The long-term challenges of short message service

TORONTO — The short message service (SMS) market has grown up to 600 per cent this year but adoption rates are a far cry from European and Japanese levels, according to one of the world’s largest cell phone makers.

Manufacturers and leading carriers met Tuesday at the Yankee Group’s North

American SMS and Mobile Messaging Forum to discuss ways to improve those adoption rates and the barriers that are still in their way.

Europe has a significant head-start on the U.S. and Canada. Experts in attendance at a carrier panel suggested it could be 2005 before North America even reaches European SMS penetration. Europe has built on a legacy of GSM networks for several years, said John Bunyan, senior vice-president of consumer offers for AT&T Wireless. North America, on the other hand, is fragmented between GSM and CDMA, two competing wireless networks. In Canada, GSM is the provenance of Rogers AT&T Wireless and Microcell, while Bell Mobility and Telus deliver services over CDMA.

“”We’re never going to have (uniform service) here,”” said Bunyan. “”I think that’s going to be a limitation.””

But interoperability between networks and carriers has been a boon to the SMS market, said Adel Bazerghi, director of product development for wireless Internet and data at Bell Mobility. Agreements between the four major carriers to allow for interoperable messaging were announced at the Communications 2001 conference last year.

What hasn’t changed, however, are fundamental differences between European and North American payment structures for basic wireline services. Bazerghi pointed out that most local calls over land lines aren’t free like they are here. “”This is North America, not Europe. We’re close cousins, but we are different,”” he said. “”SMS started out as a cheap substitute for voice (in Europe).””

Another stumbling block for the North American cell phone market is the technology lag. More sophisticated cell phones routinely come out in Europe and Japan, well ahead of North American releases. Nokia’s Communicator, for example, was only released here this summer. It had been available for more than a year in other parts of the world.

“”In North America, probably the biggest single thing is consumer awareness,”” said Gerry Christensen, director of wireless data service for VeriSign. “”Probably only one or two people out of 10 would know what (SMS) is.””

Nokia’s forthcoming 3650, however, will be released simultaneously in North America, Europe and Japan. The phone includes a built-in camera which can be used to take and send pictures. It’s part of a move from SMS to MMS — multimedia message service, which could include sending graphics, audio and text files to other enabled devices.

“”We see MMS as just the evolution of person to person communication,”” said Nokia‘s director of imaging services for the Americas, Randy Roberts.

But isn’t a move to more advanced services a little premature? It’s time to take advantage of the technology that’s available now, said Roberts. “”Today we have GPRS and 1X (networks) that are realistically going to give us 14K types of speeds. If we are going to make money today, we need to use those networks today.””

He said that SMS services have been available in the U.K. for about six years, but really didn’t find a niche until two years ago. The uptake of SMS in the U.S. has been comparatively faster, he said.

To push that adoption further, AT&T Wireless in the U.S. has allied itself with the Fox television network, and its hit series American Idol in particular. He said MMS is “”an illusive target on this continent,”” but insists that North Americans are willing to pay monthly charges for services above and beyond voice capability. In a joint marketing campaign between AT&T and Fox, American Idol viewers could subscribe to polls, updates, trivia and quotes from contestants over their cell phones. AT&T broadcast an SMS message to 75,000 users in the 18-43 age bracket — though some recipients complained of spam. “”It’s an area for exploration,”” said Bunyan, “”but cautious exploration, given that these are valuable customers for the carriers.””

Bunyan estimates that SMS is responsible for 16 per cent of carrier revenue in Europe — but it isn’t a drop in the bucket for North American telcos yet. But by adding services like music, games, interactive TV and location-based services, that could change, he said. “”These are the best shots we have.””

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