Free messaging apps will cost Indian telcos over $1B in 2013

Free messaging apps will cost Indian telcos over $1B in 2013

Summary: Indian consumers' fading love affair with SMS will cost local telcos US$1.2 billion dollars this year, and rise to US$3.1 billion in 2016 as they increasingly move toward OTT services.

TOPICS: Telcos, Mobility, India

Indian telcos will lose billions of dollars in the next few years as users increasingly communicate with their friends via the OTT services.
Ovum analyst Neha Dharia told ZDNet that Indian mobile users were sending fewer text messages via their mobile carriers, and instead communicating for relatively no cost via messaging apps, which utilizes an Internet connection.
She said the trend cost Indian telcos US$781 million last year. It will cost US$1.2 billion this year and US$3.1 billion in 2016.

"We expect to see more such device and operator-led cooperation with social messaging players which will accelerate the growth of these apps in India. Along with this, the boom in smartphones and Internet-enabled phones will fuel the growth of messaging apps even further," Dharia said.
Indians subscribers only sent an average of 38 SMSes per month in the quarter ending December 31, according to the latest figures from the Telecom Regulatory Authority of India.
This was only an increase of two messages per month compared to the corresponding period the previous year.
One messaging app, Hike, allows users to send free text messages to any phone in India, with recipients able to reply at normal rates. The app has been downloaded five million times since it was launched in December 2012, and recently its owners Bharti Softbank invested US$7 million investment to attract 15 million users.
Kavin Bharti Mittal, BSB head of product and strategy, told ZDNet said the messaging evolution is being targeted by companies such as BSB--a joint venture between Japanese telco Softbank and Indian conglomerate Bharti, which owns the country's biggest telco Airtel.
"This is great for operators in such countries as the value of SMS jumps up tremendously. At the same it also provides a seamless and easy first step to internet for those who are coming online for the first time thus increasing revenues," Mittal said. 

Topics: Telcos, Mobility, India

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  • telcos might loose money but also gain in Data Usage

    To use the Apps to text and call Free where you donthave access to Wifif, you need acess to 3G or 4G data where companies will make money coz the more data you use, the more money you pay to telcos.
  • Telcos lose nothing

    Let's get one thing straight, the telcos will lose nothing. They have been raking in "free" money. The SMS protocol was built into our cellular infrastructure since the 80's. There is really no cost associated with SMS since it's already part of GSM and therefore there never was a reason for SMS prices to increase except to find a way to make more money, like how banks keep coming up with new fees. The fact that SMS pricing hasn't been regulated is a travesty to consumers.

    With that said, free messaging apps will still rely on data when there is no wifi, but in western nations that doesn't mean anything since most pay for more data than they need (convenient for the Telcos).

    The future of the Telcos is going to be decided in the next two years by WiFi and data! This is where the real story is. We have free messaging, now imagine if any of these free messaging apps add a VoIP service. There go the minutes used on Telco services. All you need is a WiFi connection and you bypass the Telcos for calling needs or you use your data plan. Granted, this requires a strong network and reliability of service (it's not all equal by geography, region, or even parts of cities), but we are getting there. At that point, the reliance on Telcos for communication will become the reciprocal of what it was in comparison to WiFi a few years ago. There was an article last year that Apple, and Steve Jobs, wanted to do this when releasing the iPhone, but couldn't do so because of the network at the time. But now, it's becoming more and more a reality. Imagine Google Fiber growing in size as a network, say all of the US. Then, Google can offer Devices with "free" communication abilities.

    VoIP is seeing a resurgance of intense interest in the markets. Pay close attention to all the new APIs and SDKs being offered by people for VoIP and Video Calling, there's a reason these are coming into prevalence.