Ovum pessimistic about uptake of fixed SMS services

According to the analyst, fixed SMS service is likely to attract only niche markets as most mass users will be reluctant to pay for handset upgrades.

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By  Vijaya Cherian Published  May 12, 2003

Fixed SMS services are not likely to become a mass-market product, according to analysts at Ovum. Seeing the success of mobile SMS, which has generated an estimated US$36billion of world-wide revenue in 2002 with minimum marketing expenditure and easy technical implementation, several incumbent fixed line operators are considering possible revenue generation from enabling SMS service from fixed telephone lines. However, Ovum is pessimistic about the mass uptake of this service.

“The translation from the mobile world, where SMS is a mandatory specification of GSM, to the fixed world, where it will be a long time before we see a critical mass of penetration of phones that have SMS capabilities, is riddled with issues,” says Ovum analyst Nikki Matkovits.

For one, users will have to upgrade their fixed-line handsets to enable this service. Secondly, the recipient must have a similar device to receive an SMS and the sender must know that the former has one. “It is similar to faxing,” says Matkovits. “No one sends a fax unless they know that the recipient owns a fax machine.”

Ovum argues that the market opportunities are very limited for fixed SMS, and it is likely to attract only niche markets. “High mobile penetration is in danger of cannibalising usage of fixed SMS services, as most users will already have access to SMS via their mobile phones. The mobile phone is a personal device carried at all times — what seems to be lacking here is a compelling reason for users to switch their behaviour,” explains Matkovits.

Currently, mobile SMS generates around 10-15% revenue of an average mobile operator’s total airtime. No single operator, however, can predict fixed-line SMS revenues reaching anywhere close to mobile SMS revenues currently generated.

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