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Phone companies missed out on $13.9 billion last year as more people opted to send free texts through SMS (short message service) applications like Blackberry Messenger and Facebook Mobile Messenger, according to a report. This follows a $8.6 billion loss in phone-company provided text revenues in 2010.
SMS revenues are down as people communicate through chat boards and within other applications like Words with Friends. Mobile communication is also surging on Facebook, Twitter and smartphone email clients.
The Ovum report estimates that there will be further losses in profit if the "legacy services" -- big phone companies companies -- don't start investing in bringing new and improved services to the table.
"Tapping into the creativity of app developers, forming industry-wide collaborations, and leveraging their usage data and strong relationships with subscribers are the key ways for operators to ensure that they hold their ground in the messaging market," says Neha Dharia, consumer analyst at Ovum and author of the report.
Does this mean people will soon give up texting? No, texting isn't likely to become an archaic form of communication any time soon. Keep in mind that 75% of the world's cellphone users still send traditional text messages. Half continue to send photos and videos through mobile messaging.
Don't feel too bad for AT&T, Verizon and other big phone companies just yet. The study didn't factor in all the extra money made from users surpassing their allowed mobile data limits, which could make up for the billions of dollars lost in SMS revenue.
Let us know in the comments if you have opted out of traditional text plans or have gone for cheaper plans. If you are saving money, tell us what free SMS applications you use.