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Online messaging apps are eroding revenues from short messaging services (SMS), forcing mobile operators to seek new strategies to remain competitive and profitable.
These chat applications are also beginning to challenge operators’ voice services. Telecom consultancy Ovum has reported annual SMS declines of 20–30%. At the same time, over-the-top (OTT) services such as WhatsApp, Facebook Messenger, Skype and Viber are rapidly expanding their user bases. WhatsApp alone handles approximately 30 billion messages per day. In China, WeChat doubled its user base to 200 million within six months, and KakaoTalk is used daily by roughly 90% of South Korea’s mobile subscribers.
SMS usage has fallen sharply in some markets. In India, for example, the Telecom Regulatory Authority of India (TRAI) recorded an 18.35% drop in SMS traffic in June 2014, a decline largely attributed to the rising volume of OTT messaging. The growing popularity of WhatsApp and similar services significantly impacted operators’ SMS revenues, contributing to estimated global losses exceeding $1.5 billion in 2014.
Voice services are also feeling pressure from OTT platforms that offer voice calling. While OTTs have not yet replaced traditional mobile voice services, their adoption is steadily increasing. Accenture projected a 2% annual decline in voice revenue between 2012 and 2017, reflecting this trend.
Improvements in call quality for VoIP services are prompting customers to adopt OTT apps for voice communication. Analysys Mason reports that around 20% of smartphone users actively use VoIP services and are beginning to treat these apps as primary voice providers. Although these figures are still emerging, they illustrate the potential for OTT platforms to compete directly with mobile operators for voice services.
In less-developed countries, the OTT voice market remains limited by lower network quality and reduced internet penetration, and traditional operators often retain the advantage with low voice tariffs. Industry observers argue that OTT growth does not simply represent direct competition; instead, it creates opportunities for operators to develop new revenue streams. To capitalize on these changes, operators may need to rethink pricing models. Today’s OTT customers typically pay for internet access rather than per-message or per-call fees, so operators could explore value-added services, bundled data plans, differentiated quality-of-service offerings, or partnerships with OTT providers to monetize data consumption more effectively.
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