To text or not to text?

Have we seen the end of SMS based text messages? Or are there still areas in which SMS supersede data and Wi-Fi?

We’ve seen a lot of articles in the first six months of 2014 about the possible death of SMS. With an increasing number of data based services such as instant messaging (IM) and other smart-phone based services that provide people with an alternative form of P2P-communication, it seems to be the end of traditional text messaging via SMS as we know it.

Or maybe not? According to Deloitte’s report “Technology, Media and Telecommunications Predictions 2014” mobile operators will see an increase in revenue from SMS until at least the year 2017. How is that? What markets are still alive? According to the report, SMS traffic will still be dominated by P2P messaging. However, while we will be seeing a decline in P2P traffic, we will se an increase in A2P SMS traffic.

“The entire telco industry is under pressure as consumers are moving away from voice traffic over to data. Providing great data access and speed requires network investments due to the increasing demand from the end-users. But we obviously need to adapt to the market, which is why we are constantly expanding our network, “ says Henrik Stenson, Director, Wholesale Denmark at Telia.

“But it takes time, and we can’t provide high-speed data in all areas just yet. That’s why we are seeing an increase in the use of bulk SMS as an alternative to data. Companies need to be able to provide their consumers or employees with information at all times, even if that person is in an area with little or no data access. For that purpose, SMS is still the most reliable means of communication,” says Henrik Stenson.

There is no doubt that the ways we go about mobile communication are changing rapidly. Aside from being the most reliable means of communication, it is also the most known type of mobile communication.

“We’ve used it for more than 20 years, and being supported by the vast majority of mobile phones and networks, it currently makes it more universal than some of the more recent forms of P2P communication. Especially for some of the new case examples we are seeing,” says Anders Baekgaard, CEO at Netfors.

Interesting case examples of A2P SMS

While it seems that data based services are out-ruled by SMS, more and more industries are showing great examples of how to better utilize SMS. As with the case of Telia, it is to date the type of communication, that has the widest coverage, making it easier for companies to reach customers or employees in areas, where a data signal is unreliable if not impossible.

The industries have therefore turned to SMS using it for anything from internal and external communication to logistics and marketing. The hairdresser reminds clients of their appointments, the traveling industry use it for confirmation of bookings. Codes and passwords are sent via SMS to confirm a login to a website, and with the relatively steep roaming prices, traveling agencies are using SMS as a means of communicating with their clients. TV Shows use it for voting, and you can donate money to charity with a simple SMS. And now that everyone seems to be participating in marathons and triathlons we are seeing an increase in demand for text based services that allow friends and family to follow their loved ones as they make their way through course.

Lack of regulation creates boom in bulk SMS in Turkey

In essence, the widespread use of SMS, a broader coverage and it being a more reliable service still makes it an attractive means of communication for the industry.

At Netfors we are also seeing more and more requests from MVNOs that are looking for an SMS Gateway solution. Turkey is currently one of our emerging markets, and in the past few years we’ve seen a 300% increase in clients from that area and more projects are on the way. We are also getting requests from India, South Africa and Eastern Europe, as well as more exotic destinations as the Solomon Islands, where SMS is a more reliable solution for e.g. financial services.

However, one of the primary reasons why some markets are still slow on the uptake is permission. While some countries, like Turkey, allow companies to send SMS messages to customers without permission, most countries still require consent.

“In Turkey they’ve taken a completely opposite approach to SMS marketing and B2C communication. There simply is no regulation. Unlike our home market, Denmark, companies can send an SMS to whomever they want, and that can be both an opportunity and a threat,” says Anders Baekgaard. “Approaching a consumer via SMS, without their prior consent, puts great pressure on the sender, the companies. They need to make that SMS relevant and interesting, otherwise it may even hurt their brand. So perhaps this model forces the companies to be even more creative.”

There is no doubt that the current lack of regulation is why we are experiencing a boom in A2P in Turkey, but we will probably see some regulation in the years to come. Until then, it will be interesting to see how companies are using this opportunity, and we hope to see some great case examples in the years to come.