Mobile internet on smartphones could HURT carriers as social networks reduce the number of text messages

It may seem that the rise of mobile internet has boosted the use of cellphones, as many people seem more glued to their phones than ever before.
But a new report suggests that the online boom could in fact lead to heavy financial losses for leading phone companies.
The paradoxical outcome is the result of people shunning text messages and using their cellphones to send short messages via email and social networks instead, according to TechCrunch.

Social media on the move: The increasing use of social networks to send short messages is biting in to carriers' text-messaging revenue

Until a few years ago, the only way to send messages on the go was via Short Message Service (SMS) - text messages.
These were a cash cow for telecommunication companies, as consumers have proven willing to pay a significant amount of money to send a text, even though technologically speaking they involve transmitting little data.
However, with the rise of social networks and cheap mobile internet, users now have a vast range of communication options, including Facebook, Twitter and network-specific tools such as Blackberry Messenger.

 

Because so many smartphone owners have cellphone plans which include unlimited or nearly unlimited data, it is harder for carriers to make a large profit from the use of these services.
According to a study by analyst Ovum, carriers lost $13.9billion in text message revenue last year - nine per cent of overall revenue - as a result of consumers using internet-based messaging instead.
That is an increase from $8.7billion in lost revenue in 2010, and it could rise further as smartphones become even more popular.

Conversation: But the rise of Skype is endangering traditional phone calls

And it is not confined to text messaging - the increasing use of web-based telephone services such as Skype could detract from carriers' primary business, the placement of phone calls.
Tech expert Paul Golding has argued that these services are challenging carriers' identities as both transmitters of electronic data and providers of services such as voice calls and SMS.
If the big carriers are reduced to no more than data transmitters similar to internet service providers, they will need to create drastically different revenue models to stay profitable.
One suggestion from Ovum for how to tackle the potential disaster is for carriers to work more closely with software designers to create applications which integrate phone and communication once more.
Telephone companies are not the only firms to worry about the impact of smartphone use even though it might be expected to benefit them.
In its initial public offering earlier this month, Facebook said that one of the biggest threats to its business was its own mobile app - because the company has not yet worked out how to make money from it.
The surprising woes of tech giants are a reminder that despite the ubiquity of the internet in everyday life, few companies have figured out how to turn the web into a business model.