Why is SMS Still Growing?
Date: Monday , November 14, 2016
Headquartered in Mumbai, Route Mobile is a leading messaging and voice API company. The unique innovations are effectively tuned with the client\'s specifications to give them one-up advantage over their competitors.
It’s been 24 years since the first message, a simple ‘Merry Christmas’- was sent over the Vodafone network on December 3rd 1992 by a 22-year-old Canadian test engineer to the phone of one Richard Jarvis. SMS has survived the test of time and has become integral to our communication. But will it continue to withstand the onslaught of other messaging services like OTT ones (Whatsapp, Facebook, Snapchat) or even email?
At Route Mobile, we took a bet on SMS twelve years ago. We built our own technologies (SMPP Platform, SMS Centre etc) and started catering to the international market. We are happy that this bet has paid off. On the back on high volumes and increasing subscriber base in emerging markets for the last 5 years, we’ve grown at quick pace.
Opportunities: SMS is categorized into P2P (Peer To Peer, message from one person to another) and A2P (Application to Peer, message generated from a software/machine to a person(s) According to Juniper Research, by 2017, SMS traffic is expected to reach 12 trillion messages per annum. Revenues are expected to be in the vicinity of $192 billion per annum in 2017. Despite the proliferation of other messaging technologies, the industry is growing at about 7 percent per annum. Let’s consider what’s driving this growth.
Despite being one of the oldest messaging technologies, SMS still remains one of the major forms of mobile messaging and a key part of MNO (Mobile Network Operator) service revenues. One word that is unanimously quoted as being the reason for the success of SMS is ubiquity. This has clearly proven to be its greatest strength. In less than 3 decades, the mobile phones in use have grown from zero to more than 7 billion; and every one of these phones supports SMS. The other strength is Reliability. SMS doesn’t depend on mobile broadband or any data connection to deliver a message, unlike IM and social messaging. There is no sign-up needed, no internet data connection and one, potentially, has limitless access to message anyone with a mobile phone.
From a mobile user standpoint, given that SMS is native to mobile, there is little or no learning curve to get accustomed to the medium. Additionally, people don’t tend to mute their SMS box like they would other messaging apps. Aiding the growth of SMS are applications such as Alerts and Notifications, One Time Password (OTP), Transaction confirmation, Reminders, Requests (user name/ password), Brand building and promotional activities, Customer Relationship management, Information Updates, Remote system monitoring and other such applications.
From a marketing standpoint, according to a study by MobileSquared, more than 90 percent of text messages are read within three minutes. Can one hope to get a similar response through other media? Compare these averages to the open rates of other channels: Email marketing - 22 percent, Tweets - 29 percent and FB posts - 12 percent.
Challenges: As one of the largest SMS aggregators in the world, one of the key issues we see in SMS growth is price variation in SMS charges in the same country. For example, all mobile operators in Kenya have different pricing slabs ranging from very high to very low. For aggregators like us, such a situation makes it difficult to make any kind of monthly commitment to operators. Operators must move to having a common pricing structure in a single country.
Another example of challenge is this - For a while, especially in emerging economies, any subscriber could be sent an SMS from an International operator or a web application without the knowledge of the subscriber’s operator thereby resulting in revenue losses to the local operator.
Operators, now, having realized that A2P will be a big revenue generator have started installing a filter in their system and are blocking off SMSes delivered from a web application/internet that they do not have an revenue arrangement with. Route Mobile offers technology products and solutions across various areas to ensure mobile operators lose no money while ensuring businesses have very reliable SMS deliveries. With DND and other good permission based marketing practices, the incidences of spam have reduced dramatically, thereby make the recipient of messages more open to receiving context based marketing messages.
Way Ahead: Customers rely on SMS to track the movement of school children and school buses to alert parents on where their child is during the journey to and fro from school. So accordingly, the parent knows exactly where their child is and also just-in-time notifications when to go and drop the child at the pick-up point or pick up the kid when the bus in nearing the drop point. We see the growth in the use of similar innovative SMS applications continuing for the foreseeable future.
The simplicity and versatility of SMS has helped it stake its claim as the most reliable messaging service beyond just P2P (Person to Person) communication but also in A2P (Application to Person) and P2A (Person to Application). While a lot of the growth in P2P messaging has shifted to OTT players, like Facebook, Wechat and Whatsapp, A2P messaging is what will continue to drive the market.
In the coming years, due to their large population, India, China and Africa will be the highest A2P (application to peer) volume generating regions. 70 percent of all mobile users will come from these three places. The industry will focus more on the enterprise segment; Banks and e-Commerce being the highest contributors of the A2P SMS traffic. There is a huge opportunity in the A2P segment, especially in Enterprise business. OTT players, like Facebook, Wechat and Viber, will also use more A2P SMS for OTP & other activity related alerts. Since the numbers of users for OTT are increasing day by day, there will be more number of A2P SMSes to send. From a consumer standpoint, bundling SMS with voice packs will also help keep the costs of SMS communication for a mobile phone user affordable.