SMS History

SMS was an accidental success that took nearly everyone in the mobile industry by surprise. Few people predicted that this hard of use service would take off. There was hardly any promotion for or mention of SMS by network operators until after SMS started to be a success. SMS advertising went from showing business people in suits entering text messages to bright pink and yellow advertisements aimed at the youth markets that adopted SMS.

SMS was the triumph of the consumer- every generation needs a technology that it can adopt as its own to communicate with- and the text generation took up SMS. Paradoxically, it was because SMS was so very difficult to use that the young people said that they were going to overcome the man machine interface and other issues and use the service anyway. The fact that the entry barriers to learning the service were so high were an advantage because it meant that parents and teachers and other adult authority figures were unlikely and unable and unwilling to be able to use the service.

SMS is one of the few services in consumer history that has grown very fast without corresponding decreases in pricing. Usually- even in the case of voice mobile phones- price reductions in the cost of the phones and phone service have led to increases in usage. Whilst these factors have helped to bring younger people into the mobile market, the price of SMS itself stayed steady because the networks were having trouble handling the volumes of messages being sent and dared not reduce prices.

A whole new alphabet emerged because SMS messages took a long time to enter and were quite abrupt as people attempted to say as much as possible with as few keystrokes. Abbreviations such as “C U L8er” for “See you later” sprung up for timesaving and coolness. The use of “smileys” to reduce the abruptness of the medium and to help indicate the mood of the person in a way that was difficult with just text became popular.

The introduction of prepay mobile tariffs in which people could pay for their airtime in advance and thereby control their mobile phone expenditure was the catalyst that accelerated the take up of SMS. The network operators were unable technically to bill prepay customers for the SMS they were using because the links between the prepay platform and the billing system and the SMS Centers were not in place. The network operators responded with silence- the prepay literature did not mention SMS at all even though the prepay phones supported the service. One thing that is certain is that in these days with the Internet revolution to spread information, the young people will identify loopholes like this. And they did. Suddenly, millions more SMS messages were being sent- with some individual mobile phone subscriptions accounting for thousands of SMS per month alone as they set up automated message generators. Network operators worked with their platform suppliers to try and sort this out and implement charging for SMS for prepay customers. Meanwhile SMS incubated and spread and people were using it because it cost nothing whereas carrying out the same transaction using voice clearly did cost. Eventually after a few months the network operators finally got their act together and managed to implement SMS charging for prepay users- such that they could decrement the prepay credit by the cost of an SMS message

A mass SMS message distribution campaign was then typically sent out- such that everyone that had used SMS received a text message informing them that from a certain date, SMS would be charged for. This led to an immediate and protracted decline in SMS usage to between 25% and 40% of the pre-charging levels as people suddenly stopped using SMS or using it as much. Then something interesting happened- the volume of SMS messages started gradually increasing again and soon reached its pre-charging levels. SMS volume growth has continued its upward growth ever since, fueled by simple person to person messaging as people told each other how they were feeling and what they were doing- information services and other operator led initiatives failed to interest the user community to any degree and never have done. Whilst it was free, SMS had become an important part of the way that young people communicated with each other in their daily life. SMS would have taken off without this prepay factor because it was already being used before that time- but it would never have taken off as quickly.

SMS growth continued its astonishing growth during the year 2000 in Europe, a period of time when the mobile industry was trying to dictate the deployment of WAP. Despite doing nearly nothing else of any benefit, WAP did at least increase the attention that the mobile Internet received as people tried to work out services that would appeal to the mobile phone users. Those companies that survived the WAP debacle started to realize that it was SMS and not WAP that had the addressable audience of users and the clearer business case. Advertising and other services based on SMS started to be trialed as companies realized that people who could use SMS for person to person messaging would also be able to access SMS based commercial messages.

The next great success for SMS based services was ringtones. Nokia had started its smart messaging protocol that was built on binary SMS rather than the standard text SMS. Nokia had expected this technology to be used for information services and over the air service profiling and it had languished for years, until suddenly in the year 2000, it found its application- ringtones that allow users to change the way their mobile phone rang. Because the network operators were woefully inadequate and unable to offer the ringtone suppliers fair and flexible revenue sharing, the service providers started using premium rate Interactive Voice Response (IVR) voice platforms to trigger the transmission of ringtones. The ringtones market soon became a billion dollar market- and few of the network operators even offered services- this category was dominated by independent service providers who advertised in newspapers and magazines.

SMS was the triumph of the consumer- a grassroots revolution that the mobile industry had next to nothing to do with and repeatedly reacted to. This is in stark contrast to the top down technology and industry led approaches to other nonvoice services such as WAP. The industry can learn a lot from SMS as it tries to create other nonvoice services- it is no surprise that the only other nonvoice success- i-mode in Japan was also an unprecedented and unexpected success. The mobile industry would do well to realize that success for nonvoice involves setting the right environment to allow services to succeed- ensuring everyone implements the same open standards in the same ways, putting the right payment and microbilling technologies in place and recognizing that it takes a while to build a critical mass of usage. The mobile industry needs to realize that it can either delay the mobile Internet revolution by refusing to cede control to the end user and application and service development communities- or this will be taken away from it by the markets by force. Either way, the nonvoice revolution will arrive- it is not a question of whether, just when.