Resuscitation of SMS

Telecom Operators are perplexed with ongoing decline in SMS based revenue, and there is no amount of bundling that’s helping to attract consumers back to the healthy levels of...

Telecom Operators are perplexed with ongoing decline in SMS based revenue, and there is no amount of bundling that’s helping to attract consumers back to the healthy levels of traffic SMS once enjoyed. But isn’t it obvious? To transform SMS into opportunities in the digital age, B2B and Enterprise collaboration solutions must be a new area of rapid solutions innovation for CSPs. The dilution of the traditional Telco person-to-person (P2P) messaging is now a foregone space to OTT players. In fact, it is obvious with ongoing trends, that in 3 – 5 years, SMS will be extinct, or at best “returned” to the engineering teams use.

SMS played an important role in the evolution of peer – to – peer messaging. Even though it was largely unreliable as a means of “dependable” form of text based communication, and continued to enjoy healthy adoption rate as the only means outside e-mail. Carriers and Telco’s made significant earnings from SMS with minimal investment into innovations and expansions to deliver unique SMs value propositions to consumers.

In some situations, re-prioritization of SMS services on the network to lower resource impact on resource utilization became a norm as “voice was king” and an all-time cash cow. SMS was purely a value-add, but not looked as as an opportunity to value-create. The result, bad experience from SMS with reliability and dependability issues leading to distrust, and fertile grounds for alternatives. It would have happened either ways, that Internet will dominate as the flexible platform offerings all means of communication, but not to the demise of SMS. Innovation in the IT space was catapulted-up by the strong-hold Telcos have always wanted to maintain, in an entrenched position, over communications services, and thus a disconnect between necessity to drive the richer enablement of services and incremental consumer experience.

In 2016, it is estimated that 40% of CSP revenues will come from Data services, andUS$54bn (Ref. Ovum 2014) in SMS revenues will be lost to Over-The-Top (OTT) messaging. SMS usage is on a fast decline with complaints of reliability and delay being sighted as pivotal to its poor experience. Subscribers are charged for messages sent with no guarantee of delivery, and in some markets you are charged for a late delivered SMS without a recourse to validate and re-mediate in your bill. Widespread distrust in SMS makes OTT messaging an absolutely pleasurable experience, with richer communications offerings such as push-to-talk, video notes, social presence, mapping etc.

SMS originated as a tool used by engineers, and over time became an offering in mainstream communication services portfolio as a Value Added Service (VAS) without commensurate and timely investments from Telcos to evolve it into platform that will enable new forms of services in the modern age. Alternate forms such as MMS had short lived success with other variants of SMS such as Secure SMS becoming features that never really became light-of-the-day interests of consumers. If SMS is to make a rebound into the mainstream messaging world, then it must be a service that must promote what is missing from the public Internet, security and local presence.

In times where public Internet concerns begin to feature prominently, SMS still holds a niche opportunity to deliver local end-to-end messaging security and reliability, and for such a promise, OTT players will require investment in local markets to bring that trust. CSPs must be willing to open their network platforms to new partners and business models. They will need to support partnerships that can invest in technology services and R&D on platforms such as SMS, USSD, MMS to capture new value. When viewed as a layered platform, SMS can be turned into new potential conduits for services, promoting security of P2P messaging for B2B and B2C application, especially in an age of Digital Everything.

The Digital Economy will require local and guaranteed quality of security with Internet-of-Everything leading to Data-of-Everything.  M-Pesa, the worlds renowned Mobile Money showcase rides on SMS to provide reliable Mobile Payment and Banking services to consumers and businesses. Creating and driving secure local services should not only be seen as a cost to voice anymore, but as an opportunity to usher in new forms of B2B and B2C services to delight consumers and open the door for a new and flourish CSP services. M-Pesa’s business model assures secure and guaranteed SMS delivery between parties, creates a value stream, and captures a new Telco market. The cost of R&D and service guarantee on a Telco layer, SMS, is mitigated by the new value economy that it ushers in.

Adopting models that bring Telco into different vertical industries through a layered service model must become part of the way out of the current impasse. In the Digital Economy, Everything-as-a-Service requires a new approach to applying technology products and services. Telcos becoming significant in the near future is hinged on their ability to not only create new value adds, but to capture added value in their local markets. A promise of quality of services, quality of security, localization and data driven are but a few of the pivotal capabilities Telcos can leverage. I recently tried a new service that allowed the local market to provide secure Bit-coin services via SMS. It was a fast, reliable and guaranteed model that diminishes the fears of crypto-currency access and local market price variations using SMS as a mediator. This service is creating a new wave of income and opportunity for trade, which hitherto would have been purely an OTT based model.

This use-cases for SMS as a layered application to capture new value streams from B2B and B2C solutions can improve the odds of bridging public internet and local-networks in order to enable growth in network transactions and activities of Telcos. The case for SMS returning back as a new layer of the Telecom network stack is a shift of Telecom VAS delivery model that has huge potential of benefits. Indeed, the Internet space will only grow to become highly security conscious, and even with offers from players like Google to “police” it, still create a fear or concern for security in a digital-ized economy. SMS holds a promise of an advantage over current means, it offers local certainty and appeal, reliability, an avenue for direct regulation and can promise security beyond what OTT apps bring.

With the rise in smartphones expected to surge exponentially within the next 2 – 3 years, and strategies such as just announced by Microsoft to wind down the production of feature phones, Telcos must seize new business models for current traditional services to capture ground in their local fronts and avoid competing head on with OTT players.The average smartphone marketplace will make it unappetizing for pure SMS P2P services if there is no “added flavor”. There is a huge market that CSPs can explore in the B2B and B2B2C space, including building local alliances and “networks” that strongly leverages APIs for SMS and other VAS products to enrich partnerships, operating models and become enablers of services for consumers.

Enterprises and Telco’s can therefore seek new ways together to embrace the Digital age. Leveraging their combined assets, Telco services can become layers to new service delivery platforms. What was once a service application can become a service protocol for secure and localized service models.  Use SMS as a competitive inter-working solution to deliver the assurance consumers seek for security, reliability and speed of digital-ized offerings, without becoming pure pipes for OTT propositions. Also traditional Telco services can become foundations to drive localisation of OTT services that bring new value propositions. Mobile internet reliability is a sporadic trend across networks, leveraging SMS as a fallback can enhance service dependability and help re-position Telco in the consumer value chain.

The promise of P2P security, reliability and guaranteed levels of quality are clearly winning propositions that Telcos bring to complement OTT services. Riding on new forms of trust to win back revenues of traditional feature services requires balancing engagement with OTT players in order to localize services and capabilities.

In the end, CSPs must put customer needs and wants at the center of it all.


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