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Will iMessage Hurt Wireless Carriers

Posted by KL Tech Muse at 8:32 PM on October 11, 2011

iMessageOne of the features that is coming with iOs 5 is iMessage. iMessage will allow you to share text messages, photos, videos, locations and contacts with other iOS 5 users.  All messages sent or received are encrypted. Any message that is shared between two iOS 5 devices will be free of charge. iMessage can be either single or group messaging and will include notifications. Google is working on similar systems for Android devices. Plus Microsoft is developing it’s own instant messaging system for the Windows Phone 7 platform.

This is sending shock waves through the wireless carriers business market. Right now it can cost a customer up to 20¢ to both send and receive a text message. Approximately two trillion text messages are sent in the U.S. each year. Which translates into 20 billion dollars in revenue for the wireless carriers in the U.S. Since text messages are sent on the same network as voice calls there is little if any overhead cost for the carriers. It is estimated that a single text message cost the wireless carriers a third of a penny which means they have a markup of up to 4,090 percent according to some experts.

At first glance iMessage would appear to be bad news for the wireless carrier, however these messages are free only if they are sent from and to another iOS 5 device. Which means if you send a lot of messages to non iOs users and are on a bulk plan with your wireless carrier you are probably better off keeping that plan, then paying by messages. If however most of the people you text use iOs 5 devices, it might make sense to go with a pay by message plan with your wireless carrier. The wireless carriers are betting that for most people paying for the bulk plan will still make more sense. They don’t care if you are using the service or not as long as you are paying them for it. The biggest fear for the wireless carriers is someday a third-party app will come along that will connect people not only using different messaging plans but across all major platforms, iOS 5,  Android, and Windows. When this happens the wireless carriers will lose a major revenue stream, but for now they appear to have little to fear from iMessage.

5 Comments

  1. From Omar at 5:00 pm on November 29, 1999

    “The biggest fear for the wireless carriers is someday a third-party app will come along that will connect people not only using different messaging plans but across all major platforms, iOS 5, Android, and Windows.”

    this app already exists, it’s whatsapp, available at least on iOS, Android and Blackberry !

    sms is not dead yet as there are people out there that pay for it…

  2. From tv on web at 5:00 pm on November 29, 1999

    Honestly, I do not believe that there is any way that you will be able to hurt, so to say, the internet carriers regardless of what new stuff comes on the market, they are just too deep rooted. However in time they could lose the market, but only in a pretty long time … at least that is what I think.

  3. From Andrew at 12:13 am on October 12, 2011

    I strongly suspect iMessage will iFail in its current version for two reasons.
    i) SMS texts are popular because everyone can send and receive them. There isn’t a phone out there that doesn’t have SMS texting.
    ii) The social networking sites are now used for a great deal of “messaging”.

    If iMessage had a feature that converted messages to SMS texts when the recipient didn’t have an iOS device that would certainly go a long way in increasing adoption.

  4. From Philip from Australia at 6:43 am on October 13, 2011

    Umm, Andrew, it does have that feature. At least if you’re using it on an iPhone.

  5. From Andrew at 10:48 am on October 13, 2011

    Philip,
    That’s very interesting and I didn’t know that (because I don’t have an iPhone) and that feature does make it a much stronger messaging proposition.
    Andrew