Instead of paying a set amount to send a message via your mobile provider, smartphone users are now turning to apps like WhatsApp, WeChat, Viber, Line and KakaoTalk, all of which boast large customer bases and offer innovative features like the ability to send pictures and videos.
Frost and Sullivan analyst Ajay Sunder says the shift is hitting markets all around the world.
"Definitely in the developed economies we're already seeing a trend of declining SMS revenues. But even in emerging economies, like Indonesia, some of the operators are already seeing the impact of OTT apps on their voice and SMS revenue. With Thailand, for example, the minutes of usage of the top three voice providers actually declined close to 4 percent when Line was introduced in 2011."
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Earlier this month, Singapore's second-largest mobile carrier, StarHub, inked a deal with Line to offer OTT-based data plans. The tie-up followed a similar arrangement with WeChat in December. Michael Chang, StarHub's Assistant Vice President of Mobility, says the company also plans to launch its own OTT app for customers this year.
"In the second half of 2014, we plan to launch new communication services which will enable customers to enrich their messages or voice calls with videos and images. We are also constantly exploring mutually beneficial and sustainable business models with various other OTT players. We are in talks with more players besides Line and WeChat to enrich our portfolio and give customers more choice.