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Social networks to displace SMS text messaging?

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Photograph of Mark HeathIn May 2011, I wrote my article ‘Will Mobile Messaging Revenues Decline?’, in which I discussed declining messaging revenues experienced by Vodafone Spain. As I reported, in the year to March 2011, there was a 13.8% decline in mobile messaging revenue compared with the previous year, from GBP400 million to GBP345 million. The publication by Ofcom of its ‘International Communications Market Report 2011’ on the 14th December 2011, which contains interesting market research on the adoption of social media, has prompted me to revisit this important topic as we near the end of 2011.

Mobile industry concern about the possible negative effects of social media on SMS revenues has increased during the year. Back in April 2011, KPN in the Netherlands attributed a 10% annual decline in SMS revenues to changing consumer behaviour, where mobile applications and data services provide an alternative to traditional voice and SMS. KPN’s recent results for the quarter ending September 2011 show a further decrease of voice and SMS service revenues in the Netherlands. Among KPN’s mobile consumer customers, the number of mobile-originating SMS messages per subscriber fell substantially to 50 in the quarter ending September 2011, compared with 55 in the previous quarter.

Messaging revenues for Vodafone Spain also declined significantly to GBP77 million for the quarter ending September 2011, compared with GBP88 million for the previous quarter.

The uptake of social media has been impressive. In Ofcom research undertaken during October 2011, 79% of UK consumers claimed to have visited a social networking website. Among the 18-24 year age group, the proportion was 92%.

Of those consumers with a social networking profile, the most popular site was Facebook. 71% of people with a social networking profile in the UK stated that they visited a social networking website at least once a day. 32% of 18 to 24 year olds in the UK claimed to visit a social networking website five times a day or more.

The increasing penetration of smartphones is encouraging access to social networking sites via mobile phones. The Ofcom survey during October 2011 revealed that smartphone penetration has already reached 50% in the UK and Germany, with Italy (48%) and France (44%) just behind. According to Ofcom, 43% of UK consumers access their social networking profile page via an app or the web browser in their mobile phone.

The most popular function on social networking sites is communication with friends and family. 85% of those interviewed in the UK with a social networking profile use it to communicate with existing friends and family. 49% of those with a social networking profile in the UK agreed that social networking had significantly changed the way they communicate with people.

The challenge for mobile operators during 2012 is now to minimise any net loss of revenue from the migration of messaging traffic from SMS to social media sites.

To all our regular readers, I hope you have a restful Christmas, ready for the challenges in 2012! Thank you all for your continued support.


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