The first text message – a simple Merry Christmas – was sent over the Vodafone network on December 3, 1992 by a 22-year-old Canadian test engineer to the phone of one Richard Jarvis. And the rest, as they say, is history.
In the past 23 years, the SMS (short messaging service) has redefined the way we communicate. As far as technologies go, it has survived the test of time.
The question, however, remains whether it will continue to withstand the onslaught of other over-the-top (OTT) messaging services such as WhatsApp, Facebook and Snapchat or even email.
On its 23rd anniversary, it is probably a good time to reminisce about the past and consider the drivers and challenges for SMS to continue to play a part in our lives.
SMS, or commonly referred to as text message, is typically around 160 characters in length and is routed through a telecom operator. Multiple messages can be clubbed together to appear as one full message to the recipient. However, each message is billed separately.
Will the industry continue to grow, at least at a modest rate? Let’s see what research indicates.
According to Juniper Research, by 2017, SMS traffic is expected to reach 12 trillion messages per annum and revenues are expected to be in the vicinity of $192 billion per annum.
Despite the proliferation of other messaging technologies, the industry is growing at about 7 per cent per annum. Let us consider what is driving this growth. Despite being one of the oldest messaging technologies, SMS remains one of the major forms of mobile messaging and accounts for a key part of mobile network operator service revenues.
The main reason cited for the success of SMS is ubiquity. This has proven to be its greatest strength. In less than three decades, the mobile phones in use have grown from zero to more than 7 billion, and each of these phones supports SMS. The other strength is reliability as SMS does not depend on mobile broadband or any other data connection to deliver a message, unlike instant messaging and social messaging. There is no sign-up needed, no internet data connection, and one potentially has limitless access to message anyone with a mobile phone.
Aiding the growth of SMS are applications such as alerts and notifications, one-time password (OTP), transaction confirmation, reminders, requests (user name/ password), brand building and promotional activities, customer relationship management, information updates and remote system monitoring.
One of the customers of Routesms Solutions relies on SMS to track the movement of schoolchildren and school buses to alert parents. The parents receive just-in-time notifications and know exactly where their child is, or exactly when to go and drop/pick up their child.
We see the growth in the use of similar innovative SMS applications continuing in the foreseeable future.
The simplicity and versatility of SMS have helped it stake its claim as the most reliable messaging service beyond just person-to-person (P2P) communication to application-to-person (A2P) and person-to-application.
While a lot of the growth in P2P messaging has now shifted to OTT players such as Facebook, WeChat and WhatsApp, A2P messaging is what will continue to drive the market.
In the coming years, India, China and Africa, due to their large populations, will be the highest A2P volume generating regions. In fact, 70 per cent of all mobile users will come from these three regions.
The industry will focus more on the enterprise segment, banks and e-commerce being the biggest contributors towards the A2P SMS traffic. There is a huge opportunity in the A2P segment, especially in enterprise business. Further, OTT players like Facebook, WeChat and Viber will use more A2P SMSs for OTP and other activity-related alerts. Since the number of users for OTT services is increasing day by day, there will be more A2P SMSs to send.
Are there bottlenecks? Sure, there are. But most of these are limited to challenges at the mobile operators’ end and can be easily overcome.
One of the key issues we see in SMS growth is price variation in the same country. All mobile operators in Kenya, for example, have different price slabs, ran-ging from very high to very low. For aggregators like Routesms, such a situation makes it difficult to make any kind of monthly commitment to operators. Operators must move to a common pricing structure in a country.
For some time, especially in the emer-ging economies, any subscriber could be sent an SMS from an international operator or a web application without the knowledge of the subscriber’s operator, thereby resulting in a revenue loss to it. Now, having realised that A2P will be the biggest revenue generator, operators have started installing a filter in their system and are blocking SMSs delivered from a web application/internet service povider that they do not have a revenue arrangement with.