Apple's iMessage Could Alter Carriers' Text, Data Plans

With Apple releasing the iMessage application for its iPhone, analysts have mixed opinions about what that will mean for text messaging and data plans.

There's a huge amount at stake here, Sanford C. Bernstein analyst Craig Moffett told the New York Times. They (Apple) are undermining the core business model for an industry that makes most of its money from services that are high priced and low bandwidth, like texting.

The iMessage service allows iPhone users to send text, photos and video to other iPhone users through wireless Internet or a data plan. This is the iPhone's alternative to BlackBerry Messenger, or BBM, which has kept some loyal Blackberry users from switching over to Apple's product.

Text messaging has become a major revenue generator for telecom companies. The New York Times pointed out Monday that Verizon Wireless garners as much as $7 billion annually from text messaging -- about 12 percent of total revenue. This is because although text messaging has become a way of life for many Americans, the company still charges 20 cents for both incoming and outgoing messages.

Yet the advent of BBM, so far, doesn't seem to have made a dent in the amount of text messaging. According to a survey conducted by the Pew Research Center last month, text messaging users over 18 years old send and receive an average of 41.5 messages per day. Those between the ages of 18 and 24 send or receive an average of 109.5 text messages a day.

Christopher King, an analyst with Stifel Nicolaus who covers the telecommunications industry, told the International Business Times that a program such as the iMessage won't significantly undercut the revenue of telecom companies in the near future. He cites the current popularity of text messaging as evidence that it is here to stay for a while.

With text messaging, people with all different types of phones can get ahold of each other, something that can't be accomplished with BBM and iMessage, points out Todd Day, an industry analyst with Frost & Sullivan.

For that reason, I don't think text messaging will go away quickly, he told IBTimes, although he said the price of text messaging may go down within the next year or so and likely will be incorporated into data plans in the future.

Although they have not caught on with the public, the real decline in text messaging will happen when applications allowing people to chat across mobile platforms takes off, which could happen in the next couple of years, Day predicts.

King said that even if text messaging were to decline in the future, higher data prices for smartphones would help carriers earn back lost revenue. Data plans have moved towards tiered-pricing in part to make up for some of the lost revenue, King said.

The two carriers that currently sell the iPhone, AT&T and Verizon, both have tiered-pricing based on data usage. Sprint, which will begin selling the iPhone on Friday, has unlimited data, which they hope will lure business away from their two larger competitors.

But Day doesn't predict Sprint will keep up the unlimited deal for too long; he gives it about a year as the company continues to build their subscriber base. In fact, he believes carriers will eventually move towards five to 10-tiers of data plans, allowing for more customization.

Some people might want unlimited Tweets, some might want unlimited Facebook, some might want unlimited iMessage, he said. Like voice calling, eventually people will choose what data they want in their phone plan.

Write to Samuel Weigley at s.weigley@ibtimes.com.

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