Future of SMS
Industry-related
reports point to a future in which SMS volumes and revenue will
continue to grow on a global basis for at least the next three years. So
what is going to drive this level of growth?
By Ronald J. de Lange, Executive Vice President, Global Product Solutions, Tekelec

The
humble text message celebrated its fifteenth birthday last year. Few
applications in the fast moving world of mobile communications can boast
such impressive longevity. At this
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landmark age, the time has come to reflect on the impact of short
message service (SMS) and what the future holds for both consumers and
operators.
SMS has been the most successful non-voice service for
mobile operators in the history of telecommunications and, as such, has
been a key revenue generator. Every year stories of the demise of this
160-character service are thick in the air, and every year SMS usage
continues to grow
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as more uses are found for this once ignored service. The key to the
success of SMS has been its simplicity, reach, price and reliability.
All other messaging based applications launched since SMS have struggled
to meet the lofty expectations set by the service and pale in
comparison to its success.
Industry-related reports point to a
future in which SMS volumes and revenue will continue to grow on a
global basis for at least the next three years. So what is going to
drive this level of growth? In short, several trends will drive the
continued expansion of the service.
Figure 1 : SMS traffic continues to grow at a blistering pace
Machine-to-machine Applications. Recently businesses have started to utilize SMS as tool for sending telemetry
data
and updates from places that are constantly in motion or from which a
fixed data connection is not practical. A case in point is the new
global positioning system ( GPS ) device being used in German trucks for
tracking applications. A GPS located in the truck sends regular updates
via SMS to the parent company. This SMS-enabled capability allows
companies to better track truck movements and plan logistics based on
up-to-date location information.
SMS Spam. Unfortunately,
fraudulent SMS is on the rise and poses a serious threat to operators'
networks, customer satisfaction and revenues. The reach of SMS has
proven to be a key driver in its growth. However, its reach is also
attractive to unscrupulous advertisers and fraudsters who see the
potential to launch unwanted and unauthorized messages from across
countries and networks. And, the advent of smartphones, which act more
like miniature computers, has caused a tremendous increase in the number
of viruses and malware. These threats infect handsets, causing them to
generate messages without the
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knowledge of the handset owner. Operators are now starting to deploy
SMS Firewalls to stop spam, spoofing attacks and other SMS-related
scams.
Flat-rate Billing Plans. SMS is slowly turning into a
commodity service just like voice. Operators have started to launch
flat-rate billing plans that allow consumers to send as many messages as
they like in a fixed period, normally one month. When this charging
model was introduced in the United States , it caused a huge explosion
in SMS traffic. As more operators adopt flat rate billing plans, the
volume of text messages is expected to accelerate.
While the
volumes of SMS are still growing, operator revenue per message is
falling. This is increasing the pressure to either find new services to
increase revenues or improve the network delivery architecture to drive
down costs. What can operators do in the near term to help maintain SMS
margins?

First
Delivery Attempt. FDA, also known as SMS routing, flips the legacy
short message service center ( SMSC ) store-andforward approach on its
head. With this delivery method, the SMS router attempts to deliver the
message first before storing it. Since most people are ‘always on' and
geographic coverage in most parts of the world is extremely high,
messages can be delivered successfully in the majority of cases (80-95%)
on the first attempt. Using the FDA model cuts down on SMS storage
requirements and allows operators to effectively cap their investment in
legacy SMSCs and grow SMS routing in a costeffective manner.
Personalized
Services. SMS has become extremely reliable and consumers now consider
it a real-time service. As such, it is being used for business-critical
communication. New opportunities exist for services that subscribers can
configure for personal usage such as copying, forwarding, auto reply
and white/black listing. Business users likely will be willing to pay
subscription fees for these types of services.
Mobile
Advertising. Based on industry reports, this will be a huge revenue
generator for operators across a number of media such as multimedia
messaging ( MMS ), wireless application protocol (WAP) and SMS. Due to
its ubiquity, SMS is a perfect starting point for operators to enter
this new market and realize high response rates and revenues on
campaigns.Instead of getting the consumer to pay for messaging, why not
get large, third-party organizations or companies to pay for advertising
on mobile devices?
Figure 2: Predictions on the overall market for mobile advertising vary,
...........but there is a consensus on continued, accelerated growth
No
other messaging-based service has matched the simplicity, reach, price
and reliability of SMS. Mobile instant messaging (MIM), with its
popularity on the fixed side, is the next service that is predicted to
cannibalize SMS. However, recent reports from operators show that SMS
usage actually increases along with voice when people start to use MIM.
MIM, inherently a chatty service, leads to an increase in SMS usage when
a consumer
tries to chat with a buddy who is not available and
uses SMS to communicate instead. MIM will continue to lag behind SMS in
terms of reach until an increased level of interoperability is achieved
between the large, existing IM communities.
Consumers care little
about the inner workings of the network and how messages are
transported between them and their social groups. They only care about a
few things that are not related to the price – that the message will
turn up in a timely manner and the man-machine
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interface is simple and easy to use. However, operators see
infrastructure consolidation as a key component of tomorrow's networks.
All messaging services have common functions such as storage, routing
and interfaces. New standards are evolving, such as session initiation
protocol
(SIP), that promise the operator the possibility of
collapsing all of their current messaging-based services onto a single
platform --eliminating multiple applications which use a myriad of
protocols and networks.
So it seems the fifteen-year-old service
that initially struggled to gain popularity will continue to flourish
and remain a key component of mobile communication around the world for
the foreseeable future.
About Tekelec
Found at the heart
of most global networks, Tekelec's marketleading, carrier-grade network
solutions enable the secure and instant delivery of calls and text
messages for more than one billion mobile and fixed-line subscribers.
The company's session management solutions allow telecom operators to
manage the diverse applications, devices, technologies and protocols,
across existing and evolving networks, to meet the demands of today's
consumer.
Tekelec uniquely ensures telecom operators have a clear migration path
to SIP-based IP networks, and whatever comes next, with the flexibility
to deploy solutions at a pace dictated by their business needs.