New revenue alert from SMS: new SMS architecture can ensure continued growth for text messaging

Telecommunications International, Feb, 2004 by Tony Hill

SMS is now firmly established as the world's most popular form of personal communication, with GSM subscribers sending over 1.7 billion messages each month in the UK alone, according to the Mobile Data Association (Figure 1). What makes this success all the more remarkable is that no one planned it.

SMS was first used as a voice mail alerting service--a simple mechanism to inform subscribers that they have a voice mail ready for retrieval. Many GSM networks were launched without support for person-to-person SMS, as this was not expected to be a popular service.

The SMS architecture was designed to meet the needs of the time. When the first SMS was sent in 1992, radio coverage was poor, battery life was short and handsets were large, so most messages had to be stored before they could be delivered. A 'store and forward' mechanism was essential, and the Short Message Service Centre (SMSC) was born.

This 'store and forward' architecture has brought SMS a long way, but its limitations must be overcome if operators are to unlock the true potential of SMS.

The importance of architecture

In all spheres of design and engineering, the right architecture is the key to success and the key to maximising revenues. Revenues will only be maximised if the solution matches the problem.

Successful architectures like GSM take the following into account:

* Connectivity drives revenues: the success of post, telegraph, the fixed line telephone and now GSM has proven that humans have an almost insatiable desire to communicate.

* Metcalfe's Law: the usefulness, or utility of a network, equals the square of the number of users. Put simply, the more users on a network, the more useful and successful it is. This is clearly demonstrated by the success of national SMS interworking. In the UK, SMS traffic grew nearly eight times in nine months once the four UK networks were fully interconnected.

* Threshold Law: lowering the entry threshold increases the utility of a network: The easier a network or service is to use, the more successful it will be. The introduction of the mobile phone lowered the entry threshold. Rather than having to make calls from a fixed location, users could make calls wherever they were. As a result, a mobile phone has far more utility than a fixed line phone.

What does this mean for SMS?

The world has changed since 1992. GSM radio coverage has vastly improved, battery life has extended and handset size has reduced. Accordingly, there is no longer a need to store all messages before delivery: the majority can be delivered immediately. Some operators report that up to 80 per cent of person-to-person messages are delivered at the first attempt.

SMS usage has also evolved. As well as wanting reliable person-to-person 'text telephony', subscribers are demanding interactive services, such as SMS voting. We now see that SMS communication is required between:

* person to person;

* person to organisation; and

* person to TV programme.

A future SMS architecture provides excellent connectivity for all these forms of communication.

Person-to-person

For person-to-person communication, a future SMS architecture takes advantage of the fact that most messages are delivered at the first attempt. Direct delivery is used to send the majority of messages directly to their destination. This improves quality of service, reduces costs and enables network traffic to grow without further investment in SMSCs.

Person-to-organisation

Leading brand owners such as Cadbury and Coca-Cola regularly use phone-based on-pack promotions to engage their customers and stimulate sales. These promotions either use different phone numbers for text and voice response, or they restrict customers to one form of response. In both cases, the potential success of the campaign is limited.

A future SMS architecture utilises the Threshold Law to enable subscribers to respond in the way they choose--either by text or by voice--using the same phone number. A future SMS network enables all numbers to be accessed by text and voice.

Person-to-TV programme

Person-to-TV programme communication offers the most immediate source of revenue growth. To date, interactive TV programmes such as 'Big Brother' and 'ldols' have clearly demonstrated a demand for SMS voting but they have also suffered from a lack of capacity.

This lack of capacity is a direct result of the unsuitability of the current 'store and forward' architecture. Voting messages are delayed in SMSC queues and yet it is unnecessary for these messages to be stored at all as there is no need for voting messages to be sent over a radio interface to reach the recipient of the message (as in person-to-person texting).

A future SMS architecture acknowledges that 'connectivity drives revenues' and intelligently routes voting messages to a directly connected, high capacity voting system. Offloading the voting messages avoids the SMSC bottleneck and enables voting throughput to approach the radio bandwidth.

[FIGURE 1 OMITTED]

In addition to immediately increasing capacity and therefore revenues, this approach makes new programme concepts possible. With the current store and forward architecture, votes have to be counted slowly over a period of time as the SMSC queues gradually empty. This often means that voting results are presented later in the programme, or even in a separate results programme later in the evening. This type of delayed feedback can hardly be described as 'interaction'.