As Users Choose Social Media over SMS Texts, Mobile Operators Lose Billions

I remember when I first visited Japan in 1997.  Our group of North Americans were shocked at how even teenage girls had their own cell phones, complete with dangling bells and ornaments.  What surprised us more was their use of “SMS” messaging to send chat messages to one another.  After I’d returned from the trip, I did some research and found that the phenomenon was also spreading all over Europe — Brits in particular sent millions of text messages per year.

It would be a few more years before we had it over on our continent, but once it hit, it hit big.  That’s what it’s a bit of a changing of the guard to see that social media messaging (Facebook, Twitter, etc) is costing mobile operators billions of dollars in SMS revenue.

The BBC did some digging and found that Neha Dharia had written a report on the specifics of just how much revenue is being lost by mobile operators due to users choosing social media over SMS.  She identified that users were skipping SMS texts in favor of using Facebook chat, Twitter and Blackberry Messenger.  These use data connections and are therefore far less expensive that SMS which typically charge a per message rate.

The report identified what mobile operators must do to keep SMS a profitable business.  The idea of mobile operators battling against the social media messaging services seems a bit awkward — the mobile operators are scrambling to get social media on to their phones to attract new customers.  So while Neha recommended that operators “work together to face the challenge from major internet players”, it seems like that will be a challenge.

Surprising is that the report specifically identifies Whatsapp, a social media messaging aggregator, as a leading tool that users are flocking to instead of SMS.  4% of UK smartphone users used Whatsapp in April 2011 as shown by a Comscore survey.