Facebook is killing carriers' SMS revenue

Facebook Killing Carriers' SMS Revenue

Global carrier revenue from SMS services is in decline, and the cause of the slide is a topic of much debate. Mobile messaging services such as WhatsApp, BlackBerry Messenger and Apple’s iMessage are widely believed to have had a tremendous impact wireless service providers’ messaging revenues, however another company has now been identified as potentially sharing the responsibility for carriers’ dwindling SMS sales: Facebook.

“If you look at how most operators market and sell SMS, you will see that most operators charge the customer for each individual SMS he or she sends,” market research firm Strand Consult wrote in a recent report. “In practice this means that the customer has a choice between sending an SMS that the customer knows costs money, or alternatively use his flat rate data subscription to write a message via Facebook if the recipient is on Facebook.”

Facebook is now home to more than 900 million users, 425 million of which use the service from their mobile phones.

“In many ways one can compare Facebook’s development in the mobile industry to how the Internet affected the media industry,” the firm said. “Market players like Google, Skype, Twitter and MSN are only marginally important to the mobile industry compared to Facebook.” Strand Consult added, “The biggest difference between Facebook and Google is that Facebook is a communication tool that people use to keep in touch with their family and friends every day.”

The firm does note that the impact of Facebook’s messaging services on carriers’ SMS revenues is less significant in markets like the United States and Denmark, where carriers charge flat monthly fees for message bundles as opposed to per-message fees.

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