SMS has been the non-voice success story of the mobile world. Yet GSM’s inventors never envisaged it would be much used – unlike MMS which operators thought would take off like a rocket.

Instead it is MMS that has proved a damp squib that is only just showing signs of drying out. Grand industry pronouncements – most notably at the 3GSM Congress in 2006 – have heralded the arrival of instant messaging (IM) on mobile, but it’s very limited progress has been by the back door. While email is proving popular in some unlikely places, it a long way from being in widespread personal (as opposed to business) use in the West.

Despite a rash of scandals in Europe surrounding rigged voting by SMS on TV programmes, a growing number of SMS messages are person to machine, or vice versa. Short codes are an increasingly popular payment mechanism in Europe and now the US , not least because clearing house NeuStar (www.neustar.biz) got involved, but the industry has even bigger ideas about the role SMS can play.

At the annual bash in Barcelona in February, the GSM Association (www.gsmworld.com) announced that 19 operators had teamed up with MasterCard (www.mastercard.com) to run a global trial in which SMS would be the means of transferring money in 100 countries. The GSMA said the programme could double the number of recipients of international remittances to more than 1.5 billion, helping to quadruple the size of the international remittances market to more than USD1 trillion by 2012.

Vodafone UK (www.vodafone.co.uk, one of the 19 operators involved with the GSMA’s initiative) launched a pilot in February in Kenya as a joint venture with Kenya 's state-owned landline company Telkom (www.telkom.co.ke). The service is to be extended to workers based in the UK .

Operators are not the only ones working on this issue. Anam (www.anam.com), which specialises in exploiting SMS primarily for marketing purposes, is developing its #cash (hash cash) service, initially with the aim of serving the migrant worker market.

A #cash subscriber can send or receive money, even if the other party is not a subscriber and their operator doesn’t offer #cash services. This is because Aman picks up any SMS that is tagged #cash as it enters or leaves an operators’ network.

The transaction costs the sender 1 per cent of the amount sent, plus 50 eurocents. No commission is charged on changing the amount sent into another currency, which is done at going international exchange rate at the time the transaction goes through. There are two elements to the security precautions, in line with banking practice.

Jonathan Power of TR2 (www.tr2communications.com), which provides the payment mechanism, says, “We think are much bigger sectors, such as the casual payments like £25 to the babysitter or lending someone £25 in the pub. Typically people send money to people they know, people who are in their address book, so in most cases it will be immediate and simple.” The two companies are also looking into business to business payments as smaller businesses usually only have access to inflexible and expensive banking facilities.

It may be that smaller initiatives will succeed in making SMS the world’s most common banking mechanism. Certainly as we have seen with IM on mobile, large scale collaborations do not always fare well. Nevertheless Allen Scott, general manager for NeuStar NGM is bullish about IM and its potential for operators. NeuStar provides IM to 29 operators in 20 countries, either by providing the infrastructure or as an ASP.

He likes to stress that UK operator 3 generated 133 million IMs within two months, that is, the take-up rate is faster that of SMS when it launched, and NeuStar handled 3bn IMs in the last year. He argues that mobile is a different medium to the web and that the big PC-based IM brands won’t have an easy time of it. He says, “There isn’t enough room to have multiple windows open and display all the usual icons. It has to be simpler, which is what NeuStar is striving to bring to the party, for instance, providing a presence icon which indicates which contacts are available to receive what kind of communication.”

He also acknowledges that there are compatibility problems, but points out the likes of the Open Mobile Alliance is working on this with its SIP initiative.

Others are less optimistic about the operators’ chances of being the providers of IM as they are of SMS. Paul Goode of M:Metrics (www.mmetrics.com) says, “IM still remains a surprising story for me. From data at the end of Q2 this year, are seeing penetration levels of between 5 and 6 per cent in Spain and Italy, and again going down to 3 per cent in France and Germany, 5 per cent in UK and 6.7 per cent in the US.

“This is very low,” he says. And this, he adds, is the rub.

“We ask about access methods and 80 per cent of consumers are using IM through the browser or some sort of messaging service or SMS. There is no significant growth in uptake, the frequency of use is still relatively low and the access method painful for what is a compelling, addictive even, form of communication on PCs.

