The SMS Phenomenon

The SMS (Short Message Service) was part of the GSM specification over 25 years ago. I doubt the developers of the original SMS, who probably also were throwing around concepts such as video phone conferencing, would have anticipated the success of the SMS concept. The removable SIM card and SMS were the two killer features GSM technology had over competing analog networks.

Although, initially the uptake of SMS was slow, since at that time messages could only be sent between users on the same network. However, once message center gateways became established between operators and different networks, the momentum of SMS messages exploded exponentially.

In the late 1990s and early 2000s, SMS messages were the bread and butter for most operators. SMS typically is a best effort service and delivery is not guaranteed, the infrastructure support when compared to voice services is minimal and revenue from SMS messaging outweighed the revenue from voice services once the operating cost was deducted from the equation.

However, competition amongst operators eroded this revenue share as contract plans (popular in Western markets) included unlimited text messaging as part of the plan and per message competition in the prepaid space also drove the SMS cost downward.

The increasing volume of text messaging is driving the decline in revenue for mobile operators, as the traditional SMS takes a backseat to other text messaging networks. BlackBerry Messenger, iMessenger and Facebook’s mobile messenger service are taking revenue away from the carriers. For instance, social messaging cost carriers US$14B in SMS revenue. They lost $8.7 billion in SMS revenue in 2010, according to Ovum.

What has further diminished the SMS is services is other text messaging devices that do not not limit the size of the message to 140 characters and uses the concept of group broadcast, sending of pictures, which SMS doesn’t handle. Coupled with instant feedback if a message is unsuccessful, blackberry users will resort to SMS only if their contact doesn’t have a Blackberry. It is indeed a unified messaging platform.

The GSM MMS was a bolt on addition used almost exclusively for early phones with cameras, with the idea you can send a photograph to another user, assuming they also had a MMS capable handset, and this would be the natural successor to SMS. However, the cost and unreliability of MMS services meant that service never hit a chord with the public.

Today, the original SMS protocol accounts for just a fraction of the total volume of messages flying around the ether. The XMPP protocol has become the standard protocol for messaging platforms. Google use it, so does Skype and others. In fact, being an open standard, anyone can setup their own messaging platform. Many private corporations do so for security and accountability reason.

The best thing about XMPP messaging is that a single client can support multiple accounts. For example, you may have a Google talk account for friends and family, a dedicated XMPP Jabber account for work, you could set your available status to unavailable for the Google talk account during the workday and vice versa, with the work account during the weekend and after hours.

So it is no surprise to learn that for the first time text messaging is outstripping the telephone call. Let’s face it, with a phone call there is so much unnecessary “wrapper” protocol which must be included, “Hi, How are you, have you got time to talk about XYZ”. With text messaging it is universally accepted you can just get to the meat of what you want, and keep going. It is ideal for busy people who don’t have time for the dignitaries of a phone call.

Text messages can get you in trouble, though. Due to the mobile spirited ways of text messaging, it is easy to react suddenly and fire off a suitably caustic response to a text message, this is often almost always during the consumption of alcoholic beverages. As we all know, with text messaging what is done cannot be recalled and changed. What we need is a digital personal assistant on smartphone, which is intelligent enough to either delay such a SMS or change it automatically, here’s to hoping!

To conclude, SMS is going to remain the dominant force in mobile technology for several years to come. According to Informa Research, the global SMS traffic will total 9.4 trillion messages by 2016, up from 5.9 trillion messages in 2011. And, the worldwide mobile transaction volume and value to average 42 percent annual growth between 2011 and 2016. Analysts are predicting a market worth $617 billion with 448 million users by 2016.

America and Asia Pacific mobile operators for instance, derive approximately 40% of their mobile revenue from mobile broadband and messaging. But, while mobile broadband is no doubt the fastest growing revenue stream for operators, mobile messaging and voice aren’t dead just yet, not by a long shot,” notes Stephane Teral, Infonetics Research’s principal analyst for mobile infrastructure and carrier economics.

“The prophecies of doom for mobile operators’ SMS/MMS cash cow are being overplayed. Despite the popularity of over-the-top messaging applications like Apple’s iMessage and WhatsApp, our data shows SMS growing every year from 2012 to 2016, delivering a cumulative $1 trillion in operator revenue during those five years. And over that same period, voice revenue will decline only slightly, still making up a sizable chunk of operator revenues.”