Seizing the Opportunity in Messaging, the Emerging Market Way

With the current mobile messaging landscape developing at an impressive rate, remaining relevant in this fast paced environment is becoming an increasing challenge for all industry players, particularly as handsets evolve, networks mature and new services continue to launch in the market. However, while relevancy is of primary focus for mobile operators globally, when developing their future strategies one thing is certain, new services must evolve in line with technical innovation and be tailored to meet consumers’ expectation and demand.

One mobile service that has certainly proved its worth and, after 20 years, still continues to meet user requirements and remains popular today is SMS. While this service has remained fundamentally unchanged since its inception, the ubiquitous nature of SMS amongst other factors has contributed to its success: reach, reliability, speed, ease of use and open rate. These attributes have helped to give SMS a dominant status, and even now, no rival messaging service has offered such unparalleled potential.

However, as operators look to seize new opportunities in messaging, a number of emerging market trends have become apparent and provide valuable insight into consumer behaviour, demands and needs, something that operators must now both recognise and address as they evolve their most popular service.

Emerging Market Trend No.1: Application stores are gaining ground − In a recent study, independent telecoms analyst firm, Ovum, reported that the increasing penetration of smartphones, mobile broadband, and the ongoing reduction of services and device prices has translated into an expansion in the use of mobile applications in emerging markets. In fact, application stores are now gaining momentum in the emerging markets of Asia-Pacific, Africa, the Middle East and South and Central America, a sure fire indication that mobile users in this region are seeking a richer experience on their device. This recognised app store dynamic is just the start of things to come, with smartphone penetration in emerging markets expected to incrementally rise from 2013.

Operator Recommendation No.1: Enrich the SMS service with new features − This trend does in many ways correlate with Acision’s own messaging research, indicating a clear demand for services that enhance and enrich the SMS user experience, such as notifications, black/white listing and group messaging. By successfully combining the reach and delivery reliability of the SMS platform with the added features offered by new mobile messaging applications, operators and developers alike are presented with a powerful opportunity to enrich both the messaging and service application space - which ultimately will result in an enriched user experience and customer loyalty.  

Emerging Market Trend No.2: Price conscious mobile customers are driving business model innovation − While application stores are already gaining ground in a number of emerging markets, it must be recognised that a number of products are free, or pose negligible costs, as consumers have largely shown an unwillingness to pay for applications. The majority of populations in these markets have relatively low incomes, so in the past, operators have typically competed stiffly on price, by undercutting each other on call rates, SMS and data service rates. Nevertheless, low average revenue per user, especially in emerging markets of Asia Pacific, has forced mobile operators to become innovative in pricing models. For example, operators in Indonesia have launched services with different quality of service standards, offering speed booster options for different customers. In response to changes in mobile consumer habits, Filipino operators are also demonstrating innovative approaches to redefining traditional billing practices, and by successfully bundling social messaging for prepaid users, they are helping to secure and protect future revenue channels as the mobile ecosystem continues to evolve. Acting on a clear response to consumer demand, Filipino operators are now reported to be generating one of the highest proportions of non-voice revenues in the world, with around 1.8 billion SMS messages being sent every day.

Operator Recommendation No.2: Eliminate the cost incentive for smartphone owners to use alternative messaging services − As smartphone adoption continues to rise, it is crucial that operators eliminate the cost incentive for smartphone owners to use alternative messaging services. This can be achieved by offering unlimited SMS and MMS bundles to subscribers with an mobile internet subscription. As we all know, consumers will always look for the lowest price when they have a choice of services and unlimited pricing encourages usage, particularly amongst the young, as they will pay one price to send as many messages as they want – through a service which reaches every handset globally without the need for broadband connection. With SMS bundle prices or pay per use plans, this provides a strong incentive for mobile users to look for alternative messaging services today which consumers perceive as free. This is due to the lack of itemising data cost associated with each message sent via mobile messaging applications on customers’ monthly bill. Such pricing innovation is key in securing the future of SMS is based on value, and not volume.

Emerging Market Trend No.3: Operators are starting to look at OTT as an opportunity − There can be no denial that over-the-top (OTT) content will be high on the agenda for mobile operators throughout 2012. Whether they will continue to see OTT messaging applications as an obstacle to overcome or as an opportunity for revenue growth will largely depend on market conditions and of course consumer demand. Yet one thing is for certain, operators in emerging markets are now starting to embrace this new style of communication. At the end of last year, Telefonica launched its own branded low-cost smartphone and tablet in Latin America. This was a prime example of an emerging market operator directly addressing the demand for high-end devices and data services. Most interesting though is that Telefonica chose to preload the device with a number of apps, including the infamous WhatsApp. This is just one example of operators in emerging markets understanding that market trends can actually be used to their own advantage, embracing customer demand while creating opportunities for additional revenue growth.

Operator Recommendation No.3: Launch an enriched messaging service − Operators in emerging markets have indeed acted quickly to address clear consumer demand, yet there is further opportunity to maximise the potential of mobile messaging. As opposed to simply allowing access to current OTT applications or indeed partnering with OTT providers, a real opportunity now exists for operators to launch an enriched messaging service. They can either launch the operator independent GSMA Joyn service or develop alternative operator specific OTT services, which have a shorter time to market and can be optimised upon real-time consumer feedback.

With a potential reach of more than 5 billion people across the globe, it is clear that SMS still remains a huge area of opportunity and it is important that operators recognise the need for progression in messaging. These recommendations serve to highlight some of the key points for consideration in emerging markets, and most importantly, all have been developed in response to current market trends. Whether operators will truly seize the opportunities in messaging is yet to be witnessed. One thing is certain, future mobile operating strategies must be developed in direct response to consumer demand if they are to succeed.

Sign-up to our weekly newsletter

Keep up-to-date with all the latest news, articles, event and product updates posted on Developing Telecoms.
Subscribe to our FREE weekly email newsletters for the latest telecom info in developing and emerging markets globally.
Sending occasional e-mail from 3rd parties about industry white papers, online and live events relevant to subscribers helps us fund this website and free weekly newsletter. We never sell your personal data. Click here to view our privacy policy.