SMS services could fill the gap where internet is not available

Orange’s pan-African operations have partnered with Google in a bid to exploit SMS as a platform for delivering Google services to low-end devices in use across Africa and the Middle East.

With a total customer base of around 60 million customers across the continent, Orange is keen to facilitate access to innovative services, expanding “Gmail SMS Chat” from Senegal, Uganda and Kenya to Cameroon, Côte d’Ivoire, Guinea Conakry and Niger and deploying it as a trial in Egypt.

The service, which gives Gmail users a quota of free text messages they can send to any Orange customer, will ultimately be rolled-out across Orange’s entire African footprint. As the SMS quota is used, an additional five messages are added each time an Orange customer replies to the initial SMS. Through this service, Gmail users can add Orange mobile customers (even if they do not have a Gmail account) to their address books and initiate chat sessions with them. For Orange customers, the service is free of charge and requires no subscription; chat messages sent from their mobile phones are billed at normal SMS rates.

“By bringing the full potential of the mobile internet to our customers in Africa, this strategic partnership is a step forward in Orange’s “Digital Coach” strategy,” said Xavier Perret, VP of strategic partnerships at Orange, as the group revealed plans to extend the initiative to more Google services.

“The group’s capacity to combine its knowhow on service infrastructure with innovation, and by adapting its offers to local needs, will enable it to provide mobile customers across Africa with access to internet-based services in the best possible conditions,” Perret said.

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Orange states that only 1.4 per cent of the population in Africa and the Middle East has access to broadband services, and Informa Telecoms & Media forecasts that the penetration of smart-phones in Africa and the Middle East by end-2011 will be just 11.3 per cent and 19.8 per cent, respectively. According to Informa, there were 577.6 million mobile subscribers in Africa and another 226 million mobile subscribers in the Middle East at end-2Q11, equating to penetration rates of 54.7 per cent and 93.5 per cent, respectively. In order for an Internet company to reach the widest possible audience in Africa and, to a lesser extent the Middle East, it’s going to be essential for that company to use SMS as the access mechanism.

The partnership delivers mutual benefit to Orange and Google: Orange will generate additional traffic and revenues from the SMSes sent by those of its subscribers who use the Gmail SMS Chat service and by those of its customers who reply to the chat messages.

Meanwhile, Google will secure additional market reach. The Internet company already offers Gmail SMS Chat via 29 other mobile operators in Africa and the Middle East, but the tie-up with Orange gives it access to another 19 networks, representing 60 million subscribers in total. At a micro level, Gmail SMS Chat users will be able to add Orange mobile customers who are not Gmail SMS Chat users to their address books/buddy lists, which may in turn encourage non-users to sign up for the service themselves.

It’s also possible that Orange and Google will co-brand and/or co-market the service, which will again deliver benefits to both companies in terms of raising or enhancing their brand awareness among mobile subscribers in the MEA region.

Orange and Google have not disclosed the commercial terms of the partnership, but it’s unlikely that Orange will share messaging revenues with Google. However, Orange is offering Google the opportunity to provide other services to its subscribers, and Google may well be able to charge for these or secure a share of the revenues generated by these services.

Orange and Google have already had some success with Gmail SMS Chat: Orange stated that the service attracted 700,000 unique users in Senegal within the first six months of its launch in Jul. 2010. Between them, these users sent four million Gmail SMS Chat messages.

It is possible that Gmail SMS Chat can achieve a similar level of success in the other African countries in which Orange and Google propose to introduce the service, which is also already available in Kenya and Uganda. Initially the operator has only named five other markets in which it will launch or trial Gmail SMS Chat, though it expects to roll the service out across all 19 opcos.

Orange is not charging its subscribers a subscription fee to access Gmail SMS Chat, nor will it place a premium on the SMS chat messages, which will help to make the service more attractive to consumers. In fact, to provide even more incentive, Gmail SMS Chat users receive a quota of free SMSes (Google states on its web site that Gmail SMS Chat users receive an initial quota of 50 messages), which is renewed with an additional five free SMS messages every time an Orange customer makes a paid-for reply to a chat message.

