mobile devices via IP services exceeded the volume of SMS messages for the first time in 2013, at more than 10.3 trillion compared with 6.5 trillion worldwide,” said Sale. “Messaging volumes associated with OTT services are expected to almost double in 2014 and will reach 37.8 trillion messages sent in 2018.”

That is having an impact on voice revenues and usage as well, at least in many markets.

To be sure, Insight Research projects that U.S. telecommunications service revenues will continue to grow from 2013 to 2018. But that growth will not come from voice services.

Instead, voice revenue will continue to decline at -4.81 percent compound annual growth rate from $163 billion in 2013 to $127 billion in 2018, Insight Research predicts.

Mobile voice—which peaked at $118 billion in 2008—will decline at -3.82 percent CAGR to $84 billion in 2018. Fixed network voice will drop even faster, at a negative 6.56 percent CAGR from $61 billion in 2013 to $44 billion in 2018.

Voice lines in service obviously will mirror those declines. The U.S. fixed network voice installed base peaked at 192 million access lines in 2000. In the following decade, despite nominal population growth, close to 80 million  access lines or more than 40 percent of wireline network lines were disconnected, replaced largely by mobile phones, Internet-based phone services or a shift to other communication apps, Insight Research says.

Globally, by 2002, the global telecommunications industry reached a crossover point at which the number of mobile service subscribers surpassed those of fixed telephone networks. At the close of 2002, there were 1.2 billion mobile customers around the world, compared with
1.1 billion fixed telephone lines.

Those are daunting challenges for observers who argue that service providers actually can do very much to protect and then grow voice revenues. Some might argue that, no matter what service providers do, voice revenues will drop.

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