Tuesday, 18 October 2011

Phone revenue future all about data

Phone revenue future all about data
Published On Tue Oct 18 2011 By John Terauds Staff Reporter
If Hamlet had a smartphone, he might ask, “To text, or to message: That is the question.”
The answer is worth about $5 a month to the average Canadian wallet, as an increasing number of people switch from sending text messages on the country’s cellphone voice networks to using instant messaging on smartphones. Canadians trade nearly 7 billion regular text messages every month. But with the growing popularity of smartphones, the shift to data-based instant messaging has begun in earnest.

People once paid a monthly fee for a set number of text messages or, typically, 15 to 20 cents on a pay-per-message basis. Instant messaging piggybacks on a smartphone’s data plan, eliminating the need for a separate charge.The eventual disappearance of traditional texting has the potential to take $5 out of a typical cellphone bill, suggests industry analyst Peter Rhamey, of BMO Capital Markets.
On the other hand, customers’ data plans appear to be making up for any eventual reduction in income from text messaging.“There is a perfect storm coming where all the pieces will be in place to grow mobile usage,” says Bryan Segal, vice president of sales at comScore, a telecom industry research firm. He predicts “a tsunami of data revenue.”
Rhamey reports that, currently, “Canadian carriers are growing data revenue by 30 to 50 per cent a year.”Telus reported that, during this year’s second quarter, its wireless data revenue per user increased by 39 per cent to $19.25, up from $13.80 at the same time last year.
Rogers did not provide specific figures, but spokesperson Patricia Trott said that both regular texting and instant messaging have been increasing among its customers. “We’re seeing both as complementary,” she said. Despite a small increase in the number of subscribers, total data revenue at Telus grew by 49 per cent in the second quarter. This neatly offsets declining income from voice service, which includes text messaging.
In real terms, Telus has made $4.04 less from each voice user, but earned an extra $5.45 on the data side, since last year.In case this is viewed as pure profit, Telus spokesperson Jim Johansson points to a need to complete costly infrastructure upgrades. “Today’s smartphones consume about 15 times more network capacity than the basic cellphones of a few years ago,” he states.
But putting a price tag on invisible improvements is likely to be challenging. “How do you explain capital spending?” Rhamey asks.
It looks like the carriers will have to try. Telus has reported that 42 per cent of its non-prepaid subscribers chose smartphones in the second quarter. On Friday, Sony Ericsson announced that it would stop manufacturing regular cellphones at some point in 2012, because 80 per cent of its sales now come from smartphones.
The four-day global service breakdown of BlackBerry Messenger and Apple’s introduction of iMessenger on its new iOS5 operating system further underlined how important instant messaging has become.
A host of other services available to smartphone users, including Facebook Messenger, Windows Live Messenger, Google Talk, Pinger Textfree and Yahoo Messenger, work the same way.
Peter Rhamey predicts that the next breakthrough will be a “clearing house” that will allow all instant-messaging systems to freely connect with each.

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