MOBILE INSTANT MESSAGING - The new communications channel
What do mobile operators do now that many of their services are reaching saturation
point? How do they continue to develop new and innovative ways for people to communicate that are as universally embraced as voice and text? Allen Scott contends that Mobile Instant Messaging will become the third key operator communications channel in the future
Mobile messaging services have never been so popular, with SMS still the hands-down winner. According to recent forecasts by Gartner (December 2007), 2.3 trillion messages will be sent across major markets worldwide this year. That is almost a 20 per cent increase from the 2007 total. Whilst the growth in traffic has been (and is predicted to remain) nothing short of phenomenal, for most operators the growth in volumes will not be anywhere near matched by a growth in revenues. Many are already seeing the flattening of messaging revenues.
Operator margins on messaging services are going to become ever slimmer as competition and market saturation bite deeper. Gartner estimates that the compound annual growth rate (CAGR) for SMS revenues is expected to fall by almost 20 per cent over the next four years to just 9.9 per cent. Rather than trading blows in a competitive game of one-upmanship over highly reduced bundled text tariffs - or even giving text away for free - forward-thinking mobile operators are beginning to realise that they should be planning right now for a future where current messaging services are fully commoditised and the margins greatly reduced.
The challenge is to replace the revenue. There is a need to develop new services that drive additional revenues, increase customer loyalty and develop new streams of income for operators. The challenge has not changed in the last five years. Yet a host of services - from MMS to WAP and from Mobile Television to video calling - have failed to capture the imagination of the public.
Perhaps it is time to go back to basics. So far, the most successful operator services have all been channels of communication rather than specific services. What do I mean? Voice and text are both simple to understand and use. Most importantly, both provide channels with which to communicate. No one tells users what to say or write in voice and text. What is provided is a simple communications channel for the user to use as he or she sees fit.
Operator services that have failed to capture users' imaginations have tended to provide very specific services rather than communications channels - or they have tried to recreate a PC experience in a way that is not suitable for the mobile. WAP, for example, is a specific service providing browsing on a mobile phone. However, it is slower than browsing on a PC, and the results are usually difficult to read and to navigate. Similarly, MMS is a specific service offering the user an opportunity to send photographs from mobile to mobile. Ultimately, volumes of photo messaging are likely to stall (probably in the next year or two) as mobile subscribers increasingly share photos through mobile communities and social network portals rather than sending them directly to one another.
So what are the new communications channels? The most obvious one today is mobile Instant Messaging. Mobile IM offers operators a new opportunity because it provides a comprehensive new communications channel and not a specific service. Though mobile IM's uptake today compared to SMS is still relatively small, operators are taking the service seriously. Indeed, early indications are that mobile IM has a growth pattern that matches, and in some cases exceeds, that of SMS at the same time in its development.
IM has at times been unfairly seen as little more than a service extension to the PC. But the reality offers so much more, with operators increasingly recognising the opportunity to create a global partnership to truly take mobile to the Internet, and vice versa. The combination of messaging, presence, and conversations, plus the ability to attach links or pictures, provides an incredibly vibrant solution for the mobile environment. It's about much more than driving additional active subscribers.
IM is actually ‘text talk.' It is differentiated by two key points: presence and interactivity. Presence means subscribers can tell their connections what they want to do. Are they busy? Are they free to communicate? With SMS, there is a restricted level of interactivity and uncertainty as to whether a text message recipient is ready or able to communicate. With Mobile IM, interactivity delivers a text conversation in its truest form - and offers an unmatched user experience. IM allows that conversation to become more real-time, more intuitive, and more content-driven.
Instant messaging can, and already does, have numerous different forms. There are multiple applications (business, social, educational) and multiple channels (via ISP or mobile operator) for delivery.
A lot has been intimated about the risk to SMS revenues due to ‘cannibalisation' from mobile IM. This has not been the experience within the operator community. Turkcell has already announced that they have seen an increase in revenue from mobile IM users who are now using more voice and SMS. The nature of the medium is conversational, chatty, and public. Turkcell users were starting conversations in mobile IM and then breaking off to call or text one of the participants whilst the conversation continued.
So far, there have been more than 60 mobile IM launches across the globe. Operators as diverse as Vodafone, Vimpelcom, Turkcell, 3 UK, TIM, and Tele2 have launched mobile IM services. Some are market leaders and others are new entrants. Some have launched ISP branded services, whilst others have launched their own branded services. Some have even launched both! The common bond amongst them is that they see benefit and revenues from the mobile IM opportunity. NeuStar's operator customers alone have an end user base in excess of a third of a billion mobile subscribers.
Most important, though, is the potential mobile IM has to transform the delivery of information and data to mobile across the Internet. Browsing on a mobile is a slow and frustrating activity. Through the use of IM ‘information buddies', mobile IM services can provide users with access to information like news and sport headlines, train timetables, weather information, and so forth. This is relevant, useful information delivered in a way that is suitable for the mobile environment - short, sharp bursts of relevant information delivered quickly and in an easily digestible form.
Furthermore, the ability to share is a fundamental cornerstone of mobile IM. Today it is sharing messages, but tomorrow it could be any number of things: bookmarks, photos, video, phone numbers, or location-based information.
To sustain growth over the next few years, operators are likely to look to IM and social networking applications to drive traffic, working either with popular established ISPs and social networking sites or creating new communities in which people can gather and communicate.
The growth of mobile IM has been impressive. A number of operators went public with announcements in the latter half of 2007 and the early part of 2008 regarding service success so far. These included 3 UK, who announced more than one billion mobile IMs sent in less than a year. Vodafone Portugal announced an early success milestone of 100 million messages, and Vimpelcom commented favourably on the launch of its Beeline service.
The challenge for the industry now is to seize the moment. SMS became a ubiquitous service when it opened its doors to interoperability. Before this, users needed to know which network someone was on to message them. Mobile IM is even more complex, with interoperability issues between different ISPs as well as different operators. But consumers do not care about this. They simply want to communicate. The opportunity is there to be seized. If operators engage with the ISPs and with other operators, then there are real achievements to be secured. We, as an industry, must keep looking forward to the bigger picture. The danger apparent is in emulating the growth of the Internet, which took ten years to derive real value - and a lot of money was lost on the way.
This may all sound ambitious, but as long as operators embrace the vision and address the demands of interoperability, IM has the propensity to drive new revenues in a host of ways. No one expected SMS to be the roaring success that it has been since it embraced interoperability. This year, mobile operators will have 2.3 trillion reasons to be thankful it has been. Mobile IM has as much, if not more, potential to succeed. The technology is in place - it just needs to be well executed.
Allen Scott is General Manager of NeuStar NGM www.neustar.biz/ngm/
Share this article with others
Post to del.icio.us
Printed from http://www.eurocomms.com/features/112320/MOBILE_INSTANT_MESSAGING_-_The_new_communications_channel.html
Comment on this article
Skip to comments
We encourage users to analyse, comment on and even challenge European Communications's articles, including the one above - 'MOBILE INSTANT MESSAGING - The new communications channel'
User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site.
Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. We will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site.