WhatsApp, Kakao, other free messaging apps may cost telecoms billions

Global telecom operators are expected to have lost US$23 billion in SMS revenues by the end of this year as smartphone users shift to free messaging applications, an industry report said on Thursday.

Technology research company Ovum forecast the cumulative losses would reach US$54 billion by the end of 2016 as the traditional Short Messaging Service (SMS) gives way to internet-based platforms such as WhatsApp.

“Social messaging is becoming more pervasive and operators are coming under increased pressure to drive revenues from the messaging component of their communications business,” said Neha Dharia, consumer telecoms analyst at Ovum.

“Operators need to understand the impact of social messaging apps on consumer behaviour, both in terms of changing communication patterns and the impact on SMS revenue, and offer services to suit.”

Ovum cited the increasing popularity of WhatsApp, which allows smartphone owners to exchange messages free using wireless internet links, bypassing SMS gateways that charge users per message or for a monthly quota.

“Ovum believes this level of growth will continue as smartphone and mobile broadband penetration increases and expects smaller players such as texPlus, Pinterest and fring to cause further disruption in the messaging space,” the report said.