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Monday, November 10, 2014

Reality-check: some real stats on SMS and voice telephony usage trends

It's very easy to get caught up in "what's next". I spend a lot of time predicting the future of communications: apps/web-embedded voice and video (usually with WebRTC), new forms of enterprise collaboration & conferencing, Internet-based communications services (the ignorants in the industry still call them "OTTs" - they should be fired for incompetence) and so on.

But what is actually happening back in the real-world of good old phone calls and SMSs? We hear a lot about possible revenue declines (or revenue "stolen" by OTTs - ignoramuses again) as well as some bright spots like application-to-person messaging growing. But what about usage? While I disagree with the continued myopic focus on minutes and message volumes for the future, there is no doubting that those metrics still form the basis of many telecom industry mindsets.

I'm moderating a work-stream at TADSummit in Istanbul this week, about innovation in legacy services. While a lot of that concerns value-adds and APIs, some of it is going to look at innovative ways to encourage use of phone calls and SMS/MMS. 

So, bringing this to life a bit, I thought I'd do a quick scan of reported numbers by operators and regulators on what they're actually seeing in terms of usage. It should be noted that there's always definitional complexities here, so comparison between countries might not be perfect. There's some fuzziness in areas like corporate VoIP and SIP-trunking too. However, trends over time should be indicative. I'm also constrained by what I can find quickly & easily in English - which tends to push me towards European regulators, which generally have hard-working stats departments and accessible publications.

First, Ofcom in the UK. In a report published in August 2014
  • SMS/MMS volumes fell 24% in 2013 vs. 2012
  • Total outgoing fixed+mobile voice minutes fell by 3.9% in 2013. Total outgoing fixed voice call volumes fell by 10.7%, while mobile-originated minutes increased by 1.4%. (Interestingly, the mobile growth reversed an earlier decline - perhaps because of the growth of unlimited bundles)
  • 35% of UK adults used VoIP services in Q1 2014

In Spain:
  • Mobile voice minutes grew 11% in the year to Q2'2014. Again, there had been a fall in 2012-2013, but it is now rebounding. Fixed minutes decline 18%, however
  • SMS/MMS volumes in Q2'2014 were down 32% on the previous year, and are now 82% lower than at their peak in Q2'2007

In Germany
  • Fixed minutes declined 3% in 2013, and mobile grew by just 1%. Unlike most countries however, fixed usage is still about 60% higher than mobile, so it is past the point of overall "peak telephony"
  • SMS volumes fell by 37% in 2013 

In France
  • Overall telephony volumes fell 0.5% in Q2'2014 - with 8% growth in mobile not offsetting 11% falls in fixed calls.
  • SMS volumes actually grew 3% year-on-year, unlike most markets. This seems to reflect unlimited-text contract plans, as prepaid SMS volumes fell by 13%
In Sweden
  • Fixed minutes fell 13% & mobile-originated phone calls grew 4% in 2013
  • SMS volumes seem to have fallen in 2013 based on the chart in this report, but the text says the number increased by 13%.
In the US
  • Mobile voice minutes grew 14% in 2013
  • SMS volumes fell 13% in 2013
Other stats from a brief scan:
  • Canadian SMS/MMS volumes fell 4% in 2013
  • Chinese SMS volumes fell 18% in the period Jan-May 2014 vs. the previous year. Local mobile minutes grew 2.3% in that period, but at a substantially lower rate then the previous year
  • For China Mobile specifically, voice minutes grew 3% in 2013 although average use fell about 5%. SMS fell about 1.5%
  • NTT DoCoMo's overall mobile telephony minutes fell by 5% in FY2013
  • MTN Group (mostly active in Africa) had a 19% increase in voice minutes in 2013
  • SingTel telephony average MoU fell 6% in the year to March 2014, and SMS volume per-subscriber fell 30%
Overall, it seems pretty clear that there are multiple overlapping trends here, often driven by local competitive/pricing issues, as well as some cultural factors.

Firstly, it seems as though prepaid users (on pay-as-you-go plans) are much more likely to switch to Whatsapp, Skype and similar services to directly save money. This makes sense - if you pay per-message, there a direct and clear incentive to look for alternatives. Secondly, markets with all-inclusive telephony and messages seem to see volume usage improve. I suspect that this is partly due to pent-up demand from people who previously saw communications as expensive/variable-cost, and partly because when something is "free" people sometimes use more than they need, to perceive "value" (think buffet food...).

There is also...
...the chance that...
...SMS use switches to IM-style phrases...

... when users have unlimited messages, especially coupled to a good smartphone-type device with well-threaded and scrollable messaging interface and a decent keypad/touchscreen.

The aggregate numbers of fixed+mobile calls seem to demonstrate that many markets are now past "peak telephony", although they do not capture all the call-equivalent VoIP services around. There does appear to be a clear peak of calling volumes in affluent markets with a lot of post-paid contracts, however. Watching 2014 data will give an indication of whether people really are now "talking less", as certain use-cases get carved off by competing apps or complete substitutes.

The data sets we don't have are "usage by purpose". Are calls growing longer or shorter? To a greater number of contacts or fewer? From certain locations, or particular applications? For example, maybe there are more long calls (conferences, calls to family etc) but fewer B2C interactions or short "information calls" (eg arranging meetings). The lack of analytical insight into the voice telephony and SMS market make it hard to discern the inner details of the macroscopic trends.

Taking everything together, there appear to be a few general observations that can be made:
  • Not everyone is "bored" with telephony yet, especially in mobile. It's also still not that easy to replace with VoIP on smartphones.
  • SMS is facing both huge pricing pressure and people switching for both price and utility/function reasons. Volumes may not tell the whole story.
  • We have not yet seen a major shift toward in-app / in-context comms for voice communications.
  • More granular detail would be good, as otherwise important trends may get "lost in the noise" as pricing plan changes and other factors swamp and hide the initial stages of market evolution.

1 comment:

Gunnar Almgren said...

Interesting summary. Intrigued by the 14% increase in Mobile minutes in the US. Due to high penetration of "unlimited call/text" plans ?

Regarding the Swedish SMS figure, there seems to be a typo in the English version of the report (says 13% decline in Swedish version). Chart is correct.