Canadians yawn at short message service introduction

Even with a cross-carrier interoperability agreement and a proven track record in Europe, the prospects for SMS messaging in Canada remain hard to predict, according to a report released Wednesday by The Yankee Group in Canada.


November, Canada’s four major wireless carriers, Bell Mobility, Telus Mobility, Rogers AT&T Wireless and Microcell Telecommunications Inc., agreed to a cross-carrier plan to allow short message service (SMS) transmissions to move between their networks. The carriers are expected to go live with the interoperability plan, a North American first, in April. Such agreements signed in European countries over the past few years have proved a spark for SMS adoption, said Jeremy Depow, the Yankee group senior analyst who authored the firm’s Canadian Wireless/SMS Review.

For example, before the April, 1999 introduction of an interoperability agreement in the United Kingdom, SMS users in that country were sending 50 million messages per month, according to the GSM Association wireless industry group. In December of that year, 250 million messages were sent. Roughly 10 per cent of Europeans send and receive more than 20 SMS messages per week while about a third send and receive one to five messages weekly, according to The Yankee Group.

“”Once users were able to exchange messages, regardless of SMS carrier, SMS usage began to surge,”” Depow said.

The GSM Association reports the number of SMS messages sent worldwide rose from four billion in Jan. 2000 to 30 billion in Dec. 2001. But Depow said Canadians are at best lukewarm on SMS. Yankee Group research claims only five per cent of Canadian cellular users are very interested in SMS while fully 42 per cent have no interest at all in the service. As well, less than 15 per cent of Canadian cellular users are willing to pay as little as $5 monthly for text messaging. Nine per cent of Canadian cellular users currently use a text messaging service, while more than 40 per cent are cellular subscribers.

“”Despite the anticipation, it is still unclear as to what role SMS messaging will play in the lives of Canadians,”” Depow said. There are “”no hard numbers yet. It’s just too early to do it.””

Depow attributed the lack of interest among Canadians to lack of knowledge and said carriers are going to have to educate both the consumer and business markets on the value of SMS messaging, conveying usage plans in bytes for businesses and message quantity for consumers.

“”The thing to keep in mind is to keep it simple,”” Depow said.

He added carriers should sell SMS messaging as a compliment to wireless e-mail. SMS messages are typically limited to 160 characters and offer cross-network rather than worldwide correspondence, but they are faster to transmit and less expensive to send than e-mail messages.

“”One significant difference between e-mail and SMS is message creation. The creation of e-mail is charged as air time”” while SMS messages are billed only by their transmission time, Depow said, adding sending an SMS message costs about 10 cents. “”The important thing to recognize is that there isn’t going to be a battle between wireless e-mail and SMS. Both will work together.””

Despite the cost concerns and indifference of Canadians, Depow predicted SMS will have an impact on the wireless market by boosting adoption of cellular technology by youth and spurring an interest in mobile data service. He also said SMS will increase usage by current cellular users and deliver new revenue streams, especially when 2.5G technology makes SMS more multimedia and graphic friendly.

Depow argued carriers’ SMS strategy should include not only education, but also new handsets and packages – including inexpensive services bundles that combine e-mail, SMS and instant messenger offering – tailored to different markets.

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