Q and A: SMS

Q&A: SMS

What is SMS?

How is SMS related to MMS?

How have SMS voting and sweepstakes contests affected the SMS market?

What are analysts predicting for the future of SMS?

What is SMS?

SMS, often referred to as "text messaging," is a form of mobile communication wherein short messages, up to 160 characters, are sent to and from mobile devices. SMS was originally developed for use with GSM networks and devices, but usage has spread across multiple kinds of access technologies, meaning SMS messages can be exchanged even when the sender and recipient are on networks that use differing technologies, such as GSM user on one network communicating with a CDMA user on another.

SMS is a continued success as the cheapest, quickest, worldwide form of mobile communication.

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How is SMS related to MMS?

SMS is similar to the popular Multimedia Message Service (MMS), which supports multimedia messages including text, video, and audio. Both services are widely supported by wireless operators and equipment vendors, and both are based on open standards to facilitate interoperability across different phone models and wireless networks.

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How popular is SMS, and how does it affect operators' data revenue?

Since its inception, SMS was the largest driver of data revenue for operators. However, despite the fact that many operators are now deriving extensive data profits from other offered content, SMS usage is not seeing a decline. In fact, in October 2007, CTIA announced that SMS users in the US send more than 1 billion text messages per day, with 28.8 billion SMS messages sent in June 2007 alone.

According to a June 2007 report by Telephia, premium SMS revenues made up a third of mobile content revenue in the US for Q1 2007, totaling more than $273 million, fully 32 percent of mobile content revenue. A September 2007 report by Informa states that SMS activity worldwide increased by 50% year over year, to more than 620 billion messages in Q1 2007.

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How have SMS voting and sweepstakes contests affected the SMS market?

The June 2007 Telephia report found that while voting/sweepstakes entries generated only 13 percent of total revenues for premium SMS transactions, they represented 47 percent of premium SMS volume, equaling more than 34 million transactions.

Kanishka Agarwal, vice president of mobile media, Telephia, explained, "Marketers are experimenting beyond the standard rate SMS voting pioneered by American Idol and tapping into premium SMS with voting/sweepstakes campaigns. NBC's Deal or No Deal has translated into a premium SMS hit, generating nearly half of the volume and revenue of voting/sweepstakes entries in the first quarter of 2007."

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What are analysts predicting for the future of SMS?

A 2007 Portio Research report predicts worldwide SMS revenues will reach $67 billion by 2012. Since 2005, some analysts have been forecasting a plateau in SMS activity. However, Portio's findings are such 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. The SMS market, despite declining prices, continues to be fuelled by new subscribers."

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