The New York Times’ Bits Section looks at how in many countries text messaging (SMS) services are declining.
For telcos, the SMS feature was a happy – and extremely profitable – accident with the Short Message Service feature designed as a control channel for the mobile voice networks.
The Short Messaging Service cost almost nothing to develop and quickly became a massive profit centre for mobile phone companies.
Today in markets where smartphones are dominating sales, people are moving many of their communications away from text messages over to Internet based services like email, instant messaging and social media.
Interestingly, in the United States text messaging still growing although at a slower rate than previously. This makes sense as the US is behind countries that have fully adopted 3G networks and subscribers don’t get the full benefit from a smartphone without a reliable and fast data service.
For developing countries, we’ll probably see SMS continue to grow as the attractions of a relatively cheap and simple communications channel like text messaging still make sense in markets where data plans are expensive and smartphones scarce.
As revenues from text messaging drops, we’ll be seeing more telecommunications companies try to replace the lost income with other services. Expect to see more offers for various business and home service bundles and offers to upgrade to the latest phones or packages as providers try to lock profitable customers into cash generating agreements.
The era of accidental profits for telcos is over, the quest for these companies now is to find how they can maintain profits in an era where data services are commoditising their lucrative product lines.
For the managers of these companies, the challenge is on to successfully do this – it remains to be seen how well they do in refocusing their businesses.