NEW YORK (TheStreet) -- According to new analysis, third-party messaging software such as WhatsApp, Facebook (FB) , Twitter (TWTR) and Skype (MSFT) will cost mobile network operators mobile network operators (MNOs) more than initially thought, as consumers habits change, putting pressure on the likes of AT&T (T) and Verizon (VZ) .
Juniper Research found that the transition from what used to be core voice and data services to an app-centric environment has had a severe impact on network operators' profits. Voice and instant messaging traffic lost to OTT (over-the-top) players such as WhatsApp (owned by Facebook), Facebook, Twitter, Microsoft's Skype and others will cost network operators $14 billion in revenues globally this year, up more than 25% from 2013 numbers.
The study finds that OTT app usage generates costs, but not revenues, for the networks. Consumer behavior has shifted from primarily using voice conversations and text messages to now preferring social media posting as well as making additional comments on all of those posts.
Juniper believes MNOs are in the process of having their core revenues eroded, in many cases sharply eroded, by a combination of new factors including VoIP, increased backhaul costs, market saturation, regulatory intervention and spectrum shortages. "Separately these factors can be challenging for operators to address," the survey found. "Added all together they have the potential to be ruinous."
In a number of markets around the world, including Italy, Spain and the UK, operator mobile voice revenues had fallen to less than 60% of their value five years ago.
But, Juniper has identified a number of new income streams with the potential to deliver revenues to operators that could total more than $66 billion over the next five years -- the resulting revenues could "more than offset the decline from core service revenues on an annual basis by 2018.
Carriers need to add additional services to its offerings, Juniper noted, including 4G voice services, direct carrier billing, Mobile Money (NFC, Money Transfer, Mobile Banking), M2M (Machine-to-Machine) transactions and operator-run VoIP services and have the opportunity to see overall revenues increase. "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," Dr. Windsor Holden, the author of the report, noted.
By adding these potential services, it could boost revenues lost for the operators by a wide margin. Juniper noted that $7.2 billion in revenue was generated in 2013 from these services, a number that's expected to rise to $30 billion by 2018.-- Written by Gary Krakow in New York.
To submit a news tip, send an email to email@example.com.