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Mobile Messaging: Who Is Driving it and What Should Operators Do to Ensure Success?
Telecom Trends International (TTI), May 2003
Mobile messaging is fast becoming a mass consumer service due to several factors, such as increased awareness, new applications, and cross-carrier interoperability. The report, “Mobile Messaging: Who Is Driving it and What Should Operators Do to Ensure Success?” looks at emerging trends in this evolving market, and examines what vendors and operators need to do to remain on top of the growth curve. The report provides six-year user and message forecasts broken down by messaging technologies.
Mobile Messaging: WHO IS Driving IT AND What Should Operators DO To Ensure Success?
Executive Summary
1.1 Overview
The industry wide commoditization of voice and the massive increase in competition is driving mobile operators to introduce new and unique services in order to reduce churn and increase revenue. Over the past few years, Short Message Service (SMS) has become a huge success on operator networks, particularly in Europe and Japan. The massive uptake of SMS in several regions has caused many successor messaging services, such as Smart Messaging and Enhanced Messaging Service (EMS), to emerge and take center stage as promising revenue drivers. Fierce competition exists among a number of vendors for the supply of infrastructure for SMS and its more advanced successor technologies.
Smart Messaging and EMS are superior alternatives to SMS that, like SMS, use signaling channels, and have been categorized by Telecom Trends International (TTI) as Advanced SMS (SMS). To distinguish traditional SMS from A-sms, TTI has coined the term Basic SMS (B-sms) for 160-character messaging.
To tap into the revenue stream that messaging has the potential of generating, mobile operators have developed strategies that encompass alliance building, applications development, and creation of value-added services. These operators are depending on the messaging services, and their value-added applications, to add revenue to their decreasing Arpus.
During 2002, several operators launched Multimedia Messaging Service (MMS) as carriers began shipping handsets in significant quantities to support the service. MMS which uses traffic channels of packet-switched networks is being deployed over Gprs, cdma2000 1X and other 2.5/3G networks that are rolled out by the carriers.
While MMS offers the highest potential as a revenue generator, operators are able to use A-sms technologies to test the waters for new applications. Value-added services in the form of Mobile Instant Messaging (mIM) and Unified Messaging (UM) are making their way into carrier networks. While UM will remain a niche application for sometime, mIM is emerging as a mainstreaming offering.
Cross-carrier messaging is another significant trend, providing users the ability to send and receive messages to other carriers’ customers, regardless of the technology they use. Wireless carriers are offering messaging interoperability to help prevent churn and to lure new customers.
1.2 Questions Addressed by This Study
The questions addressed by this study include the following:
 What are carrier strategies and approaches with respect to deployment of messaging solutions?
 Which messaging solutions will be more successful and why?
 What will be the number of users by region for B-sms, A-sms, and MMS over the next six years?
 How many messages will be sent by region over B-sms, A-sms, and MMS networks during the next five years?
 What are the regional trends with respect to adoption of various messaging solutions? What are the major drivers of these trends?
 What are the decision drivers that affect wireless operators’ choice of messaging vendors?
This study attempts to answers these questions and more in order to provide insights into the promise of the growing mobile messaging market.
1.3 Key Findings
The following are the key findings of the study:
 By year-end 2002, there were 580.2 million mobile messaging users globally. These users sent 430.8 billion messages during the year. The number of messages will grow faster than the number of users during the forecast period of this report.
 MMS is on a fast growth track, thanks to a flurry of contracts signed by Ericsson and Nokia. Globally, MMS messages will grow at a compound annual growth rate (Cagr) of 154.8 percent over the next six years.
 B-sms will gradually be replaced by A-sms for most messaging applications, growing at a Cagr of only 12.2 percent. A-sms which will grow at a Cagr of 132.7 percent
 In terms of the messaging traffic, MMS will remain behind B-sms and A-sms during the forecast period of this report. Thus:
 As Figure 1 shows, B-sms accounted for 95 percent of messaging traffic, followed by A-sms with 4 percent, and MMS with 1 percent in 2002.
