Monetizing New Mobile Opportunities

Although there are clearly regulatory hurdles, designing premium encrypted and secure communications services is a wise plan for 2014


As Forbes BrandVoice writer Eric Lai acutely opined in September, 2012, “The tech industry attracts the worst kind of futurists...who behold shifting paradigms, looming inflection points.” This leads industry pundits to proclaim the death of technologies that are far from the grave. An excellent example is SMS, or short message service, and its oft-predicted funeral. Although research firms have argued otherwise, SMS use is still growing and delivering more revenue each year.

“It may be true that SMS revenues are levelling off and that OTT is on the rise, but SMS is still generating revenues of $15.3m per hour, 24/7, that’s a massive $133.8bn in 2013,” said Karl Whitfield, managing director, Portio Research, in a press release last July. “Worldwide SMS revenue has gone up year on year since the early 1990s and will continue to be above 2010 levels until 2017. SMS was levelling off before OTT apps came along, and now MNOs are gaining revenue from increased data usage instead. The MNO community has not really ‘lost’ very much at all, but there is much to play for going forward.”

Mobile messaging is worth $230 billion, and this figure will only increase. The service mix may change, as customers choose to use different messaging services at different times based on a variety of factors; but messaging isn’t going anywhere. In many ways, OTT messaging functions as a complementary service to SMS and MMS (multimedia messaging service), similar to the way that Netflix functions as a complimentary service for cable subscribers, not a replacement.

CSPs must refine and integrate their messaging services. Direct competition with OTT is unlikely to be a winning strategy. The industry’s attempt to out-compete the likes of WhatsApp and Skype with joyn, a branded iteration of Rich Communications Services (RCS), is losing support from its own membership. A better strategy is to create a messaging ecosystem that delivers the functionality that users desire and partner with OTT messaging services to offer unified identity management and single login functionality. Further, OTT services actually create opportunities for service providers to better monetize mobile data. In 2013, for example, Deutsche Telekom (DT) partnered with the popular social networking and messaging service Path, as well as Twitter and Evernote.


As Pipeline predicted in 2013, the ongoing NSA wiretapping and digital espionage scandal is creating a market opportunity for advanced security and encryption services. High-profile hacks of customer data repositories have similarly ratcheted up the focus on cyber security. In 2013, super secure communication solutions were announced by Telefónica, Verizon, and DT. Orange followed suit in early 2014. This trend is likely to continue. Although there are clearly regulatory hurdles—the laws regarding privacy are quite different in the US than they are in Europe—designing premium encrypted and secure communications services is a wise plan for 2014.


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