Are Texting Apps a Real Threat to Wireless Carriers?

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Apple is poised to introduce iMessage – essentially “free text messaging” – in iOS 5. Is it the end of the text message as we know it? Perhaps, but not quite yet.

The thought of an app on your phone that lets you communicate with others for free, sans antiquated text message, is thrilling. While it may not be time to ditch your text-messaging plan just yet, it’s becoming an ever-increasingly real possibility. However, it’s not quite all roses.

(MORE: Apple: iOS 5, iCloud Both Launching October 12)

While it’s a step in the right direction, iMessage is still proprietary: It’s limited to other iPod, iPad and iPhone devices that have been updated with iOS 5, meaning you can’t use it with your rebellious Android friends. Apple took a cue from RIM in this particular instance, and modeled it after the pre-existing BlackBerry Messenger (BBM). BBM is essentially iMessage, but for BlackBerrys.

This is where something like WhatsApp, an application developed for multiple platforms, stands superior. Unlike iMessage and BBM, it works between different operating systems: Android, BlackBerry, iOS, Nokia and eventually Windows Phone. While there can be a fee to download the app, the software automatically searches your current phone contacts to see who is available. However, the key to WhatsApp’s success mainly lies in how willing people are to adopt a system that’s not natively built into their phone.

(MORE: RIM Opens Up BlackBerry Messenger to Attract App Developers)

Essentially, all of these third-party messaging applications allow consumers to send text messages, even internationally, for free through a local data or wireless network. It has the potential to save customers oodles of money, but it comes at a cost to networks like AT&T and Verizon.

Aside from shifting power from wireless carriers to developers, texting is a profitable industry. According to the New York Times, Americans send more than two trillion text messages each year. Texting adds up to more than $20 billion in revenue for the entire industry. How much of a wireless carrier’s bottom line does that affect? Wireless analyst Craig Moffett estimates that “texting brings in about a third of [Verizon’s] operating income.” It’s enough to matter.

But really, the sticking point of the matter is that it basically depends on how much the rest of the population willingly embraces technology. Because let’s face it, if Grandma isn’t willing to upgrade to a smartphone, texting might not even be an option. You might have to call her.

Erica Ho is a reporter at TIME. Find her on Twitter at @ericamho and Google+. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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