However, Orange and Google are not alone in seeking to provide SMS-enabled Internet services to mobile subscribers in Africa; companies such as ForgetMeNot have been doing so for a couple of years. ForgetMeNot, for instance, enables SMS-based e-mail, instant messaging and social networking for operators in Kenya, the Republic of Congo, Zimbabwe, Lesotho and Nigeria. Although such companies do not have the scale of Orange and Google, they are agnostic in terms of the services that they do enable, which can be a potential differentiator for mobile operators.

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Global SMS revenues are forecast to rise to $136.9bn by 2015 from $105.5bn in 2010

The humble SMS will remain a significant source of revenues and traffic for mobile operators on a global basis until at least 2015, according to the latest forecasts from Informa Telecoms & Media. Global SMS revenues are forecast to rise to $136.9bn by 2015 from $105.5bn in 2010, as global SMS traffic increases from five trillion messages in 2010 to 8.7 trillion messages in 2015.

Although mobile operators are spending heavily on rollouts of LTE and other new technologies, leaving relatively little in the budget for messaging services, SMS should not be overlooked as a core service for mobile users, delivering in 2010, 80 per cent of data and messaging revenues.

In fact, argues Pamela Clark-Dickson, senior analyst at Informa, SMS will continue to be the most popular form of messaging for some time due to its low cost, universal access and interoperability across devices and mobile networks.

Although traditionally used by consumers, SMS is increasingly being used by government departments, banks and financial institutions, brands, retailers and transport providers for increasingly sophisticated purposes such as tickets, coupons, payments and loyalty programs. Its popularity in emerging markets as a banking and payment tool is also well documented.

Indeed, the types of services that are being delivered by SMS in emerging are playing a vital role in improving the economic and social well-being of mobile users and their families in these markets, said Clark-Dickson. Farmers can use SMS to receive weather reports, crop prices and information about fertilizers, and in so doing hopefully increase their crop yield and allow them to get the best possible price for their harvest. Meanwhile clinics can harness SMS to better manage their stocks of medication or to allow patients to check whether their medicines are fake, which will ultimately help reduce the spread of diseases such as malaria and HIV.

“The fact that SMS is the universal data communications channel on the mobile device is also a huge benefit for businesses and government departments in developed markets and, more recently, for social networks like Facebook and Twitter. By enabling SMS updates or alerts for their services, social networks, businesses and government departments can reach all mobile users, and not just the segment of users that owns a smartphone,“ said Clark-Dickson.

Report summary

Informa’s Mobile Messaging report includes essential five-year global forecasts and provides a detailed evaluation of the mobile messaging market, including coverage of trends in SMS, MMS, mobile e-mail, mobile instant messaging, and Rich Communications Suite.

Overview

Mobile messaging is the second-highest revenue-generating service for mobile operators behind voice, with person-to-person SMS being the key revenue-driver. SMS traffic continues to grow, however messaging revenues as a proportion of mobile operators’ overall service revenues are in gradual decline, as mobile users increasingly take advantage of affordable tariffs that include large buckets of messages or unlimited messaging.

Informa’s Mobile Messaging report includes essential five-year global forecasts and provides a detailed evaluation of the mobile messaging market, including coverage of trends in SMS, MMS, mobile e-mail, mobile instant messaging, and Rich Communications Suite.

Challenges facing mobile operators include slowing growth in SMS revenues and tight budgets for the development and roll-out of new messaging services (largely due to their investment in network technologies such as LTE). In addition, the ascendance of over-the-top providers of IP-based messaging services such as e-mail, instant messaging and chat, coupled with the ability for mobile subscribers to offload their messaging data traffic onto either public or private Wi-Fi networks – which may not be owned by the mobile operator – means that operators face becoming increasingly less central to the role of mobile communications service provider.

Our Mobile Messaging research provides comprehensive profiles of mobile operators, service providers, vendors and handset manufacturers, and details a multitude of strategies currently followed by industry innovators and corresponding business models. The report also provides a look into the future, and how current strategies can evolve to create new revenue opportunities for mobile operators and service providers.

