Random startups are eating almost $14B in operator sales

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Viber. WhatsApp. Facebook Chat. Google Voice. These services all are alternative ways to send instant messages or texts across mobile platforms and join the usual suspects such as BlackBerry Messenger, iMessage and Skype as ways Internet businesses are again challenging the mobile carriers at their own game. The rise in third-party IM and voice applications has been noted in Europe, but reports out today show that carriers are running out of time. They need to hurry to co-opt their competition by playing to their strengths.

Ovum estimates operators lost $13.9 billion of potential SMS revenue in 2011 through subscribers using social messaging apps on their mobile phone, a loss in revenue that is both high margin and creates a virtuous cycle of use. When I sign up for a new social messaging service, I get my friends on it too, causing a loss in potential revenue that spreads virally. That’s how Viber, a social messaging service that was relatively unknown six months ago, can suddenly shoot up to consume 2 percent of mobile bandwidth six months later, according to data from Allot.

This morning I suggested that the challenge for carriers is finding a way to continue getting the same total dollars from subscribers while transitioning them to new services. Otherwise they might lose valuable dollars to IP-based voice and messaging services without making up the loss of voice and testing plan revenue. Ovum also pushes carriers to stop dithering and get on board with startups to offer their end users some sort of value that will keep some of that texting revenue in carrier pockets. Ovum suggests carriers focus on their ownership of the phone number:

“In addition, operators are in a position of strength because they control the entire messaging structure through their access to the user’s phone number and usage data. The established billing relationship is a great advantage, as is the fact that operators control to a great extent the services to which the user is exposed.”

I’m not 100 percent sure trying to pen users in using their phone number or creating extra hurdles to communications is the way to go, which seems to be an implication buried in Ovum’s idea. However, for widespread use, creating an easy on-ramp for less tech-savvy (or social) customers and allowing users to interconnect across services would be helpful and something that average consumers might pay for.

However, carriers who push too hard or erect too many barriers will likely see users resort, not just to giving up texting plans, but to a wholesale abandonment of their cell phone numbers. By using new services they can piece together their own IP-based communications using a device, some handy apps, and their mobile data plan.

My colleague Kevin Tofel does that right now, and while it takes a little effort today, there’s no reason a new service couldn’t come in and make it easier. By using a VoIP SIP provider and Google Voice, Kevin can receive phone calls and send texts over Wi-Fi or 3G networks at no per-minute cost, with his Galaxy Nexus. And he’s using a $30 a month data-only SIM card to do so, which eliminates all of the high-profit-margin revenues a carrier would normally earn through voice minutes and a texting plan.

Clearly, the non-techie population won’t take this route because it’s too complex for most people to bother. But if the carriers don’t begin to offer these types of services, or partner with those who do, they run the risk of third-party solutions that start to drain revenues from the network pipes.

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