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Wireless Carriers Struggle to Combat Threat from Over-The-Top Applications, Survey Confirms

May 14, 2013
Lack of advanced messaging services and monetization strategies affects carriers' ability to compete

ALISO VIEJO, CA - May 14, 2013 - Recent survey results confirm mobile operators are feeling the threat from Over-The-Top (OTT) applications like Skype, WhatsApp and MessageMe and their drain on traditional SMS revenue. In a new survey of carriers conducted at the Competitive Carriers Association (CCA) Global Expo in April by Smith Micro Software, Inc. (NASDAQ: SMSI), 82 percent of respondents said they are not effectively monetizing OTT social messaging apps, and 62 percent are concerned about the impact of OTT apps on revenue.

"Ovum predicts that operators will lose $32 billion in SMS revenue to OTT social messaging apps in 2013, and that this number will increase to $86 billion in 2020. As our survey results confirm, operators are feeling the pain," said Jim Mains, senior vice president of global products and programs, Smith Micro. "The fact is operators are in an excellent position to raise the bar with today's social messaging services. They offer a more secure, trusted and reliable service; whereas with OTT apps, do you really know who has access to your messages and personal information?"

"One of the biggest challenges of OTT apps is discovery - there are thousands of them and growing every day. With the right visual messaging platform, operators can take advantage of prime real estate on the device to offer premium services that generate revenue beyond the one-time app purchase," said Sunil Marolia, vice president of product management at Smith Micro. "With social sharing, personalized content add-ons and targeted mobile ads, visual messaging is a wave operators don't want to miss."

According to the survey:

  • 82 percent of respondents are not effectively monetizing OTT applications used by their subscribers, and 12 percent are not sure
  • 53 percent to do not offer any form of advanced visual messaging
  • Only 31 percent offer visual voicemail, 26 percent offer voicemail-to-text, and 10 percent offer video messaging apps
  • 63 percent of carriers are concerned about the impact of OTT apps on revenue
  • When asked what type of applications in the CCA Carrier-Branded Android App Store would be most popular with their customer base, respondents ranked messaging services (59 percent) and entertainment applications (69 percent) highest, followed by lifestyle applications (27 percent) and productivity applications (16 percent)

Industry Perspective:

"Now that the market has been tested, operators know what types of messaging services work," Ovum analyst Neha Dharia said in a statement. "In addition, operators are in a position of strength because they control the entire messaging structure through their access to a user's phone number and usage data. The established billing relationship is a great advantage, as is the fact that to a great extent, operators control the services to which a user is exposed."(1)

"The survey highlights an important issue for carriers, which is the ability to effectively monetize OTT applications when they have no control over what subscribers download," said Steven K. Berry, President & CEO of CCA. "While larger operators can selectively pre-load the latest in visual messaging technology, smaller operators need an over-the-top model that lets them in on the action. This is why we created the CCA Carrier-Branded Android App Store - it gives consumers peace-of-mind knowing the apps on their devices are safe and certified, while letting carriers open new revenue opportunities, build brand recognition, and increase customer loyalty."

For access to additional key findings from the survey, please visit findings.

(1) Originally published in Fierce Wireless article

About Smith Micro Software, Inc.:

Smith Micro Software provides solutions that simplify, secure and enhance the mobile experience. Our portfolio includes a wide range of applications that manage broadband connectivity, data traffic, devices, voice and video communications over wireless networks. With 30 years of experience developing world-class client and server software, Smith Micro helps the leading mobile network operators, device manufacturers and enterprises increase efficiency and capitalize on the growth of mobile-connected consumers and workforces. For more information, visit (NASDAQ: SMSI)

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