How will this research help you:

• Evaluate competing technologies and their application for different market segments
• Align corporate objectives and growth strategies with accurate and detailed market forecasts
• Assess competitor positioning and direction through case studies and profiles
• Focus product development on emerging trends, compelling new technologies and essential feature sets

Pricing Information: £2495

To buy this report click here 

To view a free extract of this report click here

The first is to deploy ubiquitous high-speed broadband factories. In essence, operators are focused on extending the reach of broadband to as many people in as many locations as possible using a mixture of fixed and mobile technologies to do so. On this front, the tactics in achieving the goal vary both in terms of the speed of deployment and the technologies chosen, but the operators are united in realising that high-speed broadband will be their key asset in the future. But it’s not just about coverage, quality is also uppermost in their thoughts and operators are deploying a variety of network management tools to try to lay a foundation that is leading in terms of coverage, capacity, quality, speed and experience for their users.

Whilst all the talk may be of future revenue streams, operators cannot afford to forget about the cash cows that drive profitability in their business. That means protecting the core revenue streams of voice and SMS that even in five  year’s time will continue to account for more than two-thirds of mobile operator revenues. On this front we again see a variety of approaches – some more short-sighted operators are still focused on VoIP blocking, others are keen to partner with third-party VoIP providers, while the most forward-looking operators such as Telekom Austria and Telefonica have begun launching their own VoIP propositions. SMS, meanwhile, is threatened not only by price declines, the threat of regulation as well as cannibalisation from other internet-based communications options such as Facebook messaging,

The third priority is a commitment to service quality. In a mature industry where the retention of customers is so fundamental to profitability, operators must have a razor-sharp focus on ensuring exceptional service quality levels across every part of their business, from the call centre, to the retail footprint right through into the network.

At the same time, however, new revenue streams must be found to fill the holes left by declining traditional revenue streams. That means investing in new areas to seed and nurture the arrival of alternative sources of cash. It’s no coincidence that every major European telco has set up dedicated arms to tackle the M2M business. Ironically, many of the European telcos have been engaged in M2M for nearly 10 years, but only now have the resources and focus been put behind those initiatives in earnest. The growing operator investment levels into M2M also reflect the fact that other industry verticals have suddenly awoken to the opportunity to bring enhanced products and services to market by bundling in a connectivity play.

The arrival of the iPhone and the service-strategies of others like Nokia, Samsung and RIM has caused many in the industry to debate the smartphone’s role in disintermediating the operator from the provision of services to end-users – to breaking the relationship with the customer. There’s also strong questioning from some about the upfront hit to profitability that operators take when they target heavy subsidies on these expensive devices.

But when we’ve looked at the positive impact that smartphones are having on operators businesses, it’s not hard to see just why operators have been so aggressively marketing the push for smartphones. Telenor Norway recently reported they are seeing close to 60 per cent ARPU uplift when a user migrates to a smartphone from a non-smartphone and although this is perhaps a more aggressive example, in other markets operators have regularly reported uplift in the order of 25-40 per cent per month. Not only is there incremental revenue uplift, but operators also report that smartphone customers are more loyal meaning that more revenue per month, plus a longer eventual lifecycle gives huge gains in overall customer lifetime value. Put simply, getting the right device in users’ hands has become the single biggest incremental revenue driver for today’s mobile operators.

Many of those who are following the disaster online or in print, by television or radio, would probably gladly give their right arm if they thought it would help. Failing that, there has been a generous outpouring of donations to a number of charities that are committed to providing assistance to the Haitian people. These charities include the Red Cross, Unicef, the Salvation Army, Oxfam, World Vision, Save the Children, CARE and the Yele Foundation.

The donations have been pledged via multiple channels, but what has been extraordinary about the fund-raising appeal for the survivors of the earthquake in Haiti is that SMS has taken center stage as a donation mechanism, especially in the US. By January 21, about $30m in donations had been promised to various charities by the US mobile subscribers of all four Tier 1 mobile operators, according to the Mobile Giving Foundation. Mobile users in the US have been able to text a keyword to numerous charities’ common SMS short codes, in order to pledge $10.

