IN THE PIPELINE: VeriSign Races To Bridge US Wireless Gap
05 Mar 11:00
By Peter Loftus
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--In a silent phenomenon, millions of Europeans and
Asians are using their wireless phones for something other than talking -
they're swapping short text messages.
But back in the U.S., short message service, or SMS, remains a seldom-used
curiosity. A big reason is that competing U.S. wireless carriers have been slow
to make their respective SMS offerings work smoothly with each other. A Verizon
Wireless subscriber, for example, can't easily exchange messages with a Sprint
PCS (PCS) customer.
Now, a small group of companies is trying to bridge the SMS gap in the U.S.
Among these is VeriSign Inc. (VRSN), the Mountain View, Calif., company better
known for its leading position in the Internet address market. VeriSign has
begun marketing a service to wireless carriers that lets U.S. cell phone users
easily trade short messages with virtually anyone, whether they use the same
carrier or not.
Most U.S. carriers are poised to choose SMS interoperability providers
sometime this year. VeriSign has yet to announce a major carrier customer, and
it faces heavy competition. VeriSign and its rivals are going after a portion
of the growing market for SMS, which is expected to generate revenue of $426
million for U.S. carriers in 2002, up from $96 million last year, estimated Ted
Theologis, analyst with Arena Intelligence Group, a McLean, Va., research firm.
He expects the market to rise to $1.3 billion in 2004.
"Everyone else throughout the world is making money from SMS," Theologis
said. "Here, obviously the carriers aren't making as much. If you cannot send
messages to anyone you want, then the appeal is very limited."
With SMS, people can tap short text messages, usually no longer than 160
characters, into their cell phones and zip them to other wireless users.
They're essentially wireless versions of theInternet-based instant messages
that have become so popular with PC users.
A unique language has been created by the need for brevity with SMS. "CU @
THE PARTY @ 8" is one example offered up by AT&T Wireless Services Inc. (AWE).
Translation: See you at the party at eight.
It's a language more common in Britain than in America. In Britain, wireless
phone users exchanged an average of 33.4 million short messages daily during
2001, up 98% from the 16.9 million messages traded each day in 2000, Theologis
estimated. The key to SMS success in Britain and other parts of Europe and Asia
is that carriers have agreed on common technology standards to allow
inter-carrier messages.
But in the U.S., despite having a population four times bigger than
Britain's, only 4.4 million short messages were zapped across the airwaves
daily in 2001. That was roughly double 2000 levels, but still small compared to
Britain and elsewhere.
The problem is the system of disparate technologies used by U.S. wireless
carriers. Some carriers use the global system for mobile communications, or
GSM, a wireless standard that's also used by most European carriers. But other
U.S. carriers use a standard known as code division multiple access, or CDMA.
Some carriers have proprietary messaging systems that are incompatible with
other carriers. As a result, most U.S. wireless customers have been unable to
easily trade text messages with users of other carriers.
This is where VeriSign and its partner, New York-based MobileSpring Inc.,
come in. Carriers steer outgoing wireless text messages to VeriSign's telecom
service network. VeriSign inherited this network through its $1.2 billion
purchase of Illuminet Holdings Inc. in December.
VeriSign's partner, MobileSpring, has developed software that figures out
which carrier should receive the message, then reformats the message so that
it's compatible with the recipient carrier's technology. Finally, it sends the
message along, steering the message from VeriSign's network to the recipient
carrier's network.
From a user standpoint, the interoperability feature makes SMS much simpler.
Technically, U.S. wireless customers have been able to send short messages to
users of other carriers, but it's been a cumbersome process. It requires the
sender to type not only the recipient's phone number but also the "email
gateway" address of the recipient's carrier. Also, such messages are sent over
the public Internet, raising reliability and security issues. With
interoperability, senders need know only the recipient's phone number, and
their messages are sent over telecom networks.
VeriSign and MobileSpring are jointly marketing the product, dubbed Metcalf
Global Messaging. They've lined up one small carrier customer, NPI Wireless, in
Michigan. They expect to announce a deal soon to supply Metcalf to a major U.S.
wireless carrier, executives from both companies said.
"We're closing in on at least one and maybe more than one" carrier customer,
Chris Durando, director of marketing at VeriSign's telecom services unit, told
Dow Jones Newswires. He declined to identify the potential customers.
But VeriSign must act quickly if it wants a foothold in this emerging market.
A rival, InphoMatch Inc., of Chantilly, Va., has already snared AT&T Wireless
and Deutsche Telekom AG's (DT) Voicestream unit as customers for its SMS
interoperability service, InphoMatch said.
AT&T began offering inter-carrier messages to its customers in November,
becoming the first U.S. carrier to do so. It charges $4.99 a month for 100
outgoing messages, or 10 cents per message for those who don't pay the monthly
fee.
InphoMatch expects to announce SMS deals with four additional U.S. carriers,
which Chief Executive Colin Matthews says are among the 10 largest. He declined
to identify them.
Some large U.S. carriers that haven't announced SMS partners include Verizon
Wireless, Cingular Wireless, Sprint and Nextel Communications Inc. (NXTL).
Cingular, a joint venture of SBC Communications Inc. (SBC) and BellSouth Inc.
(BLS), said last week it would launch inter-carrier SMS by the end of March.
But spokesman Peter Nilsson said the company isn't ready to disclose its
supplier.
Sprint PCS eventually plans to introduce inter-carrier short text service,
said Jeff Hallock, director of consumer marketing. He declined to say when, or
which company would supply it. Verizon and Nextel officials couldn't be
reached. Verizon Wireless is a joint venture of Verizon Communications (VZ) and
Vodafone Group PLC (VOD).
There are other companies competing with VeriSign and InphoMatch for the SMS
interoperability deals. They include CMG Wireless Data Solutions, a unit of CMG
PLC (U.CMM); TSI Telecommunications Services Inc., of Tampa, Fla.; and Logica
PLC (U.LOG).
So who will win out? InphoMatch points to its head start in signing up at
least two major carriers as customers. "We've had a platform in place since
mid-2000," said CEO Matthews.
VeriSign and MobileSpring emphasize the strong relationship that Illuminet,
now a VeriSign unit, has had with U.S. carriers as a general provider of
telecom services. MobileSpring's product also was designed specifically for the
U.S. market, said MobileSpring Chief Executive Mark Caron, while InphoMatch's
product was based on technology developed in Germany.
Theologis, the analyst, expects the picture to be clearer by the end of the
year, when all of the major carriers are expected to offer inter-carrier SMS.
By that time, some 40% of SMS traffic in the U.S. should be inter-carrier, he
said.
-By Peter Loftus, Dow Jones Newswires; 201-938-5267;
peter.loftus@dowjones.com
(END) DOW JONES NEWS 03-05-02
11:00 AM |
