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back to article Mobile telcos bleed $13.9bn as IM apps chomp on SMS

Industry analysts at Ovum reckon mobile network operators lost more than $13bn in 2011 as SMS finally gets replaced - a staggering estimate backed by stats from Allot. Ovum's figures are just experts' guesswork, but Allot's data comes from the traffic generated by around 250 million mobile users - and the news is the same: text …

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Headmaster

Worst. Pie chart. Ever.

OK, not the worst but pretty bloody woeful. Somewhere, Tufte is punching his fist through a wooden-panelled wall.

Sorry, what was the story again?

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Anonymous Coward

Had the exact same thought.

Pretty unimpressive for a company that bases its entire business model on tracking and presenting data effectively.

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Pint

Good!!

SMS has been one of the biggest voluntary shafting ever received by consumers. Given they're effectively free to provide, you're talking pure profit for telcos. I won't be sad to see them die a slow death.

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WTF?

Re: Good!!

>the biggest voluntary shafting ever received by consumers

Forced to hand over money, are you?

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Anonymous Coward

How?

I pay £15 a month for my contract, and I get unlimited texts and data.

I don't feel like I'm paying into a cashcow...

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Re: How?

@AC I'm assuming you're on Giff Gaff or similar which is switching away from the text cost model and you're helping kill the cash cow, congrats :-) But in terms of most monthly contracts and "free" texts, they're not free, you're just paying for them differently, you can be sure that they're recovering their "lost" revenue via the monthly cost..

@Destroyallmonsters:

"Forced to hand over money, are you?"

See the word voluntary that you even quoted?... It's there for a reason.

Once worked out the cost per MB on SMS. Given it's ~10p per 140bytes, it even makes dial-up seem value for money..

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Devil

Re: Good!!

Err... It would have been good if it was true.

The money would have been 13Bn _IF_ it was sent as SMS-es instead.

However in the absense of F***book, BBM (missing from the chart), Google Talk, etc the user may have sent some of that as SMS. Some, but not all. Probably less than 1Bn.

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Re: Good!!

Agreed! The cost per message was completely out-of-line with the actual costs of the service. The market was bearing it, however, until there were enough smartphones that other messaging services could perform the same function. What I hope happens is that the competition will bring the costs of SMS in line with the other messaging services.

It doesn't have to be free, but if carriers want to keep making money from SMS, they need to be able to compete with free services.

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Happy

Re: How?

Maybe your contract would be £12 if you didn't have unlimited texts. Either way, telco's have been extremely extortionate with their pricing. I can't wait till VOIP and texts over data is more prevalent (texts of data is almost there). We can then use telcos as dumb data pipes as that's pretty much all their good for now.

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SMS just works

The main benefit of SMS is that you can rely on it being turned on at the other end. A few times I've received a Twitter DM on a Sunday morning asking "are you in town?" I probably was, but without 3G.

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FAIL

Re: SMS just works

Exsqueeze me ? SMS does not "just work". It's an unreliable protocol - like email. It might work 99% or 99.99% of the time, but it's not guaranteed.

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Devil

Not mention that times of delivery may vary heavily and/or your SMS may be dropped by eager operator-installed "spamfilters" or just because the airwaves are clogged. Course you will still get billed.

On the other hand, "if you want a guarantee, buy a toaster"

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Anonymous Coward

Are they going to sue or try to shut down alternatives just because it loses them money? just like file sharing did for the media giants.

This is a monumental failure of the mobile operators to adapt. They keep creating stupid value added services that people don't want, often to try to get people and all their friends onto one network. But the world doesn't work like that, you need inter-network services and standards.

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In the last few years that I have shopped around for new contracts, I have found most options included a certain number of texts. My last contract had unlimited texts, I think I get about 500 on my current one. I don't use anywhere near 500 texts.

I appreciate that, some people will still pay for each text message they use, but I would have thought it is less common than it was, especially for contracts that include the internet access required to use the alternative services.

So my question is: do the figures here assume that one message sent by an internet based service is a lost text message, and therefore lost revenue for the telco, and if so, is that true?

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Devil

SMS won't die until the dinosaurs go instinct....

It works on everything, the only thing Nokia can be marvelled of pushing in their prime days and Social IMs go in and out of fashion like the plague.

When you need help, don't rely on wi-fi.

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you're still paying for those unused SMS

Few users pay inflated per SMS rates any more. The price is now buried in their contract bundle total, or as a 'free' topup incentive on PAYG. You've still paid the carrier whether you use those bundled SMS or not.

