Telecoms companies, and the mobile networks in particular, frequently disclose the proportion of their revenues that come from carrying data rather than voice traffic. This does have an impact on margins and growth prospects, but the impact is not straightforward and extrapolating from this data is not easy.
Different types of data revenues have very different characteristics. Bandwith (amount of data transferred over time) usage varies enormously. The margin on different data revenue streams tends to fall over time as they mature.
Data revenues cover everything that comes from non-voice services, this includes:
- SMS: text messages use very little network capacity so the price per unit of data transferred is very high, but the amount of data transferred is very low.
- MMS: picture messages use substantially more data than text messages.
- web browsing: still more data traffic needed.
- VOIP: still larger amounts of data, but cannibalises voice revenues.
- other services such as music quality audio produce still more demand for data and can allow telecoms companies to sell content as well as connectivity as well as the connection: as long as they can persuade customers to stay in their walled garden.
- video: Needs by far the most data transferred.
Which revenue sources have most room to grow depends on current market conditions which currently vary quite widely form country to country. Voice is clearly the most mature and volume growth will largely be driven by price cuts (inevitable in the competitive environment) so revenues are not likely to grow very much, and are likely to decline in the long term.
SMS is fairly mature in some countries (in Europe in particular), MMS less so. Other services are very new and have room to grow but there are uncertainties about demand.
In addition, all these services other than SMS and MMS can be delivered over any internet connections and internet connectivity in general is becoming increasingly commoditised. Even SMS and MMS could be replaced by instant messaging services if they gain enough traction.
Any move towards more general internet carried services would make services like wi-fi more of a threat. The cost of wi-fi is much lower, so much so that some cities are planning to build free wi-fi networks.