Submitted by Mike Grenville on Thu, 09 Jul 2009 17:24

Speakers at the Global Messaging Congress in London in June this year agreed that there continues to be much opportunity for growth of mobile messaging with a number of good ideas discussed for increasing revenues as well.

Opening the Global Messaging Congress again this year was John Delaney, no longer with Ovum but now with IDC, who began the event saying that "not only is SMS growing but it is growing quicker". Figures he shared from IDC showed that SMS still accounts for 93.7% of messaging revenue for Western European operators with IM 5% and MMS trailing at 1.3% (not including mobile email and mobile voice mail).

Delaney noted that "SMS has very strong foundations - all you need to know is do they have a mobile phone and it gets pushed to a device straight away and is the default on a lot of phones." However he continued with what is now a familiar story that in spite of SMS growth it is about to reach its peak. He mused on what will come after when SMS runs out of steam. He said that "SMS is in danger of becoming the Razr - a great product that was overtaken by competitors. Mobile messaging must get richer or risk being overtaken by the internet" he claimed.

Connecting With SMS

In spite of this prediction a string of speakers that followed described ideas for increasing revenues from plain old SMS. First up was Telsis CEO Jeff Wilson who talked about exploiting the full potential of emotional pull events such as Big Brother where viewers will send messages costing a pound. "There is a massive potential for televoting which is not set up well enough now" he said. "There is an opportunity for the industry is to make SMS connectivity to a whole range of services" he added.

Wilson also pointed to the need to make SMS services easier to find and called for an intelligent interface with one access code to access requests. "You can't use a service if you don't know it exists" he said adding that "Simplicity and discoverability are the easiest ways to make profits."

Guy Yaniv VP & GM Comverse Mobile Advertising Division agreed that this is an interesting time for messaging. "The mobile messaging market is at an inflection point" he said. "End user expectations are affected by the internet experience and handsets are enabling new devices and new different types of players are entering the market such as Facebook, Skype, Nokia and Google". However in spite of the arrival of these internet players with free messaging, Yaniv asserted that "the people who use more and more messaging will understand they need to pay for it."

The Money In Free

Someone who knows about the effect of free on mobile is John Eccleston, Head of Communication Services at 3 UK. While confirming that SMS is still growing in the UK, he admitted that it is getting harder for operators to increase the revenues. "Since SMS wasn't predicted it will be hard to predict what will happen next" he said.

Eccleston pointed out that the growth of SMS has more recently been mirrored by an explosion of growth in internet communications services. He revealed that 250,000+ customers on 3 UK send and receive 200+ million messages a month using MSN . At the end of Q1 2009 3 UK was seeing 50 million Skype chat messages a month and 1.4 million minutes with Skype voice calls. The benefit of free mesaging came in other areas as the experience of 3 UK is that people who use services such as Skype, Facebook, and MSN spend more on other services including SMS.

Communications Trigger

Another market where SMS continues to boom is Portugal where Paolo Simones from TMN Portugal said that SMS traffic had increased 50% for the second year running with consumers sending 720 text messages a month. However this growth has seen a decline in revenues and the average price of an SMS is 33% of what it was three years ago.

One novel way that TMN has increased revenue is building on voicemail. He said that only one in two voicemail messages is retrieved as youngsters think voicemail is uncool and just for old people. Since the regulator made the first 5 seconds of connecting a call to voicemail free only more than 95% of users slam the phone down as they think the message won't be listened to. The solution TMN came up with was to install the Comverse function 'who called' and notify me which sends an SMS when a voice call is activated but no message is left. This resulted in 60% of notified customers making a return call.

Another successful approach was to launch voicemail to MMS. Starting with a 200,000 user trail in Q4 of 2008 named Direct Message, TMN launched the service without notification to the customer and no marketing. The customers discovered the service and 15% of customers even forward the voicemail reply to another phone user.

However Simones warned the audience not to "bet on SMS being a cash cow in the future". He sees that "SMS will become an enabler and a commodity. The tip is to use messaging as a communications trigger" he said.

Applied To Business

Another area of mobile messaging ripe for growth is with business. Saadi Hussain, Head of Commercial Propositions at BT UK said that there is a good demand to A2P messages across all sectors. "Business is finally getting it" he said. "Business people have now grown up with messaging and consumers are demanding updates from them which is why we are seeing a lot of growth." One example he gave was package delivery citing figures from the Royal Mail where 30% of packages are not delivered first time which need to be taken back and redelivered at a significant cost.

Hussain pointed to opportunities within the NHS where do not attend rates in NHS rates is a huge problem in the UK. "In some clinics 20-30% of people don't turn up. This costs around £500M to the NHS. An appointment reminder service sent a few days before can have a huge impact" he said.

"Likewise if a bank customer uses an ATM from a different bank it can cost them £3 - compare this to the cost of sending a balance alert by SMS." However while business departments are increasingly signed up to using messaging Hussain pointed the finger to IT departments that are dragging their feet in implementing SMS across the enterprise.

The Machines Are Coming

Since SMS is ideal for extreme high volume messaging, Wouda du Plessis with MTN South Africa saw the future growth of messaging will be with machine communication, A2P, P2A, A2A. She pointed out that SMS has low OPEX, is light to carry on the network, easy to program, and is accessible with almost any device or terminal. This she said makes it the ideal bearer for low interaction applications.

She pointed to a range of telemetry devices and applications deployed in South Africa such as notifications, remote monitoring, weather reporting, home-management, tracking, and location asset tracking.

While it is true that in spite of its un doubted popularity operators are facing new challenges to increase messaging revenues, one thing was clear from the 9th Global Messaging Congress, is news of the demise of SMS is definitely premature. There are still plenty of untapped ways to use mobile messaging to good effect to both retain customers and increase revenues.