Three's MMS pricing hike is a sign of changing market dynamics

In October last year, a report from Ernst & Young (EY) said telecoms operators across the globe see disruptive competition -- particularly from over-the-top (OTT) players -- as the biggest challenge they face today.

EY noted that while operators still enjoy a majority of "ecosystem revenues", OTT players had grown their share to 10 per cent within only a few years. Juniper Research, meanwhile, said last September that the messaging market would decline from $113.5 billion (€102 billion) in 2014 to $112.9 billion in 2019, while messaging traffic is forecast to double by 2019 -- driven by OTT messaging applications, such as WhatsApp and LINE.

In other words, much has changed, as evidenced by the shift in mobile network operator (MNO) attitudes towards OTT players. As our special report highlighted in 2014, MNOs and OTT messaging providers had a somewhat uneasy relationship in the past, but operators have long since accepted that if they can't beat OTT providers, they should instead collaborate with them while looking for new ways to generate revenue.

Thus Three UK's recent recommendation that its customers should now use Skype, WhatsApp, Facebook Messenger, Viber et al for sending MMS reflects how OTT apps and services are now part of the fabric for data-focused mobile players. The operator gave this advice after announcing it would increase the charge for sending multimedia messages from 17.4 pence to 40 pence per MMS in June.

Three is hardly the first MNO to make use of OTT apps within its service offering, but this is an explicit acceptance that offering cheaper MMS services now represent a futile effort to keep users in the face of the OTT challenge.

Yet, although MNO attitudes continue to evolve, they do not have the reputation of doing anything quickly. They are turning to VoLTE and WiFi calling to combat competition from chat apps, while application-to-person (A2P) SMS traffic, M2M and the IoT are areas of potentially huge revenue growth for MNOs in future -- if they make the right moves at the right time in order to stay relevant.--Anne

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