DENVER, United States-Analysts from consulting firm Strategy Analytics debated the future of data transmission over cellular networks in a June conference call, concluding that while current usage levels are low in both Europe and the United States, there is great potential for such services.
In Europe, where GSM (Global System for Mobile communications) networks with Short Message Service (SMS) and data capabilities are fairly ubiquitous, 91 percent of subscribers never use the available information services, 51 percent never receive SMS messages and only 26 percent use their voice mail options frequently.
The primary reasons for this, said Strategy Analytics U.K.-based analyst Mark Holden, is that carriers are not spending any money marketing the services or educating consumers on their use as they are still concentrating primarily on voice. Also, European carriers charge for these services at a premium, and mass-acceptance won’t come about until the price goes down.
However, he said he expects carriers slowly to begin marketing the service more and at a cheaper price so non-voice services will generate more revenues in the next two-to-three years.
The services that will attract customer attention include message notification, information delivery and traffic reports, as well as mobile data applications such as fixed remote monitoring and fleet management applications.
“I don’t think there’s a need for data-centric devices for (European) consumers because I don’t believe consumers have a desire for interactive data,” said Holden, explaining his bullishness over the potential for cellular data. A simple data application on a phone device that allows users to respond with canned responses, if priced right and marketed, will take off there.
In the U.S. market, however, a greater problem exists, he said. With the widespread use of paging, digital cellular carriers here will have a much more difficult time attracting customers.
While digital networks have changed the dynamics of the U.S. wireless phone market by aggressive pricing and services, SMS and data services have fallen flat. First, Holden said, is the price again. Digital voice carriers are charging substantially more than paging carriers for essentially the same service, he said.
David Kerr, director of the U.S. office, chimed in as well.
“The key barrier is a lack of awareness and the lack of any perceived value,” he said. “The single biggest factor is the lack of development of content and distribution patterns.”
Carriers are too concerned with owning the content they provide when they should be leaving that to content providers and instead focus on raising awareness, he continued.
The numbers say it all. In the States, only 14 percent of users have ever used voice mail, less than 10 percent receive information services, less then 4 percent send or receive faxes, and about 20 percent send or receive e-mail.
As such, Strategy Analytics said non-voice services have done little to increase minutes of use. “It’s had limited contribution to date,” Holden said.
Yet, like the European market, Strategy Analytics said data and SMS services could gain in popularity if carriers would lower the price and push for greater awareness among consumers.
“The market is driven by connecting users” to the network based on voice airtime, Holden said. But the future revenue will come from data services. “Information and messaging services are a way of growing the value of cellular service and possibly growing customer migration.”
