IMessage Strikes Blow to SMS as Carriers Lean on Data

IMessage Strikes Blow to SMS as Carriers Lean on Data

Apple’s free iMessage service strikes another blow at text messaging, as carriers seek new pricing options to make up for lost SMS income.

Some iMessage users, including developers, noted a significant decline in text messaging after switching over to the Apple service, according to the New York Times. The evidence is anecdotal and a large-scale study will be needed to better gauge the effect of iMessage on SMS usage, but it heralds a shift analysts predicted as services like iMessage hit the market.

IMessage lets users send free instant messages, photos, and videos to other iOS users, and operates on 3G, 4G and Wi-Fi instead of through a cellular network.

A surge of smartphone subscribers opted for iPhones after the release of the iPhone 4S, so consumers exchange iMessages instead of ordinary text messaging. IPhone users now spend significantly less on texting once their contacts join the Apple iOS platform. Apple plans to link iMessage with its Mac computers, heightening the system’s appeal and expanding the reach of the communications system beyond phones.

IMessage joins a number of messaging options undercutting SMS, including Research in Motion’s BlackBerry Messenger service, the primary alternative to SMS. In addition to BBM, Skype and messaging apps like Whatsapp offer cheap and simple ways around the traditional text message. Accessibility to social media services like Facebook, which is tinkering with its own messaging app, and Twitter also diminish demand for overpriced SMS.

Carriers mark up their text messages by over 4,000%, so the onslaught of free messaging services reduces carrier revenue. Carriers rake in 20 percent of their earnings on text messaging charges. However, as traditional texting declines, that revenue from SMS will likely decline. To combat losses, carriers will lean on data to make up the difference.

Most carriers have already started shifting emphasis to data in their pricing plans, eliminating their unlimited data packages and introducing tiered pricing meant to encourage customers to buy the larger, expensive packages. Carriers are also responding to network issues caused by growing data use by throttling heavy users’ data.

AT & T, Verizon, and other carriers are doing everything they can to increase data package prices, charging more for overages and pushing larger packages on customers. Data-heavy apps are gaining popularity, including Spotify, so carriers are likely to see some profits from this gambit.

However, users are likely to rebel against overpriced data packages, just as they’ve rejected overpriced text messages. Tablet users already opt for Wi-Fi instead of 3G to avoid data charges. Carriers risk alienating smartphone customers as they tighten their grip on data plans.

IMessage’s growing popularity points to the imminent decline of text messages. Carriers will likely innovate money-making plans to counter the fall of text messages, or suffer losses as they fail to adapt.

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