NYT -- U.S. Cellphone Users Don't Seem to Get Message About Messaging.
September 2, 2002
U.S. Cellphone Users Don't Seem to Get Message About Messaging
By JOHN MARKOFF
SAN FRANCISCO, Sept. 1 - What if they had pounded the
golden spike into the continental railroad and nobody
noticed?
That is essentially what happened in the United States
cellular telephone world last spring. Since April it has
been possible for the customers of any of the major United
States cellular carriers to send one another short text
messages, but most customers still have no idea the service
exists.
The service, known as S.M.S. (for short message service),
is already wildly popular in Europe and Asia, but it has
been delayed in the United States - partly because it had
been impossible to send messages among carriers and partly
because it has not been marketed well by the cellphone
companies.
"It's partly a cultural issue, but the blame also falls on
the U.S. cellular companies," said Alan Reiter, a
telecommunications analyst in Chevy Chase, Md., who
publishes the newsletter Wireless Internet & Mobile
Computing.
Because interoperability has finally arrived, some analysts
think that short message service is ready to take off in
the United States. But critics argue that it is already
being overtaken by less expensive and more powerful
alternatives.
The text-messaging difference in the United States from the
rest of the world could not be more striking. Last year,
more than 19 billion communications by short message
service were sent worldwide, according to the Global System
for Mobile Communications Association, almost all outside
the United States.
That is starting to change. Two gateway companies that
handle message exchanges among carriers - InphoMatch of
Chantilly, Va., and MobileSpring of New York (in
partnership with VeriSign) - said their traffic volume
doubled each quarter in the United States. The numbers are
still tiny, though, compared with the rest of the world.
The failure of the cellphone companies to market short
message service until now is puzzling, analysts said,
because the service has been a huge financial success for
European and Asian telecommunications companies.
But conditions elsewhere are different. Short message
service is popular in other parts of the world partly
because sending a text message has been less expensive than
making a phone call and also because Europe and Asia have
lagged behind the United States in e-mail and instant
messaging.
In Europe, which has long had a single standardized
cellular network and where text messaging is routine, short
message service is responsible for 15 percent of all
cellular revenue and, more significantly, 40 percent of the
overall industry profit margins, according to Colin
Matthews, president and chief executive of InphoMatch.
"This should be a no-brainer for the carriers," he said.
"From a business perspective, all of the traffic and
revenue is based on their existing infrastructure."
Indeed, the numbers are startling. Mr. Matthews estimated
that short message service can deliver $750 to $1,000 per
megabyte of data transmitted - a far higher return than any
of the other digital services the cellular companies are
beginning to offer in an effort to increase the
profitability of their new wireless digital networks.
Still, there are numerous reasons why the United States has
lagged behind other regions.
"Cellphone handsets are just not good for data," said Paul
Mercer, the president of a Iventor, a small wireless
start-up company in Palo Alto, Calif. "Moreover, S.M.S.
isn't good for data either, because the business model is
based on locking customers into an inferior proprietary
data network."
Instead, he predicts that there will be a range of new
data-centric handsets coming from Handspring, Microsoft,
Palm, Research in Motion, Danger and others that will use
standard Internet protocols and tiny full keyboards or
handwriting recognition to make sending text easier.
For example, the Danger Hiptop communicator, which will be
introduced by T-Mobile this fall, includes an AOL Instant
Messaging application. That means it will be possible to
send unlimited messages to other Instant Messaging users,
all for the flat-rate price of the service.
Other analysts, like Donald Longueuil, a wireless
researcher at In-stat/MDR, an electronics market research
firm in Newton, Mass., think that because Instant Messaging
services provide "presence," making it easy to tell if
friends and business associates are available for messages,
they will quickly begin to cannibalize the more rudimentary
S.M.S. systems.
"I'm very pessimistic about the U.S.," Mr. Longueuil said.
Devices like the Danger Hiptop, which also includes a voice
telephone, tend to be based on the Internet communications
model, where all services flow over a single network and
are priced at a flat rate.
In contrast, using short message service in the United
States costs roughly 5 to 10 cents a message, and several
of the carriers charge both the receiving and the sending
parties. The price is lower in Asia, where a message
generally costs 2 cents, and higher in Europe, where
messages are about 11 cents.
Despite the pricing issue, backers of short message service
are hopeful that the service will find a niche in the
United States based on a series of new applications that
will be introduced later this year. One popular use has
been to permit TV viewers to vote in game shows, and a
telecommunications executive said that the first trial of
this in the United States would be later this year on the
Fox Network show "American Idol."
The backers of short message service are also hoping that a
service known as multimedia messaging, which is just now
being rolled out by cellular companies in the United States
and in Europe will catch on by allowing cellphone users to
send small images.
Also next year, the short message service network will
begin to be used for financial transactions, like purchases
from point-of-sale terminals and vending machines.
Advocates of S.M.S. express belief that such services will
be eagerly adopted by cellphone users. But critics deride
the services as "kludges," a computer hacker's term for
poorly designed systems.
"You have to dial a phone number to pay for something," Mr.
Mercer of Iventor said. "It's just a stupid way of offering
the service, and it's not what the Internet's about."
Copyright 2002 The New York Times Company. |
