SMS traffic and revenues decline for the first time ever in U.S., Chetan Sharma says


U.S. mobile operators raked in third quarter 2012 data revenues of $19.9 billion, up 3 percent quarter-over-quarter and 17 percent year-over-year--despite suffering their first-ever decline in overall text messaging traffic and revenues, according to new research from Chetan Sharma Consulting.

Although U.S. subscribers still send an average of more than 650 text messages per month, data indicates that messaging revenues have peaked, Sharma said. "It might be early to say if the decline has begun or the market segment will sputter along before the decline takes place. Once the market segment reaches the 70-90 percent penetration mark, the decline begins and we might be seeing the start of the decline in messaging revenue," he noted. "The decline is primarily due to the rise in IP messaging and operators have been slow to evolve their strategies in the segment."

Data now represents close to 43 percent of all U.S. mobile industry service revenues, and remains on pace to eclipse the $80 billion mark this year. Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) together generated 69 percent of U.S. mobile data services revenues during the third quarter. The two operators combined account for 66 percent of the nation's wireless subscriber base.

Mobile data traffic growth is likely to slow down to roughly 80 percent in 2012 after doubling for the past five years, Sharma said, adding that voice traffic will slip below 10 percent of overall traffic. Overall data consumption in the U.S. market is expected to exceed 2,000 Petabytes/2 Exabytes this year, with some operators averaging smartphone data consumption of close to 900 MB per month. "As we move into 1 GB range along with the family data plans kicking in, you can expect the data tiers to get bigger both in GBs and dollar amount," Sharma said.

Overall average revenue per user slipped by $0.15 during the third quarter: Average voice ARPU declined $0.58, while average data ARPU grew $0.43, a 2 percent quarter-over-quarter increase.

For more:
- read this Chetan Sharma Consulting report

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