Picture: THINKSTOCK
Picture: THINKSTOCK

THE short message service (SMS) or text message, is turning 20 years old this week. This communication service has helped the mobile revolution and has paved the way for a wide range of value added services. Billions of text messages are transmitted via mobile networks every day, and until recent years, the SMS has been the bedrock of revenue and profit for telecommunications companies across the globe.

The convenience of the SMS is that it does not need internet connection and is accessible through any cellphone device. The SMS has enabled other services such as mobile banking, payments and airtime transfer.

Companies and service providers are using the SMS to communicate with clients, and also to enable people to among other things enter competitions.

The first SMS was reportedly sent in 1992 by Brit Neil Papworth who texted ‘Happy Christmas’ to Vodafone director Richard Jarvis at a staff Christmas party.

Arthur Goldstuck, the managing director of World Wide Worx, said in its early days, the SMS was a revolution for the mobile networks because it provided a universal service with a potential for high revenues at almost no cost. Because it was in effect an unused channel built into the network infrastructure, it was the communications equivalent of "turning lead into gold", he said.

"It was nothing less than enabling them to materialise money out of thin air", says Mr Goldstuck.

Spiwe Chireka, programme manager for telecoms at global firm International Data Corporation, says the SMS has been an enabler of revolutionary services such as mobile payments and mobile money.

Although the SMS hardly changed over the past two decades, it is being threatened by other forms of instant messaging such as Mxit, WhatsApp and BlackBerry Messenger (BBM).

"For the very reason that networks have tried to maintain the pricing structure of the SMS, it is now in danger of being killed off by data services that allow instant messaging at negligible cost," says Mr Goldstuck.

The only reasons consumers that still need the SMS, according to Mr Goldstuck, are those that communicate with those who do not have data-capable phones or do not have instant messaging apps on their phones; and to participate in interactive events in mass media, like TV voting lines and competitions.

Ms Chireka says the key selling point for service providers is internet connections and not the SMS. Operators are likely to make money through smart data services than the SMS because of services such as WhatsApp and BBM.

Research by global firm Ovum predicts that by 2016 mobile operators will have lost $54bn in revenues from the SMS due to the increasing popularity of social messaging services on smartphones. They are expected to have lost $23bn by the end of this year alone, Ovum said.

Ovum said that the trend in users adopting app-based social messaging services over using the SMS was accelerating. Social messaging players include mobile apps, mobile social networks, and even some mobile instant messaging platforms.

Ovum highlights the rapid increase in the number of over the top (OTT) players and services like WhatsApp and demonstrates that social messaging is not a short-term trend, but a shift in communication patterns. Operators in Europe and Asia-Pacific will be affected the most, and should be vigilant with respect to OTT messaging activity, Ovum stated.

OTT refers to internet based services such as Skype and WhatsApp.

"OTT players are changing consumers’ messaging preferences, and the pressure they are exerting on operators’ messaging services is forcing them to offer increased SMS bundles and to experiment with messaging pricing models, further dampening revenue growth," says Ovum consumer telecoms analyst, Neha Dharia.

Ms Chireka says there is still room for the SMS. While data connectivity has gone off the roof, in the context of Africa, there still remains a very large proportion that cannot access these connections nor afford them.

"It is likely that the SMS will move to a value add free service to drive other money making mobile services such as mobile money," she says.

Steven Ambrose, CEO of Strategy Worx, says the SMS will still remain relevant for most users, as it is still the only text messaging system that works on all mobiles across all platforms and is supported by all operators globally. "The fall off of SMS revenues will not be driven by decline in the number of SMSs sent but by competitive forces led by alternative platforms such as BBM and WhatsApp. As next generation devices, that run on 4G IP based (fourth generation Internet Protocol) and better networks come to dominate the landscape in the next five years, actual use of the SMS will decline and gradually fade away," he says.