Many mobile service providers continue to believe there is financial value to be had in creating and supporting branded over the top messaging apps. One might argue that seems extremely unlikely, given the network effects other over the top messaging providers have achieved.
Of course, many argue that the basic voice product can be enhanced in ways that allow prices to be raised, and can reverse the trend of declining usage in many markets where alternative communication modes make more sense. Some might say that is a questionable long-term strategy as well.
Ovum estimates mobile SMS plans accounted for $120 billion in revenue during 2013, down from $145 billion in FY 2012. That decrease of $25 billion, or 17 percent, is largely attributed to the move away from SMS toward data-driven communication applications.
Telcos have been down this road before. For years, when AT&T was an independent provier of long distance service, it struggled to break into the "local access" business in the United States.
Ultimately, AT&T failed. In fact, the actual strategy, for years, involved harvesting declining international calling revenues as long as possible, at the highest possible rates, while the transition to a new revenue model could be achieved.
One might likewise have argued that AT&T could change the product by creating more valuable calling services and adding features. In retrospect, that has proven incapable of halting the revenue erosion.
One might argue that mobile and fixed network calling, and mobile text messaging, face precisely the same problem, and ultimately will find the same results.
Saturday, February 22, 2014
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