According to a research note put out Friday by telecommunications consulting firm Strand Consult, Facebook is killing the mobile operators’ SMS traffic and revenue. For years and in many countries, SMS turned out to be an amazing source to generate revenue for mobile operators, almost generating 20% of the operator’s turnover. But those days are almost over. SMS has been one of the biggest cash cows in telco history.
First the operators thought their mobile portals would be their next big cash cow, and more recently they thought it was going to be mobile data. In other words the operators have yet to find a new cash cow that comes anywhere close to their SMS cash cow and now many operators are seeing an increasing number of customers moving their SMS traffic over to Facebook, resulting in their SMS cash cow getting thinner and thinner.
Today, over 800 million people around the world use Facebook on the Internet and over 425 of them use Facebook on their mobile phone. Measured in minutes of use, Facebook probably transports more mobile traffic, number of messages and time spent online than the world’s largest operator. People who believe that Google is currently the biggest threat to mobile operators may not realise exactly how much time mobile customers are using on Facebook and how Facebook is currently changing the way over 800 million people communicate on a daily basis.
Market players like Google, Skype, Twitter and MSN are only marginally important to the mobile industry compared to Facebook. The question is whether operators can do anything to limit the damage that Facebook is making on their cash flow? Is there any way that mobile operators can retain their SMS revenue even though customers are using Facebook to communicate? Strand Consult believes the answer is yes and that the solution is quite simple.
“This has resulted in almost all Danish mobile customers purchasing a SMS package every month as part of their mobile subscription, without questioning whether they need it and also without worrying about how many or few SMSs they actually send per month — as they feel their SMSs are “free,” according to the report.