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Cornered! Good news for celcos: SMS rivers of gold will keep flowing
Cornered! Good news for celcos: SMS rivers of gold will keep flowing | Good news for celcos: SMS rivers of gold will keep flowing |
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| Written by Stuart Corner | |
| Wednesday, 21 February 2007 | |
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That works out at an average of $US0.018 per message, a figure much lower than the 25 cents you pay in Australia today, unless you are on a capped plan. Let's assume its correct. Each SMS message is 160 characters which is 1.6kbits approximately. There must be some handshaking as well, so let's round it up to 2.0kbits. Now you can see that at an average of even 1.8 cents per message this represents a very high rate for data traffic on cellular networks, around $US72 per Mbyte. Compare that with the price you pay for data downloads on cellular networks. You can get a gigabyte a month for this sort of money, and even if you go over your limit the price is generally cents per megabyte, certainly not more than a dollar. In short SMS is a fantastically profitable service for a cellular operator because text messages use minimal network recourses in relation to the revenue generated. At today's rates you could talk and tie up network resources for about half a minute for the same price as an SMS which transits the network in a fraction of a second. Nevertheless, Portio Research claims: "SMS continues to be a phenomenal success as the cheapest, quickest and easiest to use form of peer-to-peer mobile communication," which one level is true. And the good news for operators is that: "Markets have continued to grow and greatly exceeded the predictions of similar research carried out in 2005. SMS traffic has not flattened out in mature markets but continued to boom whilst the US market has grown much faster than expected. In Asia the news is even better: "In every ... five minute period for the next six years, 2,267 people will have bought their first ever mobile phone. For the majority, these new handsets will offer little affordable functionality apart from basic voice and SMS services. This translates into an additional 1.4bn new mobile subscribers in Asia alone with a consequent boom in SMS traffic in the region." But there is a cloud blocking the view of this pot of gold at the end of the rainbow. By 2011, the report predicts, mobile instant messaging (MIM), especially in markets such as North America, will supplant SMS as the mainstream messaging service as smartphones and wireless Internet proliferate. Operators, it suggests, need to strike a balance between SMS and IM pricing in order to prevent the cannibalisation of SMS revenues in the future.{moscomment}
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