Home Fat-Cat Carriers Unworried By Chat Apps Passing SMS Texting

Fat-Cat Carriers Unworried By Chat Apps Passing SMS Texting

News that chat app traffic has surpassed that of SMS texting has gotten some prominent observers celebrating the death of the SMS “cash cow.” But that, to put it bluntly, is a mistake – if anything, cellular carriers will make more money from the rise of chat services than they did with SMS.

The new report from UK analyst firm Informa says that almost 19 billion “over the top” chat messages were sent on messaging apps like Skype, WhatsApp, Kik and Viber in 2012.

But in that same period, just 17.6 billion SMS text messages were sent. Around this time next year, Informa predicts 50 billion text messages with OTT services, and 21 billion SMS messages. So, for something that’s supposed to be in trouble, SMS will actually be growing in traffic next year.

This kind of deflates the celebratory tweet of Neelie Kroes, VP President of the EU Commission responsible for the EU’s Digital Agenda program sent this morning.

Kroes’ point about SMS being a cash cow is certainly valid – to a point. Text charges on some plans can be a huge revenue source for mobile carriers, to the point where many regulatory agencies and customers have complained.

Kroes logic is simple: if texting is migrating to over-the-Internet chat services, then SMS will cease to become less of a revenue source for mobile companies. Except for one problem: the data plans that will be required for the use of the smartphones and other devices that can use these apps can cost more than even unlimited texting plans.

That’s certainly the case for my Verizon plan. To use a locked smartphone with a data plan, I have to pay an extra $39.99/month, compared to the feature phone my youngest daughter uses that has unlimited calls and texting.

I realize that mileage will vary, of course, but SMS plans are usually bundled with basic phone plans these days and it’s the data plans that cost more. And you usually need a data plan to get a smartphone from a carrier and all of these apps have to run on a smartphone.

You could, or course, have a Wi-Fi only tablet or handheld device. This would be the best way to use these apps without paying for SMS or data plans… but you’ll be tethered to public Wi-Fi clouds and unable to chat out in the big wide world.

Kroes’ argument, then, seems short-sighted – while I am sure there will be some savings for people currently getting ripped off for their SMS use, any truly mobile device will have an expensive data plan attached to it. That will wipe out any potential savings and may even cost more.

Mobile carriers, I suspect, aren’t worried about SMS at all.

Image courtesy of Shutterstock.

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