It’s a pub quiz question. First person to use a cashpoint (in the UK)? Reg Varney. First person to make a mobile phone call? Ernie Wise. First person to send an SMS? Neil Papworth.
Neil Who? Well, SMS was not brought into being with the paid-for services of one of the BBC’s light entertainment stars, but by an engineer called Neil Papworth. Papworth, one suspects, while proud enough of his role in being on of those who created SMS, is a little tired of the “Who is Neil Papworth?” questions and has put his own site together that, amongst other things, informs us that he now works for Tekelec on its subscriber database solutions.
Because phones had no keyboards, Papworth had to use a PC to type out his message – sending not only the first SMS but also using the first converged, unified messaging comms platform as well!
Anyway, the mobile industry certainly didn’t miss the fact that this Monday was the 20th anniversary of Papworth’s first text. Heading away from Papworth, the BBC’s Leo Kellon tracked down the man credited with coming up with the idea of SMS, and did an interview by SMS, which was a nice touch.
The industry took the opportunity to mull on where SMS is now – filling up my inbox with a variety of views. Acision found some Informa numbers suggesting that this old technology still has plenty of headroom, which of course is good news for Acision: Latest figures from Informa suggest that 5.9 trillion SMS messages were sent in 2011 with SMS traffic expected to reach 9.4 trillion messages by 2016. Juniper Research, meanwhile, reckoned that there will be 28.2 trillion messages sent in 2017.
Others, like SecureEnvoy’s Andy Kemshall, pointed out the diversity of applications SMS is now used for, from charitable giving to secure authentication, to banking and crime prevention and detection. He might have added marketing and advertising, as well as school and enterprise communications, TV competition voting, flight information and news updates, whatever else comes to mind.
But despite the channel’s immediacy, reach and ubiquity, it seems there are doubts about how this old horse can keep running and making money for operators, the bearers of the service.
Ofcom figures show that in the first half of this year there was a steady decline overall in the number of text messages sent, falling by more than 1 billion since the end of 2011. French figures have also suggested that volumes are peaking, although there is still slight growth in overall volumes. Revenues from SMS in Spain are, to be blunt, collapsing; a combination of rate cuts, price cuts and users moving to other platforms. Vodafone, for instance saw Q1 revenues from SMS fall from £79 million in 2011 to just £54 million.
Ofcom argued that the chief cause for the reduction in volume in the UK is user substitution for other messaging platforms, the deadly OTT players. Informa’s Pamela Clark-Dickson, who came up with the number that Acision was leaning on for support, doubted this portrayal.
“Overall,” she wrote, “the future remains bright for SMS, if only because it will be some years before free messaging applications can achieve the same level of penetration as SMS. The penetration of smartphones and mobile broadband represent barriers to entry for consumers, as does the lack of interoperability between the OTT offerings.”
Alastair Hanlon, VP Market Strategy, at Amdocs argued that, in fact, operators should view OTT players as partners rather than competitors.
“Developing strategic partnerships with OTT players in 2013 and beyond seems like a viable, popular option to stay ahead of the social messaging game and to, at least, reduce the size of the SMS black hole in revenues,” he said.
Partnering could bring innovation and brand differentiation to the market, delivering high ROI, he said. “But it’s not as easy as that – it will require efficient partner management, novel business models and flexibility,” he warned.
We are, in fact, beginning to see how operators are playing their hand in the so-called “OTT” messaging space. So far, there has been very little in the way of partnering with the likes of WhatsApp, Skype, Apple and so on, but rather operators have been making the effort to launch their own-brand versions of the competitive products, such as TuMe and Libon and Bobsled.
Where operators could differentiate, and it’s clear that they hope to do this, is to build on these presences with Cloud-based services that will eventually act as the home of their subscribers’ digital lives. I think integrating messaging into that greater strategic drive makes more sense than viewing it in isolation as a declining revenue line.
Anyway, happy birthday SMS, and if nothing else, at least we will all get the pub quiz question right the next time it comes around.
Keith Dyer
Editor, Mobile Europe