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Text Messaging - The (Silent) 2,000 Pound Gorilla

Leaders in the wireless industry are always opining about what the next mobile “killer app” might be. While most people now agree that voice is, and will continue to be, the primary wireless application used, Short Message Service (SMS or text messaging) is a solid number two.

It’s not surprising that the industry tends to focus on new and emerging technologies, such as the widely discussed mobile music and mobile TV/video services. But the fact remains that wireless data today is dominated by SMS.

NPD’s Mobile Consumer Track shows – quarter after quarter – that roughly 40 percent of all wireless subscribers use text messaging. Even other established data services, such as ringtone downloads and mobile gaming, fall well behind SMS in consumer penetration. Ringtone downloads check in at 21 percent of mobile phone owners using data services, and mobile gaming is used by nine percent of subscribers with data services.

While no one is advising carriers to put other services on the back burner, it would be wise for wireless operators to find new ways to increase SMS usage. This is particularly true because advanced services, such as mobile music and mobile video, do not have a large installed base of capable devices. Significant investments in network infrastructure are also needed for advanced services to thrive. On the other hand, nearly all phones sold today allow for text messaging, and very little capital needs to be spent on SMS infrastructure.

New ways to use SMS – beyond peer-to-peer communication – have worked to increase SMS adoption, since carrier interoperability took place a few years ago. For example texting-to-TV for “American Idol” voting, text alerts and early forays into advertising have all contributed to further growth of data services. Still more could be done to bolster revenues from the handset side as well.

With a higher than average percentage of younger users, T-Mobile exemplifies a company that has worked to provide easy text messaging plans. T-Mobile also offers devices, such as the Sidekick, which make texting easier. Still, the Sidekick phones run about $300, which prices it well above the industry average of $65 after rebates and promotions. In many cases this places the device out of the price range of the most active text messaging users – namely teens and young adults.

Now another carrier is attempting to make inroads into text messaging space. Alltel recently announced the LG AX490. While at first glance this handset looks like a run-of-the-mill flip phone, a closer look shows that the device has a complete alpha-numeric keypad integrated into the traditional number pad. The technology, called Fastap was developed by Digit Wireless. It has been available to manufacturers for some time now, but aside from one LG model offered with Fastap in Canada, the technology has not been widely adopted. In short, Fastap makes texting easier by incorporating an alpha-numeric keypad into a traditional phone form factor.

Perhaps the most compelling aspect of the LG AX490 is its price – available for close to the industry’s average price. At this price the device should not only attract hard-core SMS users, but also non-text-messaging users who may come to adopt the service because of the easier messaging input capabilities.

And at the end of the day, that’s what all carriers want.

– Charul Vyas, Senior Wireless Specialist