Donate to the DEC Haiti earthquake appeal

Similarly in Canada and the UK, mobile subscribers have also been able to donate CA$5 ($4.72) and £5 ($8.05) respectively by texting a keyword to a common SMS short-code. However it has not yet been confirmed how much has been raised in Canada, and it’s also not clear how much of the £42 million ($67.6m) that had been raised in the UK by Jan. 22 is via SMS donations alone since the UK’s Disasters Emergency Committee (DEC) is also enabling people to donate online or over the phone. Those mobile users wishing to donate by SMS to DEC can text the keyword “Give” to 70077 but, unlike in the US, standard SMS charges will apply since the UK mobile operators are not waiving charges. Indeed, only Orange UK is promoting a charity separately, enabling its customers to text “donate” to 864 233 in order to to send a £2.50 donation in aid of Unicef’s relief efforts in Haiti.

Using SMS to donate to a charity is not new, but up until the earthquake in Haiti it had not been well-used. Indeed, a recent global survey conducted by messaging infrastructure vendor Tekelec found that SMS donations was the least-used of six services about which it canvassed 500 users in September 2009. The other five services were news and sports alerts, reality-TV voting, entering competitions, paying for services and alerts on special offers. But the response to the Haiti appeal has certainly set the bar higher for SMS donations.

A number of factors have seemingly combined to drive SMS as an effective donations platform for charities in the US at this particular point in time, not least of which is the growing penetration of SMS use among mobile subscribers. Another key element is that there is a value chain for mobile giving already in place in the US, which was quickly able to swing quickly into action in order to respond to the emergency in Haiti. This value chain consists of the mobile operators, the Common Short Code registry (run by NeuStar on behalf of industry organization the CTIA), providers of mobile giving platforms including the Mobile Giving Foundation and Mobile Accord, and mobile messaging aggregator Mobile Messenger.

Also, the four Tier 1 mobile operators in the US all threw their considerable weight behind the promotion of the common SMS short codes associated with each of the charities, and in particular, the 90999 short code for pledges of $10 to the American Red Cross. Each of the US mobile operators has waived their SMS fees for the back-and-forth communications associated with setting up the SMS donations. That kind of in-faith attitude can only have helped US mobile subscribers to decide to give.

But Verizon Wireless has gone a step further, moving to address one of the pressing issues surrounding the delivery of aid to Haiti, and that is that pledges are quickly transformed into usable funds for the charities involved. By January 20, the mobile operator had advanced a total of $7.8m to the American Red Cross since it enabled SMS donations on January 13. Typically, it can take between two to three months for mobile donations to clear; Verizon is only waiving this process for the Red Cross’s Haitian appeal however.

The fact that the US cellcos have all set the pledge amount at a minimum of $10, chargeable to their subscribers’ mobile phone bills, will also have helped to quickly raise substantial funds. It is possible that even more funds could have been raised if subscribers were given the option to pledge amounts lower than $10, thus enabling even more subscribers to give.

The remarkable response to the call for SMS donations in the US serves to illustrate many things, of which generosity and good-will towards one’s fellow man are not the least. Clearly the mobile giving industry has tapped into a previously unmet desire by many people to donate to charitable causes using SMS, a channel that an increasing proportion of people find easy to use and which is provided by a trusted third party, that is, their mobile operator. It is those who are aided by charities that will benefit most from this welcome development.

Orange to integrate Twitter into IPTV

Mobile carrier Orange UK said Tuesday it is working to integrate popular social networking platform Twitter into its own service offerings, including TV as well as mobile and web.

In a pan-European move, but launching first in the UK, Orange will integrate Twitter features into its mobile service, allowing users the ability to upload and share photos with their Twitter followers via MMS. SMS-based tweets will be rolled into the standard mobile plan and users will be able to set times for receiving tweets, chose a maximum number of daily tweets and chose to receive updates in real time, hourly or daily.

