Daily Archives: 03/03/2011

Free messaging apps threaten wireless carriers

By Cecilia Kang


Here’s the dirty secret about text messages. It costs a wireless carrier close to nothing to send and receive them — even though they charge about $10 a month for 500 to 1,000 texts.

Now, a new crop of messaging apps — including one recently bought by Facebook — are threatening the wireless industry’s cash cow. GroupMe and Beluga, bought by Facebook earlier this week, is among several free group messaging services that allows users to send texts to contact lists, Twitter followers and Facebook friends through a smartphone application. Fast Society also allows users to customize groups for messages and provides conference calls.

As more cell phone users turn to smart phones, the new set of messaging software allows users to bypass text messages offered by carriers. And that’s perked the interest of Web giants, analysts say.

“Facebook is, at its core, a communications company,” wrote Craig Moffett, an analyst at Sanford C. Bernstein research. “The move to acquire Beluga makes this explicit. Beluga puts Facebook squarely into competition with carriers for the first time.”

He and analyst Amelia Chan wrote in their recent note to investors that a trend toward in-app texting could eat into the revenues of wireless carriers who don’t get the same rate of returns from data consumption. Watching videos on a device is a much greater burden on a network than texting. They said wireless data makes up only 9 percent of a carrier’s revenues while voice and texting bring in the majority of revenues.

Carriers will likely respond by strapping texting plans to data packages, the analysts said. Trade group CTIA-The Wireless Association said U.S. text messages rose to 1.8 billion June 2010 from 1.3 billion the year earlier.

“The question is: how long will it be until this inefficiency is addressed?” wrote the Sanford analysts. “Just because there is demand doesn’t mean that consumers are willing to pay so much for a service that costs so little to the operator.”

By Cecilia Kang  | March 3, 2011; 9:00 AM ET
Categories:  AppleFTCFacebookMobile

See Source link here>: Free Messaging Apps

It’s Official: Voice Is Worthless

It’s Official: Voice Is Worthless

By Stacey Higginbotham Feb. 9, 2011,  25 Comments

With AT&T announcing its free mobile to mobile calls to help fend off customers defecting for the iPhone on Verizon’s network, it’s time to recognize that voice is now worthless. We can joke that AT&T clearly thought that all along (hello, dropped calls) but the pricing here signals that operators are ready to put all their eggs in the data basket. Sure, there are strings attached(customers need to have an unlimited texting plan and already subscribe to a plan of 450 minutes or higher) but allowing customers to call any mobile numbers in the U.S. without using allotted minutes turns a 450 minute plan for $40 and the corresponding $20 texting plan (for individuals) into an unlimited voice plan.

This isn’t just a means to keep iPhone subscribers, however. It’s another depreciation for the value of voice calls as carriers accept the decline of revenue coming from voice. But before we get all happy about cheaper mobile bills, don’t think operators are going to leave data revenue lying around. For example, when AT&T introduced its new $15 for 200MB planand 2GB plan for smartphones in June, its rhetoric about the plans being cheaper for subscribers didn’t fall on deaf ears. The operator has seen an uptick in its mobile subscribers since implementing the price change in June, although it’s cagey about details on how many of those that have signed up for the low-end plan that are new subscribers.

However, many of those who added data plans may find that the entry-level plan is more like a gateway drug that will draw them inexorably to gigabyte plans and perhaps even overage charges. Because voice is still profitable and represents a sizable chunk of operators’ revenue (see the chart from Chetan Sharma’s most recent mobile operator report), operators won’t let it go without trying to recoup some of that average revenue per user (ARPU) with higher data charges for consumers. They’ll also turn to machine-to-machine subscriptions to make up profits and provide high-volume, lower-revenue subscriptions. I explained a lot of this last May, but today’s news is yet another data point showcasing the continuing decline of voice.

Sure it’s good for those who use their phones for talking over cell networks, but thanks to VoIP, video chat, and increasing web use, that source of income is overrated. Carriers know it, which is why AT&T threw subscribers a bone as it seeks to hold onto iPhone subscribers and its real source of income: iPhone data hogs.

Source: It’s Official:  Voice is Worthless