Gearing up for a Fixed Line messaging revolution
by Simon Holmes, global head of marketing for LogicaCMG Mobile Networks, and
Mike Leigh, strategy director for LogicaCMG Telecoms Solutions
In September 2002, the UK sent nearly 1.5 billion text messages - an average
of 48 million per day. This is an increase of 12 million per day, or 25 per
cent, against the same period last year. Across Europe it is reported that SMS
(short message service) is used more often than e-mail, with 150 billion
messages sent worldwide in 2001. With mobile operators deriving on average 15
per cent of their revenues from short message services clearly SMS is here to stay. But
for fixed operators, SMS growth has so far been a less than positive experience.
With mobile phone ownership in Europe now on average exceeding 70 per cent,
fixed line operators have seen a steady decrease in the number of calls made on
their networks. The pressure is on for fixed operators to find new ways of
enhancing revenues from their existing customers whilst attracting new ones.
However, an emerging technology might be the much-needed panacea. The
introduction of fixed line messaging - the ability to send text messages over
fixed line telephones - could mean a major boost to fixed line operators and a
further growth catalyst to the overall SMS market.
A golden opportunity
SMS is already a proven revenue generator. If fixed line operators can harness just a tiny percentage of the overall SMS market, they stand to gain
substantial revenues. For example, a 0.5 per cent share of September's message
traffic would mean additional revenue of £7 million per month. But fixed line
operators aren't the only ones set to gain. Mobile operators will also benefit
from the overall increase in messaging use and traffic from mobile devices to fixed line phones. Messages sent from fixed line
devices are very likely to generate a return SMS, or a voice call. The volume of
traffic will also expand as sections of the population who do not own a mobile
enter the SMS market and are able to receive and respond to text messages using
their home phone. The option of texting mobiles from a home phone will be
especially appealing to families hit by high phone bills from frequent calls to
mobiles.
Likewise, messages can be sent from one fixed line to another, allowing the
transfer of SMS to convey a quick message. For the home computer user it may
also provide an instant, more direct alternative to email avoiding the long
log-on and connection times encountered with PC use.
There are a number of core areas of opportunity that fixed line messaging
opens up. SMS has already become part of everyday communications - within the
business to business arena as well as for consumers. Fixed line operators will
be able to offer successful mobile and internet services, such as ring tone and
logo downloads, instant messaging and chat, opening up new revenue streams in
the areas of premium rate messaging and SMS advertising. It will enhance the voicemail services currently offered by
fixed operators; text messages providing a visual alert when a voicemail message
is waiting, for example. MMS (multimedia messaging service) is the latest
exciting new development in messaging to be introduced to the mobile market and
has massive revenue-generating potential. Fixed line SMS will support the future
migration to MMS as fixed line networks transform from a data compatible
infrastructure designed for 'voice' communication into a network that
is mainly designed to transport large quantities of 'data and images'
as well as voice communications.
Another area of revenue potential is the extension of interactive TV through
SMS. Many television shows now offer true interactivity through viewer feedback.
For example, the Miss World Competition recently announced the launch of the
first ever global text vote - the largest and most ambitious campaign the
wireless industry has ever faced. From November 18th to midnight GMT on December
6th200 anyone with a GSM mobile phone was able to vote for the contestant of
their choice.
A still-greater TV response rate can be expected if families can text their
choices from their landline. It will enable those who previously
avoided calling premium rate phone lines to participate in their favourite
shows, and will also generate additional income for the
fixed operators.
Fixed line messaging provides a new channel for operators to communicate
special offers and promote new products and services to their customers. Mobile
operators have already successfully harnessed this opportunity. Fixed line
operators with a mobile partner or subsidiary can increase market share by
encouraging loyalty for both networks.
While it is easy to assume that the rise of fixed line SMS poses a potential
threat to mobile operators, in fact the reverse is true - it will actually
create substantial opportunities. The introduction of fixed line messaging will
mean increased SMS traffic across all mobile networks, and therefore increase
revenues to mobile operators. Mobile providers will also have the opportunity to
offer their services to fixed operators, as consultants or even as outsourcing
partners.
Timescale and challenges
Indications are that most operators will be looking to introduce fixed line
SMS within the next 12 months. Services are already in operation
in Singapore, Italy and also Germany, where, since the
launch of Deutsche Telekom’s SMS-to-voice service in
July 2001, approximately 2 million SMS are transmitted through the fixed line
network each month. While the technology is available to
enable fixed line SMS immediately, there are various
stages that need to be undertaken to launch the services. Depending
on the level of back-end functionality required, implementation is likely to
take three to six months.
At the consumer end, a key consideration is the telephone handset. New fixed
line handsets are increasingly resembling mobile phones, complete with LCD
displays, which enable simple texting. Voice to text functions can be built to
enable those with more traditional phones to compile and receive text messages.
However, it's likely that operators will charge a flat fee for SMS and supply a
new, SMS-friendly handset as part of the package. New text-enabled handsets are
also a potential new revenue stream for fixed operators - fixed line customers
can be encouraged to upgrade to their handsets with the same frequency as mobile
users.
From the operators' perspective, billing and customer data integration will
be a priority. The depth of integration required depends on operators' decisions
about billing - a flat monthly fee is clearly a simpler option than an itemised
bill. Full interoperability between the fixed and mobile
networks is vital for this new solution to take off -
hence it's in every operator's interest to work together
to achieve this. Ultimately, the industry needs to ensure that the end-user
experience is as simple and rewarding as possible, to encourage SMS novices to
make frequent use of new services. The tremendous success of mobile SMS is the
fixed line operator's Holy Grail.
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