Messaging Apps, VoIP Already Eating Into Carrier Revenue

An anonymous reader writes "A new breed of messaging services and mobile Voice over IP clients like Skype are already eating into carrier revenues according to a new study. '... one-third of carriers are already seeing voice traffic and SMS revenue decline as a result of the increased popularity of third-party solutions. ... For years, Research In Motion’s BlackBerry Messenger service has been one of the top features consumers and enterprise users loved about BlackBerry devices. It took much longer than some expected, but other vendors and third-party developers have finally come out in full force with competing services that provide SMS-like messaging over data networks at little or no cost to the user."

Comments

The funny part

[0123456]

Is that the data messaging probably costs the carrier more than SMS...

Re:The funny part

[Anonymous Coward]

SMS is technically free. The only cost is counting/bill.

Re:The funny part

[TWX]

Considering that SMS uses the same packet radio features that cellular networks use to keep the network appraised of where the phone is, and that packet size is much larger than the data that is transmitted per packet requiring the packets to be buffered out with null data, and that fitting the SMS messages just fill the rest of the packet that has to be transmitted anyway, even charging for SMS messaging is a crock.

I can understand charging for image or audio messages, as those actually do impact the use of the network. Charging for SMS, though, that's just sheer greed.

My wife and I got unlimited minutes cell plans when they were novel and first introduced to long-term customers several years ago, and we didn't get any SMS or data for her since she doesn't have a smartphone. Consequently, we used voice airtime even when SMS would have worked, as we didn't want to pay $0.20 for less than 300 characters. Because the carrier is greedy it actually cost them more for us to be customers.

I also believe that data features on smartphones that are provided by the carrier and OS on the phone, like e-mail, directory services, map data, and other non-web, fairly low-bandwidth data services should be complimentary with the purchase of the data plan, and should subsequently not count against one's 2gb cap or whatever the cap may be. But, apparently cell companies right now don't agree with me.

When I travelled overseas I found cellphones to be a much better deal. That they cost so much here for what one gets compared to overseas where they have the hell regulated out of them means to me that letting companies operate as they will, with contracts to the users, carrier-locked phones, and more than a single network standard further preventing even unlocked devices from conveniently switching between some carriers to be BS.

Re:The funny part

[Captain Splendid]

Won't somebody please think of the free market?

Not gonna happen. Libs fear it, Conservatives abuse it, and the Corporations want to get rid of it.

Best of luck.

Re:The funny part

[TWX]

The Free Market is a myth and always has been. Like the Laffer Curve and the trickle-down theory of wealth distribution.

Re:The funny part

[icebike]

SMS is technically free. The only cost is counting/bill.

If you consider only the radio spectrum involved in delivery, you could make that argument.

But the messages have to be routed, handed off to other carriers, stored and forwarded, etc. This has a real cost, even if the last mile imposes no additional burden on the cell tower.

Further, you must amortize your network, every switch, tower, transmitter, fiber optic. You spread these costs over every service you provide. If people dropped their voice plans and kept only their sms plans, you STILL end up having to maintain the same towers, networks, and switching centers.

So SMS messages are essentially free as long as you look ONLY at that segment of open air between the tower an your phone.

That being said, the rate charged for these things are beyond all measure of the actual costs. I'm not defending the pricing.
I'm simply calling into question the rather myopic view that they come down the same pre-existing signaling channel and are therefore free.

Re:The funny part

[teg]

SMS is technically free. The only cost is counting/bill.

Carriers don't charge SMS usage fees because of the big variable costs... they charge because they can, because it has a value to the customer.

A large part of the cost for a carrier is fixed cost - the various priced services is just how to they believe they can recoup most of it and make their profit. If noone pays for SMS anymore, they'll instead have higher costs for talk or data than they do now. They know how much money they need to earn per handset on average, and that's what they'll get one way or the other.

Prices go up, usage goes down?

[jandrese]

So shortly after all of the major carriers dropped the even slightly reasonable SMS plans, people started using the hacky but free alternatives? What a shocker. This seems like a classic example of what happens when you price yourself right out of the market.

Re:iMessage

[Nerdfest]

Proprietary solutions are not helping anybody but the people who create them, be it Apple or RIM.

SMS at Hubble data rates

[quixote9]

just shouts "more money than brains." It was on /. a while back. (! yr? 2 yrs? more?) Somebody costed out what people were paying for texting, and on a per-byte basis, it cost more than what NASA paid to communicate with the space telescope. I never could understand people putting up with that. Voip + wifi for me since about 2005.

Re:Good for several reasons

[alexandre_ganso]

There IS NO channel load for SMS. Every time you phone says "hello, I'm here", it receives an equivalent of an ACK with SMS WITHIN THE SAME PACKET.

So you can receive as many sms as times as your network knows in which antenna you are, without using a single extra byte from them, because that would be zero-filled otherwise.

If there is such a thing as an immense scam right now, it is SMS.