Thursday, November 4, 2010

Texting still burning hot, but does mobile operators understand this?

So once again we are getting the confirmation that texting is the killer applications if there ever was one.

Ever since GSM operators in Europe discovered that the native texting function, called SMS, which was initially made for technicians and maintenance staff, caught great interest with subscribers, this has been spreading like a fever all over the world.

Last month, Nielsen, a company specialized in marketing metrics, has issued figures that show that teenagers in the USA are sending more than 3000 text messages per month. In some cases women are up to over 4000 messages per month.

Though the survey mention texting in general, and only SMS once, it is not clear if SMS is the only texting considered in this survey. The number as a stand alone without comparison to texting through other applications does not give a total picture of the usage of texting.

10 years ago SMS had a very slow take-off in USA because operator tariffs plans were not fit to a text messaging uptake. In Europe, some operators like the MVNO CBB in Denmark have launched SMS texting price plans where subscribers can buy free SMS for a whole year for 99 DKK (19 USD).

SMS is working on all GSM and 3G handsets. It is quick and easy to use, and a very stable service. In many cases where subscribers cannot reach each other because the network is congested with voice calls, SMS will continue to work as long as the handset can reach the mobile radio base station.

Voice has become intrusive.

Another interesting finding in the Nielsen survey is that the same teenage segment which is sending and receiving 3339 text messages per month, corresponding to an 8% jump from last year, see their voice calls has dropping 14% to 646 minutes on average per month over the same period. Studies show that among teens voice has become more intrusive, and one could argue that by spending 10 minutes on Twitter or another social service, you can make yourself more heard, than if you make a 10 minute phone call.

This is actually a tendency that has been some time underway. We see that the professional sphere is penetrating the private sphere, and we get work related calls when we are at home. Many people defend that flights should continue to be phone-free. Not for security reasons, but to get a legitimate reason to turn off the mobile phone. In this way, you can say that that the falling voice traffic is yet another way that the Internet and Social media is making people gain more control of their own life.

Brazil is lagging behind on SMS, but not in texting.

The Nielsen survey does not mention the overall average of texting per month among all mobile phone users in USA, but from the tables we can assume that it is around 600 messages per month.

Last week at the Futurecom telecom trade show in Sao Paulo, one of the panel discussions, in which I participated, was dealing with outlook for Value Added Services (VAS) in the Latin American market, and Acision, a vendor of messaging platforms, pointed out that the Brazilian mobile users in average are sending 15 messages per month.

So, does that mean that Brazilians are not into texting? Not at all. In an article from last week, TIME Magazine, reports that 23% of Internet users in Brazil are using Twitter against 12% in USA. This should of cause be compared with the higher Internet penetration in USA. The Twitter traffic in Brazil has grown by 479% over the last year. Orkut, a social site, had 36 million unique visits in August this year.

Backfire on mobile operators?

The conclusion is that Brazilians are texting a lot, but not via the SMS texting channel that operators are offering. This is dangerous to operators. From the figures from USA, we can already see that voice calls are dropping when text really takes off, and Brazilian mobile operators have also used this argument of protecting the voice traffic by keeping SMS tariffs higher, but now there are clear signs that the Brazilian users are now migrating to Internet based texting and messaging services, and if operators are keeping a SMS price level of about 0,10 USD per message, they will place themselves in the high end by global measures.

It seems strange that in days where mobile operators are complaining about the Google and Apple over-the-top business models that leaves no money on the table for the mobile operators, they are now squeezing their current SMS users over to Twitter and their alike. These services are broad band over-the-top services for messaging, which eventually could leave operators in an even weaker position when it some to generating value adding revenue.

The traffic from Twitter and other messaging and social services is likely to make voice traffic fall, and broad band connectivity will hardly qualify to be called value added VAS revenue. The key question remains whether mobile operators in Brazil, and some other countries will claim their place in the future revenue chain, or mainly become broad band providers leaving the messaging revenue to the Internet players financed via advertising.

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