“As we see more clients on the handsets and more richer handsets come out, it will be usage of the existing, PC-based providers of IM that will be the way it migrates onto mobile – the Yahoo!s, ICQs and those people. It looks like the operators have missed the boat.”

By comparison there is what Goode describes as “stunning year on year growth of MMS in the US where there has been a 60 per cent rise in the number of subscribers using it, although the US is coming from a relatively low installed base. In Europe the Spanish are careering along with 28 per cent growth, France has 24 per cent, Germany 17 per cent, and the UK has only 6 per cent growth, but is the highest in terms of penetration.

“We measure active subscribers, not the volume of messages sent. In Europe about 25 per cent of the population is sending a photo to another phone in an average month as opposed to SMS which we are seeing at 82 per cent of the population using monthly. However, instead it being close to a 1:3 ratio in terms of audiences, if we look at the number of messages being sent, the ratio is roughly 1:100 in favour of SMS. MMS is an occasional habit, not a compulsion like SMS.”

Not everyone is convinced that MMS’ (or IM’s) time has come. Adam Zbar, CEO Zannel (www.zannel.com – for zillions of channels and a play on his surname. Each registered user is, in effect, their own channel.), says, “The lack of IM has been an inhibitor to the growth of social networking on mobile but when you add media, it becomes pretty interesting without it. We call our platform instant media messaging and the emphasis is on instant. People like to see what other people are doing, thinking, feeling, right now.”

Zbar says thousands of people are registering every day, but MMS is not used much. Originally the rationale was that it was much more expensive than SMS, but it is still preferred because, as Zbar explains, “Sending a thumbnail of a piece of media via SMS is better because the recipient may not want to open the file and with an SMS they don’t have to.”

If MMS and IM are failing to gain much traction, the rise of personal email is a more interesting story. In the western world, it is growing, but not at stellar rates. M:Metrics’ research reveals there is significant churn among older users and in general there are low consumption rates for services in western Europe. Goode comments, “The trends are not encouraging either.” However, it’s a different story in many emerging markets, according to Carsten Brinkschulte, CEO of Synchronica (www.synchronica.com).

He says, “The regional aspects are the most interesting, disturbing and disruptive. Over the last 12 months we’ve attracted more users in developing countries – the Middle East, Africa, Eastern Europe, Latin America and parts of Asia . We are seeing a lot of requests for tenders from operators and others in these areas. It makes sense when you consider the PC penetration rate is very low in these places and at the same time, the mobile phone penetration rate is soaring.”

He adds, “Many people use Internet cafes to send email and stay in touch with their friends and family, which is one of the great things about mobile email, it can be sent to a phone or computer. We have changed the marketing and sales strategy of our mobile email gateway to match this.”

Isn’t the problem that you need a high end phone for email which most people haven’t got? Apparently not. Brinkschulte claims, “Recently we were asked to talk to an operator in Bangladesh which is interested in offering our service and is very bullish about its potential. They found that about 25 per cent of mobiles in use would be compatible with our software – and Bangladesh is one of the poorest countries in the world. Most established mobile email solutions are proprietary and need a high end phone, and therefore will remain for niche business use.”

Currently Synchronica supports email services in Nigeria , Paraguay , Uganda and Turkey . The service is typically offered by ISPs and the client downloaded over the air. Brinkschulte comments, “It is simple to do, which is incredibly important, otherwise you lose the user before they begin. Activation and device configuration and management is automatic and over the air. We combine IMAP to handle the email side of things and SynchML to provide calendar, contacts and tasks. Our client is downloaded over the air.”

Many in the industry are arguing that the future of mobile messaging will be in converged messaging – fastmobile and Comwave both offered a single user interface which enable people to move easily between the different modes, but progress seems slow. M:Metrics’ Goode says, “I’ve been hearing about converged messaging platforms for at least 10 years whereby everything drops into one inbox and you can flip easily between different messaging modes.”

He concludes, “We’ve moved from talking about unified messaging to converged messaging. What are you trying to unify and plug together in the same place? I don’t see any rash of harmony breaking out any time soon. Apparently there is a cool feature on the iPhone whereby voicemail is presented visually, which might help that approach become mainstream, but otherwise, I put converged messaging it in the same bracket as location services in that it’s a logical thing to happen, but 12 years down the line, there isn’t much action.”

 

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