Short-lived glory for SMS | Business Standard Column

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At its peak, the SMS service could make up for as much as 10 per cent of a telco’s total revenues, now it’s negligible in the overall share

Nivedita Mookerji

The Monday night WhatsApp-Facebook blackout halted conversations and businesses across India—the largest market of the Menlo Park-headquartered group. But the mega outage, the first of its kind in scale, also pushed desperate mobile users to SMS, which has been on the slide for long. With 400 million WhatsApp users out of 2 billion worldwide, the data-based platform has increasingly been adopted as the primary mode of chat in India.

So what’s the SMS universe like now? Mostly used for receiving OTPs to transact online and sometimes for bank statement updates, SMS is just an idle but must-have entity on the phone screens these days. WhatsApp, Telegram and Signal are the go-to apps for any worthwhile conversation, with or without the fear of hacking and data security breach at all times. In the early days of mobiles, SMS was the most popular way of communication because it cost less than a call. Now text messages are part of any telecom operator’s package and therefore mostly free unless it’s an international SMS. Yet its popularity has continued to decline steadily. Even businesses, including cinema chains and airline companies, subscribe to WhatsApp.

At its peak, the SMS service could make up for as much as 10 per cent of a telco’s total revenues, now it’s negligible in the overall share. According to the latest numbers from the Telecom Regulatory Authority of India for 2020, short messaging service or SMS fetches just about 0.55 per cent of the total revenue of telcos on average. This has gone down from 0.97 per cent of the total revenue in 2019. While in 2020, only 59 paise per subscriber per month was the contribution to the average revenue per subscriber per month (ARPU), it was 85 paise the previous year for the telecom industry. Revenue from calls was higher at Rs 17.72 in 2020 against Rs 8.12 in 2019.

It’s however the sharp difference in data usage number that explains why WhatsApp and not SMS is at the top of the messaging game. Out of a net ARPU of Rs 94.87 a month in the telecom industry, revenue from data usage contributed as much as Rs 81.81 as of 2020, up from Rs 42.37 in the previous year out of a total kitty of Rs 4.88. Compare the latest revenue composition: 76.69 per cent from data, 16.61 per cent from calls, 0.55 per cent from SMS, and the rest from other services.

In 2020, wireless subscribers on average sent out only 16 SMSes a month, down from 17 per subscriber per month in 2019, a drop of 7.24 per cent. In 2018, the number stood barely higher at 18, with SMSes contributing 1.63 per cent of the total revenue. In comparison, data made up for 47.92 per cent of the revenue, while calls only 15.82 per cent. If we go back to the December quarter of 2014, SMS accounted for 2.9 per cent of the revenue for GSM telcos such as Airtel and Vodafone. And even earlier, say in 2007, the average SMS revenue was over 5 per cent in the overall revenue composition.

In contrast to the decline in relevance of SMS revenue, the data ARPU numbers are getting stronger. In 2014, wireless data usage was worth Rs 71.25 per subscriber per month. It rose to Rs 90.03 in 2015 and then hovered around the same range till 2018. There was a dip in 2019, with data ARPU at Rs 76.59, in the aftermath of deep discounting by telcos. In 2020, it rose to Rs 128.61. The total wireless industry revenues from data also shows where the future lies. From Rs 22,265 crore in 2014, it has increased to Rs 1.1 trillion per year. In 2020, it grew by an impressive 90.71 per cent. Wireless data usage establishes the same pattern: Total data used in 2016 was 4642 million GB per year, and that’s gone up to 103,522 million GB as of 2020. If you further slice and dice, 4G data accounted for 96 per cent of the usage in 2020, 3G was only 3 per cent and a minuscule 1 per cent made do with 2G.

At a time when India’s teledensity is at over 88 per cent, with urban teledensity at more than 141 per cent and rural teledensity upwards of 60 per cent with data-based services emerging the most powerful, SMS loyalists will be few. Days and nights of WhatsApp outages aren’t likely to be too many.

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