Anyone who finds it hard to believe that the average U.S. mobile subscriber sent 696 text messages per month in the second quarter of this year may be relieved to know that this figure fell to 678 per month in the third quarter.
It was the first-ever decline for SMS (Short Message System) use in the United States, according to a report released on Monday by Chetan Sharma Consulting. SMS use and spending may have peaked in the U.S. in the second quarter, the report said.
SMS caught on relatively late in the U.S. after being widely adopted by consumers in many European and Asian countries. SMS use reached its peak earlier in other countries, with messaging revenue now starting to fall in most Western markets, the report said. U.S. mobile operators continued to see gains in SMS, but in the third quarter, both the volume of messages and the revenue they generated went down, according to analyst Chetan Sharma, who runs the consulting company.
Sending text messages caught on partly because it can be both cheaper than making a call and more dependable in areas of poor coverage. But some consumers now use alternatives based on Internet Protocol, such as Skype messaging, which can cut into a monthly data allowance but doesn't require paying per message or buying a monthly plan specifically for SMS.
The SMS data was one of the highlights in Sharma's latest wide-ranging quarterly report on the mobile industry.
Mobile traffic growth slowing
The report also forecast that the growth of mobile data traffic will slow in 2012, falling to an 80 percent rate after doubling annually over the past five years.
Growth in consumers' use of mobile data has been used to justify many calls to give more spectrum to mobile operators, including a 2010 pledge by the Obama administration to allocate 500MHz more of frequencies to mobile services within 10 years. The trend has also helped to sell technologies for achieving greater mobile network efficiency and traffic offload. In its widely quoted Visual Networking Index, Cisco Systems estimated earlier this year that mobile data use would grow by 110 percent in 2012.
But tiered pricing, in which subscribers choose a level of monthly data use for a certain price, has helped to put the brakes on consumption growth, according to Sharma. So has the use of Wi-Fi, which lets subscribers avoid using the 3G or 4G cellular data network while at home or in range of public Wi-Fi hotspots, Sharma said.
Still, mobile data traffic is huge: For this year, it's likely to go over two exabytes, according to Sharma. For some carriers, the average monthly use by a smartphone user is almost 900MB. As the average user's total grows, it could mean bigger data plans, at higher prices, coming in the future, the report said.
Data now accounts for nearly 43 percent of mobile industry service revenues in the U.S., and by early next year it's likely to generate a majority of the money coming in, Sharma said. Voice calls represent less than 10 percent of all network traffic, according to the report, but still generate revenue out of proportion to the amount of capacity they consume.
More than 75 percent of the devices carriers sold in the third quarter were smartphones, according to Sharma. Google's Android platform represented the largest portion of those phones, but Apple dominated the market in terms of revenue and profit. Apple sold 6 percent of the volume of handsets worldwide but got 70 percent of the total smartphone profit. Meanwhile, Apple led in unit shipments for tablets, and took in 95 percent of all tablet profits, Sharma reported.