Social messaging cost carriers $14B in SMS revenue, says firm

Cell phone owners are turning to other services to chat with friends, according to Ovum. It also says carriers lost $8.7 billion in SMS revenue in 2010 because of social messaging.

Don Reisinger
Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Is iMessage hurting SMS revenue? You better believe it.
Is iMessage hurting SMS revenue? You better believe it. Screenshot by Jason Cipriani/CNET

It's no secret SMS is wildly popular, but according to a new report from research firm Ovum, carriers around the world lost quite a bit of revenue last year after mobile phone owners turned to other services to chat with friends.

The research firm revealed yesterday that carriers lost $13.9 billion in SMS revenue in 2011 because of consumers chatting with friends on social-messaging applications. Those applications range from everything from Facebook's mobile app, which features chatting, to instant-messaging apps. Apple's iMessage is also included in that list.

It was a similarly disappointing year for carriers in 2010, when Ovum estimates they lost $8.7 billion because of social-messaging applications.

Even so, according to Ovum, the 2010 and 2011 figures represented just 6 percent and 9 percent of total text message revenue those years, respectively.

Wondering how carriers can make so much on SMS? The CTIA reported in October that during the first six months of 2011, in the U.S. alone, Americans sent out 1.14 trillion text messages.

"Social messaging has disrupted traditional services, and operators' revenues in this area will come under increasing pressure," Ovum consumer analyst Neha Dharia said yesterday in a statement.

"Tapping into the creativity of app developers, forming industry-wide collaborations, and leveraging their usage data and strong relationships with subscribers are the key ways for operators to ensure that they hold their ground in the messaging market," Dharia added.