Web Informant #272, 6 December 2001:
Will SMS succeed in the US?


My friend Tim Meyer has been involved in numerous ventures with mobile computing. He is now a partner at Crisp Wireless (tim.meyer@crispwireless.com). Here is his report on SMS.

This year we seem closer to having SMS (Short Messaging Service) take off in the US. A combination of technology, behavior changes and network interoperability could make this more than just a European and Asian phenomenon.

SMS is pretty cool stuff, for those of you that haven't been abroad lately. Coming soon to your European cell phone, you can vote for various TV programs and other competitions, chat and sign up for various dating services. A big thing currently is being able to purchase music that will serve as your custom ring tone for your phone. To get a sense of this check out www.rabbit-on.com, www.yourmobile.com and www.orange.co.uk/millionaire

SMS became part of the European digital phone standard GSM as a mechanism to send and receive 160 byte messages between subscribers as well as a way to receive network status information such as that little envelope icon when someone leaves you a voice mail message on your cellular voice mail system. The European Union made part of the GSM specification that every network and cellular phone had to support message origination from either the user or the network. Every GSM phone sold has this functionality.

Unlike Europe, the US cellular industry wasn't as single- minded, and cellular operators had little incentive to standardize service. Most US operators chose not to implement two-way SMS, with the result that AT&T and Verizon phones could only receive messages but not originate them. As a side note, AT&T and Verizon cellular users can send messages from their phones through an Internet mail gateway since the mid 90's, but few people know about this service. Sprint phones are two-way, although you have to sign up for the plan as part of your service offering. Another exception to this was Voicestream/Omnipoint, a GSM operator that had two-way SMS built-in. Of course, Voicestream uses a different frequency for their GSM phones than the frequency used in Europe, but let's not get into that here.

To compound the situation we have two other dynamics at work in the US: instant messaging and two-way paging. American teens, used to zapping messages in multiple windows are a tough crowd to convince that tapping short messages on cell phones is useful. And US paging users prefer the smallish devices like the Blackberry and the Motorola equivalents for sending messages, especially after these devices were picked up by everyone from hip-hop musicians to displaced post- Anthrax Capitol Hill staffers.

So what will it take for SMS to take off here on this side of the pond? I think the three ingredients are network interoperability, universal SMS functionality, and consistent and predictable message pricing.

Last week four Canadian operators announced interoperability between their networks -- all you have to know is the phone number to send a message. Perhaps the prospects are good that this will happen soon in the US as well. However, if all players do not see an incentive to cooperate, this could easily falter.

Building the functionality into the phone is mainly a factor of the replacement cycle of phones. The industry average is about 18 months, and this means by next fall the majority of phones could be replaced with better SMS capabilities.

The final element is a simpler pricing model, and here we should take a page from the European SMS pricing and charge only for sending a message, but not for receiving.

SMS in the US isn't a foregone conclusion. But it would be nice for us to catch up with Europe within the next few years. And the thought of teens being able to switch their phone ring tones could take off as a new fashion statement.

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David Strom


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