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SMS Traffic will Reach 9.4 Trillion Messages by 2016

Mobile network operator text messaging revenue is being impacted by the adoption of alternative smartphone messaging apps -- such as WhatsApp, iMessage and others. But it's not a major concern.

According to the latest market study by Informa Telecoms & Media, they now forecast that mobile operators will still generate a total of $722.7 billion in revenues from SMS between 2011 and 2016.

"There will not be a uniform decline in mobile operator SMS traffic and revenues as a result of the adoption and use of over-the-top messaging services," says Pamela Clark-Dickson, senior analyst, Mobile Content & Applications, at Informa Telecoms & Media. "Factors such as the operators’ pricing strategies, and the penetration of smartphones and mobile broadband in a market will determine how quickly and to what extent substitution occurs."

For example, operators offering integrated tariffs that include a balanced proportion of voice, SMS and mobile data, are continuing to see growth in their SMS traffic and less impact on their SMS revenues.

While Informa is forecasting either slowing growth or even a small decline in person-to-person SMS revenues in some developed regions and countries, total global SMS revenues will increase at a compound annual growth rate of 3 percent over the next five years.

Western Europe will generate the highest amount of SMS revenues globally between 2011 and 2016, totaling $174.1 billion, followed by Asia Pacific Developing, where SMS revenues will total $173.8 billion between 2011 and 2016.

Globally, Informa forecasts that SMS traffic will total 9.4 trillion messages by 2016 -- that's up from 5.9 trillion messages in 2011. However, SMS’s share of global mobile messaging traffic will fall from 64.1 percent in 2011, to 42.1 percent in 2016.

At the same time, global mobile instant messaging traffic will increase from 1.6 trillion messages in 2011 to 7.7 trillion messages in 2016, doubling its share of global messaging traffic from 17.1 percent in 2011 to 34.6 percent in 2016.

Informa also forecasts that, by 2016, mobile operators globally will still be generating a higher proportion of revenues from mobile IM than the third-party providers of OTT messaging services will, at $8.7 billion or 54 percent of total IM service revenues.

That being said, the OTT messaging service provider share of IM revenues will climb from 37 percent of total revenues in 2011, to $7.4 billion or 46 percent of total revenues in 2016. So, the increased adoption could quickly become a huge concern to operators -- if they're unable to replace that lost revenue.

MMS remains a lucrative service for mobile operators. While global MMS traffic is expected to represent just 1.7 percent of global messaging traffic in 2016, at 387.5 billion events, global MMS revenues will represent 10.6 percent of global messaging revenues within the same time-frame, at $20.7 billion.

However, mobile e-mail will be the second highest-revenue generator for mobile operators by 2016, generating $32 billion in revenues, or 16.3 percent of total global messaging revenues. "Mobile e-mail is an important revenue-generating service for mobile operators, largely because they offer it as a service bundled with a mobile data plan," says Clark-Dickson.

In addition to RIMs BlackBerry messaging services, mobile network operators also generate significant revenues from their own-brand mobile e-mail services, and from offering data plans that enable internet access to the numerous independent mobile e-mail services.

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