Maybe not as much cash as in the golden days but they locked in their profit before the rise of IM could wipe it all out.

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Anonymous Coward

Wait, what? I don't understand...

The last couple of operators I was with both gave me unlimited texts.

With O2 I paid £25 per month and with T-Mobile I pay £15. Why would anyone pay per text message when 30 day contracts ar eso cheap?

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Stop

Note to commenters

Unless you regularly send thousands of messages a month from a feature phone on PAYG or a low rent contract, you don't factor into this story at all.

It's about teenagers, who used to run up honking great SMS bills but increasingly tend to message each other using other means for free.

My heart bleads for the poor Telcos.

lolz

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whatsapp?

I use viber, as most of my friends do,it's the same principle but completely free. The calls are too.

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Unhappy

Re: whatsapp?

*ANOTHER* app you can't get for Windows Phone.

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Thumb Up

Re: whatsapp?

Viber seems great for calls but the messaging features are a little limited compared to Whatsapp. Whatsapp is about $2 a year (which is so low that it's almost free). So Viber for calls and Whatsapp for messaging, I'm sorted pretty sorted. I like the way both of these integrate with the phone's existing address book so I don't need to create a username and add friend's username to some "buddy list". It just all works :-)

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Facepalm

Yeah, and another thing...

All these pneumatic tires are killing my wagon wheel sales, I would say that I'm loosing between $30 billion and $200 trillion dollars a year from it.

We need to get them defined as "selling a pipe", or else they are going to claim every new anything is taking money from them. They are just a pipe, charge what you think you can for that pipe, but do it like a pipe.

If all the telcos had to complete as pipes, we could start having competition, not this "3gb data, plus 312 super-friends minutes, plus 47 anytime minutes, plus 920 sms outgoing, 288 incoming sms, a free phone case, and box of beef jerky, all for $49.99* a month.", crap that they pull now.

Put in bigger pipes, and more towers? Nope, throttle everything. It's like if they owned a taxi service, but when they started doing more business that instead of hiring more cars and drivers, they told everyone to loose weight so more people could be shoved into the existing ones.

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Yeah, and another thing...

Being a "pipe" is what the carriers fear most. They have to be able to differentiate between each other. They don't want to lose control of the customer. This is what almost happened to AT&T. They almost became Apple's network.

Sprint is in danger of becoming a "pipe", with all the MVNO's and wholesalers on their network.

If carriers move to the "Pipe" model, then there will be less investment and a lower level of service. Carriers won't keep up service levels if no one can see the difference.

And another thing, SMS is not "free" to the carriers. There is a large infrastructure involved with the SMS service, and it has to be cared for just like every other service. SMS is almost 'free" from the perspective of frequency use, as it piggybacks on other traffic, but it is not "free" by any means.

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SMS is not "free"

And what's more SMS is not free for operator even when SMS never leaves operator's PLMN. Barry Shitpeas doesn't know a fsck about purchase, support and O&M costs of telco equipment, costs of electricity, rental of land for BSS/masts, spectrum annual license etc. If Barry's SMS service is tied to IN platform, then most probably operator is charged monthly per each Barry's ass active on the platform.

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Pipe me a river

"If carriers move to the "Pipe" model, then there will be less investment and a lower level of service. Carriers won't keep up service levels if no one can see the difference."

Nonsense. I am paying for the use of a pipe. If the pipe provider is so stupid or greedy they ignore maintenance and upkeep of the pipe, I will switch to a less stupid pipe provider with a better quality pipe. If you fold because your business model relied on trying to screw people for the pointless add-ons you bolt to your pipe - tough.

How exactly do you distort the meaning of "service levels" into "no one can see the difference"?! The bandwidth, latency and reliability delivered are all very obvious to users - and indeed are the basis on which I and presumably others choose my pipe provider, for both home and mobile connectivity. A company which is putting resources into non-pipe services is not one I'd want to buy from, in the same way I don't want to buy my mobile phone service from British Airways or FedEx: they are focussed on the wrong thing to deliver that service. Whether in denial or not, O2, Vodafone and co are in the business of selling pipes and re-selling other people's hardware to use the pipes with, nothing more.

Ramazan has a point that SMS uses infrastructure the other services don't - which is why they are more efficient and cheaper. So what? Steam engines cost money too, but very few people whine about them being misunderstood - we just get on and use the diesel or electric replacements. Most of the plant you list is not SMS-specific though: the actual cost of an SMS should be a tiny fraction of the 6p I would pay right now in the unlikely event I decided to send one, and much closer to the price I'd pay for sending those 140 bytes over the data connection instead.

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