“Growth in the volume of text messaging is slowing sharply, just as new threats emerge to that lucrative source of wireless carrier profits,” Anton Troianovski reports for The Wall Street Journal.
“While U.S. cellphone users sent and received more than 1 trillion texts in the second half of 2010, according to CTIA, a wireless industry trade group, that was just an 8.7% increase from the prior six months. It was the slimmest gain since texting exploded last decade,” Troianovski reports. “Text traffic will come under more pressure in the months ahead. This week, Apple Inc. showed off an application [iMessage] that will allow iPhone and iPad owners to bypass carriers and send text messages over the Internet to other people with Apple devices.”
“Carriers, such as AT&T Inc. and Verizon Wireless, charge fees ranging from 20 cents per text to $20 a month for unlimited texting. The texting business has low costs and high margins. A dollar of texting revenue produces at least 80 cents of profit compared with about 35 cents of profit from $1 in wireless data or voice services, according to analysts at UBS,” Troianovski reports. “‘It’s not cool anymore to SMS,’ Eelco Blok, chief executive of Dutch telecommunications company Royal KPN NV, acknowledged on an April earnings call.”
Troianovski reports, “In the U.S., carriers are contending with subscribers like Hadi Mulhem, a 27-year-old New York City beer vendor and iPhone owner who says he texts more than he talks and would welcome the chance to lower his bill by using Apple’s iMessage. ‘If I’m able to use it and not pay $20 a month, then of course I will,’ Mr. Mulhem said.”
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