Texting hotspots: why do subscribers in some countries send more messages, and are operators benefiting?
In my previous blog post I wrote about how mobile IM doesn’t pose a significant threat to SMS. This week I would like to highlight that, while SMS remains the most popular means of text communication on the mobile handset, there is significant variation geographically in usage, and likewise with MMS. In our recent report on mobile messaging we analysed the differences in operator pricing and bundling which have impacted on these variations. As to SMS, while out-of-bundle costs were found to be similar in all these countries, usage is lower in Germany, Spain and the UK than in the US. This is despite the fact that SMS developed far later in the US than in Western Europe due to compatibility issues – such as that between SMS and CDMA. Ever since these have been surmounted, growth has been significant, in large part due to cultural reasons: the US public embraced interactive voting, for example, for the reality TV show American idol. This in turn prompted a surge in P2P usage. Nevertheless, while usage is lower in the UK market, messaging ARPU is slightly higher than that of US operators, and significantly higher than that of its continental European counterparts, Germany and Spain. While the difference is small, pricing is lower in the UK than in these two countries, and we believe this has caused differing levels of usage. With regards to MMS, both traffic and usage in the US, for example, are significantly higher than in Western European markets, such as Germany, Spain and the UK. Firstly, this can be attributed to the high out-of-bundle cost: the price of an MMS for a US mobile subscriber is half that of their German or British counterparts, and a quarter of that of their Spanish neighbours. More important though, is the fact that US operators treat SMS and MMS as effectively one and the same. Whilst unlimited SMS usage is offered in all the countries mentioned, out of these countries, only operators in the US offer unlimited ‘messaging’ (SMS or MMS). A final note of caution should be sounded though when it comes to bundling. The Philippines is often called the ‘texting capital of the world’ due to its phenomenal levels of traffic, but our research has found that very high levels of prepaid subscribers combined with mainly bucket-priced texts has led to a decline in messaging revenues.