BARCELONA, Spain – Just past the security gate for the worlds largest cellphone trade show in Barcelona, executives of big mobile carriers couldnt avoid walking past a booth they would probably rather not see: It was for Pinger, a small California company that offers free texting in the United States and Germany and has global expansion plans.
Pinger and an explosion of smartphone messaging services – iMessage, BlackBerry Messenger, WhatsApp, Viber Media, Facebook Messenger and KakaoTalk – have managed in just a few years to slash away at the important revenue that cellphone companies get from text messaging. Analysts say theres no end in sight to the financial blood letting.
The messaging services do it by offering applications that let phone users chat for free on the carriers data networks or Wi-Fi. Some, like Pinger, make money from advertisements and work on computers as well.
The London-based Ovum research firm estimates telecommunications companies lost nearly $14 billion last year in text-messaging revenue as consumers migrated to applications allowing them to send messages over cellphone data networks.
Ovum said the companies still took in an estimated $153 billion, but that was down 9 percent from a year earlier, and Pinger co-founder Joe Stipher wants to reduce the amount even more.
Text messaging is free, and calling is going to be free, said Stipher, wearing jeans in contrast to the dark suits favored by thousands of cellphone company executives attending the four-day 2012 Mobile World Congress the last week in February. Data is going to be like electricity or water, not totally free, but do you worry about giving someone a glass of water at your home or letting them plug in? No.
Mobile companies are not happy at the flood of free messaging services piggybacking their networks. Telecom Italia SpA chief executive Franco Bernabe told MWC that free messaging services are undercutting the ability of phone companies to invest in their networks.
Paid texting, or SMS, has been a cash cow for phone companies that uses minimal network capacity.
The new players have based their innovation in the mobile domain, without a deep understanding of the complex technical environment of our industry.
This is increasingly creating significant problems to the overall service offered to the end user and driving additional investments for mobile operators, Bernabe said.
After years of study, the big telecommunications operators announced last month that they will try to fight back by introducing software this year embedded in new cellphones that will allow users to do the same sort of Internet-based messaging and voice calls that consumers want without paying separate fees.
The new messaging method introduced by the industry group GSMA, or Groupe Speciale Mobile Association, is dubbed Joyn and will be launched this year by operators in France, Germany, Italy and South Korea. A test beta version was released to Spanish clients of Vodafone Group PLC who have smartphones running on Googles Android software.
In industry parlance, the application is known as Rich Communications Suite, or RCS.
Joyn tries to deal with one major shortcoming of the messaging apps – both the sender and the recipient have to have the same app. But its not clear whether RCS will work on every phone. Apple Inc., for example, has a long history of not playing by mobile company rules.
Since Rich Communications (Suite) will be fully integrated in devices, there is no need for our customers to download or install anything, said Rene Obermann, chief executive of Germanys Deutsche Telekom AG. Ease of use is thus ensured and it will just work. We are looking forward to offer new services like text chat, file and live video sharing during a call to our customers soon.