Why SMS is Losing, but Operators Can Still Win


179959458 It doesn’t seem like it was that long ago that SMS was the new, new thing. Just 10 years ago, I was running a wireless application service provider that, among other things, made mobile games and offered an SMS chat dating service. (Very popular, I might add — and current traffic at BBM PIN exchange sites is evidence that some things haven’t changed!)

Back then, SMS was the dominant technology, providing the foundation for my old company’s apps and services. Now, smartphones are taking over, and with them, over-the-top (OTT) messaging and voice providers — so called because they go “over the top” of the cellular network and operators by working via a device’s internet connection.

OTT players include independents like Skype, WhatsApp, Line, Snapchat, Kakao, etc., and also — of course — offerings from the established BlackBerry (BBM) Apple (iMessage), Google (Messaging, Voice, Hangouts) and Facebook (Messenger).

Because these many apps offer free (or nearly free) messaging and voice calling, along with other bells and whistles, instant message volume is going through the roof, and SMS is on the decline.

The trend has serious implications for mobile operators, which I detail in my post on the Business Blog.

Essentially, it breaks down like this. SMS travels over cell networks, costs money, and restricts you to 160 characters and/or limits per month, depending on your plan. In contrast, OTT messaging and voice apps — including BBM — send data over the Internet for free (or a low annual fee), and there are no limits on the length or number of messages you send. So the apps give consumers more for less. It’s not hard to see why they’ve become so popular.

At the same time, the trend is a big challenge for mobile network operators who have come to rely on SMS as a revenue stream.

Many OTT players look at operators as their competition and are going head-to-head with them. At BlackBerry, we have a long history of partnership with operators, and we plan to continue in that spirit. Today, we offer BBM-carrier partnership opportunities that fall into two broad categories.

The first is providing BBM to carriers as a channel for delivering ads, content, or payment solutions directly to their wireless subscribers. This is available in markets of BBM strength, where it’s used by over 10% of the smartphone population (in Indonesia, South Africa, etc.).

The second category is strategic partnerships. Together, BBM and carriers can combat IM apps and the mutual threat of reduction in SMS revenues through a co-branded BBM product called “Messages.” It’s identical to BBM and supports customization of branding, content, and services within a standard framework.

We’re offering BBM as a free solution that offers carriers turnkey RCS support on a revenue-share basis. It’s a powerful response to the OTT players that are eradicating operator SMS business.

Get the full story over at the Business Blog.

About Matthew Talbot

I am the Senior Vice President - Emerging Solutions at BlackBerry. I have extensive International Management, Sales and Marketing background in Mobility and Cloud technologies, Financial Services, Telecommunications, and Content in both a “Start-Up” and Public company environment. This includes stints as a senior executive at SAP, Sybase, Mobile 365 and others.

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