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Is Social Media hurting Telecom Operators?

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Ever since I have started using my blackberry my mobile bill seems have to dropped significantly. It is down by more than 40%. When I analyzed this month’s bill I suddenly realized that I had much fewer calls and the number of SMS’s has dropped drastically as well.

Though my conversations though my phone have increased, the channels have become more diverse. I use G talk to talk to my close friends, Blackberry messenger to connect with my current and former colleagues. Facebook chat to talk to my trusted network. All these have eaten into the mobile operator’s share of my wallet.

So am I the only one feeling this way?

Not exactly, in a recent report the management consultant firm Ovum estimates that mobile operators lost about $13.9 Billion due to social messaging. The number was close to $ 8.7 billion in 2010. So clearly this is a global phenomenon which is adding on to the woes of the mobile operators resulting in a further decline in ARPU (Average revenue per user).

Mobile Operator Loss

This loss today represents almost 9 % of the total revenue from messaging. Applications like Blackberry messenger, G talk, Facebook Chat and Whatsit are eating into the SMS revenues of most operators globally.

In 1997 in an interview, Dr Martin Cooper who made the first mobile call 1973 and is considered the father of mobile technology, he spoke about how SMS was a revolution in communication. Today in little more than a decade the social network apps have almost started what would be the end of the SMS.

The Ovum report further warns that mobile operators need to relook at their services in order to stay competitive in the future.

So what can mobile operators do to reverse the situation?

1. Concentrate on data services: Most operator’s today focus more on voice and messages, but with the rise of smart phones it is data services that would drive revenue. A good example is the increase in data services revenue for NTT Docomo in Japan after the advent of smart phones.

2. Mobile broadband: With launch of 3G services the faster mobile internet experience would be through broadband and this is yet another area of growth for mobile operators.

3. Collaboration with App developers: Currently the apps built for various platforms are the ones that will eventually eat into the operator revenues. Working with these developers, operators can co-create apps that would keep the users on the mobile operator’s network. For example if I had a choice between the Airtel Live and a App from Wall Street Journal, the user experience of the WSJ app is far superior to Airtel Live, hence despite being an Airtel customer for over a decade, I have not spend more than an hour till date on Airtel Live.

4. Value added services: Increasingly many transactions are shifting to the mobile phone. Services like mobile banking, mobile commerce and mobile ticketing would become the norm rather than the exception. It is time that the operators work collaboratively with this increased ecosystem and enhance their services.

But this is just the tip of the ice-berg. What are the other strategies that operators can run to leverage the growth of social media and smart phones?

I would like to hear your views on the same.

  1. Dr Vikram says

    Agree

  2. Faiz Uddin says

    I don’t think its a loss of revenue. Its a case of modern technology replacing what’s redundant. SMS was the “in” thing a few years back. Now social messaging is the latest favor. In the months and years to come, social media will be replaced by a newer technology. Companies relying on redundant technology are bound loose out if they don’t keep up with the times.

  3. Rahul Karan says

    Social Messaging is the revolutionary system for personal and group conversation. Every year one new technology is coming in-terms of communication. So here we have to look about the user’s benefit with new innovative technology.

    There is no problem for telecom operators. They should prepare for the new technology. But increasing the data plan won’t generate more revenue instead they will lose the valuable customers.

    AirTel is playing these things with bad strategy. They won, because, there is no other good completion in India.

    1. Dr Vikram says

      I agree, Airtel’ strategy has been very sad. Hopefully some of the other providers will address this issue.

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