SMS: Dead in U.S. Waters?
By Brad Smith
Karl Simonsen is one of those unusual Americans who uses a wireless technology that is one of the hottest things going in Europe
but is virtually unknown on this continent.
The technology is two-way short messaging service, something Europeans have been crazy about for years. The GSM
Association–the organization promoting global system for mobile communication technology–expects the number of SMS
messages to surpass 10 billion a month before the end of this year.
The London-based SMS consultancy group Logica plc has gone
so far as to forecast that 100 billion short messages will be sent
each month within the next three years. Logica estimates that
516 million SMS messages were sent in Britain alone in July.
The European SMS market is fired up, but the same can’t be
said for North America, where two-way SMS has been largely
ignored by nearly everyone except people like Simonsen,
executive vice president of indiqu.com Inc. of San Diego. SMS
skeptics may dismiss him because his company has technology
that uses SMS. But he finds the service to be a convenient way
to communicate with other company employees.
indiqu.com recently launched in France a suite of games that use SMS, which Simonsen says have really taken off. But when he
calls on carriers in North America, all they want to talk about is Wireless Application Protocol applications, which indiqu.com also
supports.
“I have the feeling that mobile-originated SMS may just die in the United States, based on the interest of the carriers I’ve seen,”
Simonsen says. “It’s amazing, given the kind of revenue it generates in Europe.”
Simonsen may turn out to be wrong, but there seems to be reasons SMS will never be as big in the United States as it is in Europe.
One of the biggest is the air interface issue–Europe is uniformly GSM while multiple interfaces proliferate in North America.
European carriers also allow SMS across their networks, giving it broad utility. SMS doesn’t work across platforms, which negates
its buddy-list communications capabilities.
GSM carriers in North America have had two-way, also called mobile-originated, SMS but haven’t promoted it. Few U.S.
consumers even know about the technology. In contrast, Irish pubs have carriers’ SMS instructions written on beer mats.
Simonsen says he had to specifically ask his U.S. carrier to add SMS to his service, for an additional flat-rate monthly charge,
something the uninformed consumer wouldn’t know to do.
Still, at least four non-GSM carriers in the United States plan to add two-way SMS to their networks by the end of the year. The
carriers–SBC Wireless and its subsidiaries, AT&T Wireless Services, Verizon Wireless and Sprint PCS–haven’t disclosed exact
plans for the service, including pricing. AWS will use SMS in its TDMA network, while Verizon and Sprint both use CDMA. SBC
Wireless and its subsidiaries use GSM and TDMA.
Logica will supply the SMS router and gateway for SBC Wireless, which will include SMS as part of its new wireless Internet
service, My Wireless Window, which recently launched in California. SBC says SMS will be available through all six of its brands
in the fourth quarter, which includes Southwestern Bell Wireless, Ameritech Cellular, Pacific Bell Wireless, Nevada Bell Wireless,
CellularOne and SNET.
Another London company, Sema Group plc, will provide the SMS Center and activation and programming services to SBC. The
SMS solution supports two-way SMS between TDMA and GSM handsets, Sema says. AWS also is using Sema’s products.
Some questions arise about how SBC Wireless and the other U.S. carriers will market SMS. The carriers already provide e-mail
services through their digital networks and e-mail works across platforms. That fact alone raises the question about the usefulness
of two-way SMS, given its network limitations. Person-to-person messaging is the biggest use of two-way SMS in Europe, while
voice-mail notification is the most common use for one-way service.
There are a number of uses of SMS besides simple messaging, some of which might be attractive to U.S. subscribers. Among
these is e-mail notification, which almost turns e-mail into a paging service and could be especially useful for enterprises. Chat
services also could have some interest but would have to face the network hurdles in the United States.
With the advent of the wireless Internet, it seems doubtful there would be much interest in SMS for information services. That’s
because SMS is limited to about 160 characters, which might be enough for a stock quote but doesn’t cut it for a news headline.
Mobile commerce applications actually are proliferating through SMS in other countries, especially stock transactions that combine
SMS with the Internet. Singapore Telecommunications Ltd. says 30 percent of all online stock transactions are now being handled
through SMS on its GSM network. The carrier says it opted for SMS instead of WAP because the former has better security
provisions.
Don Longueuil, a wireless services analyst with the Yankee Group, says the biggest hurdle for SMS in the United States is the
network interconnectivity issue. Yankee is forecasting U.S. carrier revenue from SMS to climb from $30 million this year to about
$115 million in 2005. “The carriers in Europe have opened their networks to other carriers to allow that interconnectivity,” he says.
“Here they haven’t, and I don’t think they ever will. Carriers here want to own the customer.”
Longueuil also thinks SMS won’t be popular in the United States because of the high level of computer and Internet connectivity
that already exists. Europeans don’t use the Internet as much and use wireless phones more. Europeans may accept a
160-character limit to their messages, but Longueuil thinks Americans are too accustomed to long messages and even attachments
that SMS can’t handle.
The analyst thinks SMS’ utility in North American will be employed the most for alerts, much of that coming from enterprises for
quick updates on appointments, addresses, price quotes and the like to remote workers. “Two-way SMS is going backwards,” he
says. “Why use it when e-mail gives you so much more?”
Naqi Jaffery, a vice president at the Strategis Group, believes the growing VoiceStream Wireless Corp. GSM network could see
increased interest in and marketing for SMS. VoiceStream recently agreed to acquire Powertel and its licenses covering 25 million
people in 12 southeastern states, giving it coverage of three-fourths of the U.S. population.
Jaffery suggests a key decision the carriers have to make is how to charge for SMS. In Europe, it is on a cheap per-message
basis. U.S. GSM carriers, such as Pacific Bell Wireless, charge a flat monthly fee. The most attractive pricing scheme for a
consumer could be a low per-message charge and no flat rate fee.
indiqu’s Simonsen, who has seen how SMS gaming has taken off in Europe, says the carriers should focus their attention on the
youth market. Young people more readily adapt to technology, are mobile, like to communicate spontaneously with friends and
love games.
Simonsen also wonders what will happen to SMS in the future world of third-generation packet networks, which allow always-on
connections. Messaging will be easier within the microbrowser function than through SMS.
That’s down the road several years, however. First, two-way SMS has to find a foothold in the United States within the next 12
months. |
