Social networking sites like Facebook, Twitter, Google+, etc. were counting on the popularity of the smartphone to contribute to their growth. They expected smatphone users to access their social networking sites using apps downloaded on their phone. And they were right in their expectation, as the smartphone gained popularity, the traffic on these sites increased. However, it seems that this increased usage of social networking sites from smartphones has taken its toll on the mobile carriers.
Mobile carriers are losing revenue previously earned from text messaging since users simply access their networking site and message their friends through them. Applications like Tango and WhatsApp allow user to message one another without any charge, all they need is an internet connection and they can share text and multimedia content free of charge.
According to estimates by Ovum, an analyst firm, mobile carriers worldwide lost 13.9 billion dollars in revenues in 2011 earned from text messaging.
A report from Bytemobile, a mobile analytics firm, has also identified that increase in the use of social media yields no benefits for the mobile carriers whatsoever. Data gathered by Bytemobile was from tier-one mobile carrier customers. Their results showed that a mobile user is spending approximately 9 minutes per day per social media website on an average. They discovered that Youtube received the almost 300 times the traffic of data networks. In all cases, the mobile carriers did not generate any revenue from this.
On the other hand mobile carriers are making revenues when customers use their 3G or 4G data plans to access social media websites on their smartphones. Mobile carriers are also offering unlimited mobile broadband plans with Wi-Fi access for smartphones, which also earns them revenue. The question is: does that revenue compensate for the loss being incurred by a drop in text messaging?
Incremental revenues in the form of data consumed via tweets, check-ins and status updates are contributing a significant amount towards the overall revenue as well. Data usage from video websites like Youtube also earn mobile carriers revenue through their data plans, enough to not only to make up for the loss of revenue due to a fall in text messaging but also to make a profit.
This is working out in the short term, over the long term Ovum anticipates that mobile data will contribute 419 billion dollars to the total industry revenues, which will stand at 1,047 billion dollars by 2016.
The revenue lost form text messaging to social media seems to be growing over the past few years. Just in 2010 mobile carriers worldwide lost 6 percent of their text messaging revenue to the social media websites, which amount to around 8.7 billion dollars.
Ovum suggests that mobile carriers should carry out a collaboration of their services with social networking sites to earn revenues through partnerships. Telecom companies in developing countries are already going towards that direction. They are offering paid plans for accessing specific social media sites like Facebook, Twitter, Youtube, etc. using their USSD functionality via GSM devices.
What mobile carriers need to do is apply similar strategies in developed countries where smartphones and mobile applications are much more common than in the developing countries. The opportunity still exists in these markets and if mobile carriers made use of this opportunity they could make their own mobile application giving people access to social media websites using their network and application.
Limiting access to social networking to facilitate other websites will not have any positive impact on mobile carriers in terms of revenue generation. In fact, they might lose customers if these steps were taken. Social networks are extremely popular in the present day and this popularity is only expected to increase in the future.
If mobile carriers do choose to limit the access of their users to social networks they really wouldn’t gain much out of it. Social networks are in high demand and users can purchase unlimited mobile broadband with Wi-Fi to access the social networks through their smartphones. Mobile carriers need to adapt to the changing market needs by collaborations with social networks and mobile applications.
With unlimited mobile broadband data plans, mobile carriers can also come up with new paths of revenue generation to make up for the revenues lost by text messaging. Those revenues have currently merely shifted to social media messaging and mobile carriers who don’t have good mobile data plans will be the ones suffering.
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