 As Figure 2 shows, A-sms will account for 38 percent of the users, followed by B-sms with 34 percent of the users, and MMS with 28 percent of the users by 2008.
 Wireless operators’ decision-drivers for messaging solutions vary from region to region. Thus:
 Operators in Europe are more concerned about the ability to reuse a messaging platform as well as the deployment time.
 Operators in Asia (not including Japan and South Korea) are more concerned with price and scalability.
 Canada and US operators are concerned primarily with the track record of the messaging providers and a marketing commitment from the vendors to assist the operators.
 Japan and South Korea are more focused on technology choices, customization capability, and the availability of value-added services.
 Caribbean and Latin American operators have concerns that are similar to Canada and US operators however, price is a larger decision factor.
Scope and Methodology
1.1 Scope
This report, “Mobile Messaging: Who is Driving It and What Should the Operators Do to Ensure Success,” explores the global mobile messaging market and operator strategies in this space. Because of the multiplicity of messaging solutions, TTI has created a new messaging category, Advanced SMS (or A-sms), to distinguish it from the traditional text-based SMS which it calls Basic SMS (or B-sms). A-sms, which allows for transmission of ring-tones and images over control channels, encompasses technologies such as Smart Messaging and Enhanced Messaging Service (EMS). However, when the term SMS is used by TTI, it includes both B-sms and A-sms.
Besides B-sms and A-sms, this report covers MMS. A-sms and MMS are the mobile messaging technologies that TTI expects will lead the market, thus the report places greater emphasis on them. TTI defines a user of a messaging service as one who uses the service at least once every month.
Topics covered in the report include:
 Market trends: Discussion of global and regional trends with respect to mobile messaging, and examination of marketplace developments
 Vendor decision-drivers: Discussion of criteria used by operators in evaluating vendors, factors affecting carrier spending, and specific regional needs of operators
 Carrier deployment and strategies: Discussion of mobile messaging solutions with respect to their deployment and success in various regions, as well as an analysis of operator pricing
 Market statistics: Statistics relating to messaging subscribers, regional subscriber usage uptake and volumes of messages forecasts covering B-sms, A-sms, and MMS users and messages
1.2 Additional Information Relating to This Topic
In order to provide a comprehensive understanding the capabilities for mobile messaging solutions and the global climate for their adoption, TTI has launched the following five reports:
1. Mobile Messaging: Who is Driving It and What Should the Operators Do to Ensure Success
2. Mobile Messaging: Operator Revenue and Investment Analysis
3. Mobile Messaging: Which Technologies and Applications Will Succeed?
4. Mobile Messaging: Vendor Strategies and Profiles
5. Mobile Messaging: Stats Book
This report is the first in the series. Professional consulting services and analyst time is available for additional briefings, research, and analysis.
1.3 Methodology
The information presented in this report stems from numerous in-depth interviews, extensive research into mobile wireless messaging markets, and analysis of market trends and developments. In addition, the author performed analysis and modeling using up-to-date data supplemented by information collected by TTI for other studies on mobile wireless markets. In particular, the research tools used in this report include:
1. Vendor Interviews: Interviews with vendors who are marketing hardware and software into the messaging component of mobile wireless networks provided insight into pricing and deployment trends.
2. Carrier Interviews: Interviews with national and regional mobile carriers provided primary insight into investment strategies and deployment timings.
3. Trend Tracking. Since TTI continuously tracks trends for the entire mobile messaging market, the report was able to put in context the uptake of messaging technologies across regions.
4. Global Subscriber Forecasts. Based on TTI’s work in modeling mobile wireless subscribers combined with historical and predicted wireless subscriber penetration, the magnitude of mobile wireless messaging uptake was assessed both by regions and technologies.
5. Mobile Wireless Messaging Pricing. Based on vendor financials and pricing information gathered through industry profiling, comparative cost structures were built for software and hardware investments for all three messaging technologies.
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