Smartphones: Good news or bad news for operators?

The data traffic being produced by smartphone users is starting, for some operators, to counterbalance their falling voice revenues. It's welcome news, indeed, given that promoting the wider uptake of mobile data has been a troublesome exercise for operators whose business culture is steeped in generating billable voice minutes.

But smartphones bring with them some untidy baggage: high subsidies and, more worryingly, the damage IP-based applications are having on traditional services such as text messaging.

While smartphone subsidies are already being addressed by some European operators by not offering "discounts" on these devices to new subscribers, the issue of smartphone apps cannibalising the likes of text messaging is harder to fix. And this latter problem looks set to become bigger if findings from ABI Research prove correct.

New data from the research firm states that, while global shipments of non-smartphones will grow from 1.08 billion in 2012 to 1.09 billion in 2016, smartphone shipments will rocket from 643 million to 1.1 billion over the same period.

The study also highlights that as smartphones eclipse all other handset shipments by 2016, low-cost smartphones (sub-€113 devices) will start to make inroads, growing from 45 million shipments in 2012 to 170 million in 2016.

The acceptance of these more advanced handsets brings with it the use of more non-voice communication methods: email, Facebook, VoIP and instant messaging together with the more traditional SMS and MMS. Perhaps understandably, subscribers are becoming less interested in which communications route to use, simply allowing the smartphone to manage this via a contact client service.

According to a recent report from Strand Consult, these contact client apps are becoming available on newer smart devices, and are capable of handling all contacts for family, friends and work colleagues--regardless of the underlying communications platform.

Strand Consult believes that these types of contact apps are shifting SMS traffic away from the mobile operators and over to other forms of communication like email, Facebook and the many other apps that are taking advantage of the flat rate data subscriptions that many smartphone customers now purchase as part of their mobile subscription.

The research firm claims that operators in Norway and Denmark are already experiencing a decrease in text messaging traffic due to these new contact client services, and points towards a failure by operators to adapt their business models to manage the changes being triggered by smartphones.

Having seen text messaging grow into an enormous and a highly profitable cash cow, operators seem stunned that other more agile competitors using IP-based apps would want to encroach on this business. --Paul