Instant messaging has transformed the telco market
The global telecommunications market is a fast-paced environment and companies must ensure they are right up to date with the latest technological developments if they are to remain competitive.
One of the biggest challenges facing telecom providers is dealing with soaring mobile traffic levels. Smartphone sales have risen sharply and while growth in this area is predicted to tail off in the coming years, firms will still find it difficult to keep their clogged networks running smoothly.
The huge popularity of instant messaging has certainly had a major impact on the sector of late. Consumers all over the world are frequently using services such as WhatsApp and social media chat platforms to send free messages to their friends and colleagues. Video services like Skype and Google Hangouts have also revolutionised the communications industry in recent years.
While the benefits of free instant mobile messaging are clear from a consumer's perspective, there are numerous challenges for service providers to consider. Some of the most pressing problems include:
- Declining SMS revenues
- Extra online traffic
- Security/privacy concerns
This feature will track the trajectory of instant messaging and will also look at some of the issues that such services may cause in more detail.
The growth of instant messaging
In a recent report, telecommunications industry analysts at Juniper Research predicted that instant messaging will account for 75 per cent of all mobile messaging traffic by 2018. This would be the equivalent of 63 trillion messages.
Report author Sian Rowlands commented: "Adoption of IM (instant messaging) apps has rapidly accelerated over the past 18 months, something which has led Juniper to revise upwards our forecast for the volume of IM traffic."
Clearly, this is going to have a significant impact on telecom companies' revenues and firms will have to adapt if they are to continue making money from messaging services. But how do businesses make profits from services that people are using free of charge?
According to Juniper Research, instant messages will only generate two per cent of mobile messaging revenues by 2018, despite the fact they are expected to dominate the market in terms of volume. The instant messaging market is still in its infancy and app developers have adopted different approaches to maximise revenue - with mixed results.
Some firms have made money from advertising and subscriptions, while others have introduced in-app games and purchases. There are some examples where messaging apps are intended to make a loss, as their sole purpose is to increase awareness of other paid apps and services.
Are SMS services set to become extinct?
With such a big proportion of mobile messages expected to be sent free of charge by 2018, it would be easy to assume that SMS services will eventually become obsolete.
However, this might not be the case, as Juniper Research believes that consumers will still use paid text messages. It stated that a large slice of instant messaging traffic is made up of people sending emoticons, images and stickers and the average mobile user will send ten 'chats' to convey a message that can be sent in just one SMS.
A study undertaken by Deloitte has also shown that SMS services are still lucrative for telecommunications providers. Although it predicts that 50 billion instant messages will be sent in 2014, more than double the number of paid text messages (21 billion), the latter will generate revenues of $100 billion this year. This is more than 50 times the amount of money made from instant messages.
With mobile traffic levels expected to soar in the next four years, it is vital that communications providers have a network infrastructure that can cope with the strain. Instant messaging services require reliable internet connections and with more people using free packages such as Skype and Google Hangouts to conduct important business meetings, network suppliers are under more pressure than ever to perform.
Back in 2011, there was a well-publicised outage in Research In Motion's BlackBerry messaging service - known as BBM. Users in the Europe, Middle East and Africa regions were left without instant messaging for a prolonged period and a lot of people lost faith in the service.
To avoid this kind of reputational damage, companies must do all they can to keep things running smoothly and make provisions for the inevitable backlog of data should customers suddenly experience downtime.
Another major issue that companies must deal with is cyber security.
Facebook's recent purchase of mobile messaging service WhatsApp has caused controversy, with opponents suggesting the deal might prompt changes to the platform that could potentially affect users' privacy.
A complaint has been submitted to the US Federal Trade Commission regarding the acquisition, which is reported to have cost Facebook around $16 billion, although WhatsApp has refuted claims that privacy standards might be compromised. In a blog post, WhatsApp Founder Jan Koum said there is a lot of "inaccurate and careless" information being circulated and that respect for customers' privacy is "coded into [the company's] DNA".
"Everything that has made WhatsApp the leader in personal messaging will still be in place. Speculation to the contrary isn't just baseless and unfounded, it's irresponsible," he wrote.
Debate surrounding the Facebook/WhatsApp deal will continue and, regardless of the outcome, this case highlights the growing importance of instant messaging. With so much data being shared via these platforms on a daily basis, service providers must ensure they are fully prepared for possible criminal activity. Conversations between work colleagues, who might be discussing corporate issues or sharing sensitive company data, must remain private and out of the reach of hackers.
Concerns have been raised about the security of popular app Snapchat, which enables users to send ten-second video clips to their friends. Once the footage has been viewed, it is then destroyed. In January 2014, a group of hackers said they had breached the app's defences and were able to gain access to personal details of 4.6 million people, including their phone numbers and usernames.
This highlights the point that companies face a constant battle to ensure instant messaging services are secure.
Conclusion: Are instant messages the future?
There is no doubt that instant messaging has already overtaken SMS as the consumer's favoured form of communication, although the latter will continue to be far more profitable.
Facebook's recent purchase of WhatsApp is a telling indication that large technology, networking and communications firms see instant messaging as the future. With so much extra traffic to contend with, firms need to ensure their defences against cyber criminals are as tight as possible.
There have been calls for the instant messaging industry to be more closely regulated. Speaking to PTI in February 2014, Gopal Vittal, Joint Managing Director and Chief Executive Officer of Indian operations at multinational communications firm Bharti Airtel, said telecom firms are already subject to regulation and instant messaging app providers should be forced to follow suit.
"I think we need a framework by which these companies are subjected to similar jurisdiction ... because that will benefit everybody concerned," he was quoted as saying.
While it is unclear whether Mr Vittal's suggestions will be acted upon, it seems that user privacy and security are the most pressing issues for businesses to deal with in the coming years. While firms must also find new ways to increase revenues from such services, this should not be prioritised over data protection, as losing customers' personal data can not only lead to heavy financial penalties, it can also cause irreversible reputational damage.
The vast popularity of instant messaging suggests there is a lot of money to be made and it is important that telecommunications companies adapt as the industry continues to evolve.