SMS and the challenge of over-the-top messaging - How third-party applications are affecting operator revenues

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Since its first commercial deployment in 1993, SMS has grown to be a key mobile service, with the ITU estimating that 6.1 trillion SMS messages were sent in 2010. The service has also been a significant revenue generator for mobile operators, and in Q2 2012 made up more than a quarter of recurring revenues for operators in the developed world such as Vodafone and O2 (Telefonica) in the UK, Proximus (Belgacom) in Belgium and Optus (SingTel) in Australia.
However, recently SMS volumes and revenues in some mature markets have started to decline in the face of competition from third-party over-the-top (OTT) messaging applications such as WhatsApp, Blackberry Messenger, Facebook Messenger and Apple iMessage.
This report assesses how significant an effect OTT messaging services are having on SMS volumes and revenues in the developed world, and examines how operators can respond to the threat of these third-party players.
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