To be sure, such estimates are complicated, as researchers have to model revenue volumes “as if” competitive or replacement solutions did not exist, compare those hypothetical amounts to actual revenues and then estimate the amount of potential revenue lost because consumers have shifted to alternatives.
The report suggests that in a number of markets, including Italy, Spain and the United Kingdom, operator mobile voice revenues had fallen to less than 60 percent of their value five years ago.
Juniper Research argues that a combination of instant messaging, VoIP and social media substitution was primarily responsible.
The report identifies more than $66 billion in revenue opportunities over the next 5 years, highlighting opportunities in areas such as M2M (machine-to-machine), mobile money, direct carrier billing and ‘Big Data’ analytics.
The resulting revenues could more than offset the decline from core service revenues on an annual basis by 2018.
The analysis is similar to the challenge of estimating how much voice usage has been displaced by email and text messaging, social posts or use of free or low-cost VoIP.
It is not unreasonable to assume this has happened, as it is not unreasonable to assume that email and document scanning have displaced facsimile transmission.
But some are skeptical of the “lost revenue” claims, at least in degree. Portio Research, for example, has questioned the actual amount of lost revenue.
While in some markets over the top messaging presumably does cannibalize significant text messaging revenue, in other markets, where mobile Internet access is not widespread, dramatic growth of mobile adoption means more text messaging revenue is being created.
Juniper Research analysts would not disagree, in that sense.
“During 2012 and 2013 we have seen many reports that operators are losing $20 billion to $30 billion in SMS revenue to OTT messaging apps,” said Karl Whitfield, a director at Portio Research. “We see reports that OTT traffic will be double that of SMS by the end of 2013,” he says. “This is wrong on both counts.”
It may be true that SMS revenues are levelling off and that OTT is on the rise, but SMS is still generating revenues of $15.3 million per hour, 24/7, that’s a massive $133.8 billion in 2013, Whitfield says.
Over the top apps generate about $3 million an hour, by way of comparison.
So even if all OTT messaging displaces text messaging--and that almost certainly is not completely the case--the lost revenue might be estimated as somewhere between $3 million per hour (OTT revenues) and a figure higher than $3 million per hour that represents the lost revenue that otherwise would have used the SMS format.
The analogy is the lost revenue from Skype. Much of the Skype usage is incremental, and would not have happened, were public network calling, messaging and video conferencing the only alternative.
Skype, in other words, creates new usage, rather than cannibalizing traditional forms of communication, much of the time.
Still, one way of estimating the impact is to compare actual revenues with former trendlines. as TeleGeography has done, comparing annual growth of international minutes of use, by adding Skype volume and carrier traffic volume, for example.
Global OTT and P2P Messaging Traffic (Billions)
source: Portio Research