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October 23, 2014

Mobile operators to lose $14bn to Facebook and Whatsapp this year

Increased demand for VOIP, instant messaging and social media

By Amy-Jo Crowley

Mobile operators are set to lose $14bn in sales globally to messaging applications from over-the-top service providers such as WhatsApp, Facebook and Snapchat this year, according to research.

The study that surveyed a number of operators worldwide including Vodafone put the loss down to increased demand for VOIP, instant messaging and social media.

As a result, operators are losing out on potential revenue streams while paying more on increasing data costs that do not generate any revenue.

The report, conducted by Juniper Research, found that, between 2011 and 2013, the average number of SMS or text messages sent per user across Vodafone’s network dropped by 15% from 201 to 172.

In the Netherlands, KPN users are now sending 60% fewer text messages than they were three years ago, while users of Vodafone Spain are sending 41% fewer texts.

The report also predicted by the end of this year, 120 million consumers worldwide are expected to be using an OTT VoIP service on their smartphones.

However, the report said operators could generate new revenue streams, which could more than offset the decline from their core service revenue on an annual basis by 2018.

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Dr Windsor Holden, who wrote the report, said: "In areas such as M2M and mobile money, operators can achieve a substantial revenue uplift by focusing on full service provision rather than simple connectivity."

Richard Kenedi, president at Tektronix Communications, a networking firm, added: "Moving to NFV lets operators trial potential services for a much lower cost and greatly reduced burn rate. NFV also encourages them to adopt the OTT culture of "quick failing", trying a number of new services in rapid succession until they find one that sticks and has a positive impact on their bottom line.

"This is where the money is in NFV, letting operators deploy their own brand-building services quicker and easier than before. Gaining efficiency through network virtualisation, along with adding infrastructure to monetise subscriber data like location, is vital to creating a solid financial model for sustainable growth."

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