The Next Big Thing? SMS

Intellectually, carriers understand that the likes of Google, Facebook and Expedia need them. Intellectually, carriers understand that carrier billing is intuitive and straight forward and something that needs to be grabbed and owned. If carriers grab and own carrier billing they will be the smart platform in the centre of a smarter, simpler world.

However, it is difficult to make a leap of faith when the foundations are crumbling in other areas. Over the top messaging is seriously eating away at carriers’ revenues. Swisscom, for example, has reported a fall of 28% in revenue from ‘directly billed’ SMS. This is compounded by an overall fall of 25% per megabyte that Swisscom was getting from customers.

This does not mean that SMS is dead. It merely means that the model and the ways that carriers make money from SMS will change. At the moment, merchants are giving about 50% of transaction revenues to the carriers for carrier billing and about 15% for SMS based in-app carrier billing.

If the mobile payments market reaches its potential, and there is no reason why it shouldn’t, then carriers stand to get a percentage of a multi-billion, possibly trillion dollar market. If carrier billing is already edging up to 40 something percent in the mobile games arena then even as commissions come down as physical merchants get on board, revenue from the SMS related area of carrier billing will also be in the billions.

Also consider a slightly upside down view of another SMS opportunity – branding and advertising. With all the new technology around, the one platform that can provide advertisers with true targeting is SMS. Through techniques such as geofencing – also not new – big brands can offer customers who are in a certain place offers, discounts, coupons, vouchers and incentives knowing that their messages/dollars are getting to exactly the people they want, when they want to target them.

The brands know that they waste almost half of their marketing dollar at the moment, so footing the SMS bill in order to increase the effectiveness of that dollar is a tiny part of the equation. The imagination takes off – it is a hot day, you are out with the kids, you get a text that says if the temperature reaches 60 degrees (hey, I live in Scotland) you can get a 2 for 1 deal at the vendor just the other side of the ring where large men are throwing tree trunks around (sometimes called caber tossing, sometimes just ‘high spirits’) – it has a serious chance of being acted upon. Forward the text and the offer to two friends close by and you get both drinks for free. If managed properly to avoid a spam avalanche then it is a compelling story.

It is odd that when our beloved telecoms industry is feeling squeezed by over the top people, actually many of those people are looking to telecoms operators to solve some very lucrative problems.

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About Alex Leslie 400 Articles
Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet.

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