Interestingly, Orange has said it will also explore ways of integrating Twitter into its IPTV platform to create interactive Twitter feeds that will run during and alongside programmes and will embed the service within Orange web portals from 2010.

Twitter will be implemented first in UK, followed by France, Spain, Poland in 2009. It will then roll out across the rest of the Orange European footprint in 2010.

The platform will be added to Orange’s social media aggregation service “Social Life” in the UK, “Mes communautés” in France or “My Social Place” in Spain, alongside Facebook, MySpace, Bebo and a range of other popular social sites.

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The largest revenue potential is offered by the two sided business model, where operators charge subscribers for access and third party service providers for APIs. Pioneers in this segment include Telenor and Orange. In 2008, Informa estimates that Telenor recorded revenues of US$126 million from its Content Provider Access (CPA) initiative, which represented 6% of its mobile revenues in Norway. CPA revenues result from API access charges and revenue share agreements with content providers in Norway. These revenues equate to an effective ARPU of US$43 per year or $3.6 per month.

Orange has an extensive API offering and is targeting enterprise customers among others. For example, Orange APIs have enabled Pharmagest, a large pharmaceutical company to offer messaging services to pharmacies throughout France. The Contact Everyone API allows messaging between pharmacies and their customers. Other applications include a taxi service and various social networking utilities that use SMS, location and other APIs. The Contact Everyone API requires a €500 activation fee, a €50 monthly subscription fee and volume charges of €0.10 per SMS sent in France and UK. Informa estimates that Orange generates significantly less revenues than Telenor due to its business orientation. Lower API access charges and commitment to individual developers mean that Orange is investing on its future and the long tail of commercial applications rather to partner with a select few content providers. Informa expects that revenues from Orange Partner are used for infrastructure and to plan events for developers while Orange expects its Partner business segment to generate incremental revenues but not adhere to strict and aggressive revenue targets.

The second business model is exposing APIs to attract individual developers, who are presented with a route to market for their applications and access to billing, messaging and location APIs. Telefonica’s O2 and Orange have created app stores that utilize APIs to deliver rich downloadable applications that can be delivered through the operator portal, potentially reaching millions of subscribers. Developers are now starting to embrace operator initiatives, as the latter are starting to become developer friendly – contrary to earlier schemes that required developers to familiarize with complicated telecoms-grade protocols.

Further business models include web mashups, where web developers can combine web services with telecoms functionality to embed voice, SMS or location to existing applications, including enabling communications for social networks. Operators agree that although monetizing mashups may not be a driver, the additional traffic generated by mashups may incrementally add to existing revenues.

Telenor’s success illustrates attainable profits if a mobile operator is committed to APIs in the long term. However, replicating Telenor’s success currently would be difficult as several operators have chosen alternative routes to partner with content providers. As with Orange, the majority of mobile operators that have recently entered the API business will find out that long term benefits will be more lucrative rather than short term revenues but in the short term, they must commit in effort and infrastructure expenditure.

Syniverse snaps up VeriSign messaging business

Mobile messaging firm Syniverse this week announced plans to acquire the messaging unit of US tech and security company VeriSign for $175m in cash.

The Content and Messaging division of VeriSign features SMS, MSS and mobile content platforms focusing on mobile operators, content providers via premium messaging, WAP portals and enterprise services. VeriSign delivered more than 224 billion mobile messages in 2008.

“As mobile messaging volumes continue to experience double-digit growth, Syniverse will have the scale, reach and capabilities needed to provide mobile operators – large or small – with greater vendor choice and faster time to market for the services subscribers demand,” said Tony Holcombe, president and CEO of Syniverse.

Under the deal, Syniverse will combine its NextSM Advanced Messaging Hub with VeriSign’s enterprise messaging operations including Inter-Carrier Gateway, PictureMail, Premium Messaging Gateway, and the Mobile Enterprise Solutions business.

As part of the agreement, Syniverse will acquire approximately 300 additional employees located primarily in the US and Asia Pacific.