MOSCOW-Major Russian Moscow-based carriers recently have been expanding their short message service (SMS) capacities to meet the demand of an anticipated boom. However, experts fear the expected SMS incomes will hardly compensate for the average revenue per user (ARPU) decrease registered last year.
Mobile TeleSystems (MTS), the country’s biggest carrier, doubled its SMS capacities in late December to meet a peak load during New Year’s holidays. Although now the carrier has idle SMS capacities, it is set to double them again in the first half of 2001 because of a predicted SMS boost worldwide that could spill into Russia, along with the launch of wireless e-mail services.
The SMS traffic of Russian carriers has been growing monthly at a pace typical for the rest of the world. And in April 2000, the GSM Association, which unites 440 carriers in 148 countries, reported an unprecedented increase in short messages that exceeded 5 billion worldwide in March 2000 compared with 1 billion in March 1999. The association estimated short messages would exceed 10 billion in GSM networks by the end of 2000.
The March 2000 figure totalled 300 million subscribers of all association member-carriers and comprised an average of 16 messages a month per user. Russian carriers are far behind that average number of SMS messages sent worldwide, and MTS was estimated to have sent five monthly messages per user in the third quarter of 2000.
But Moscow-based J’Son & Partners telecom consultancy predicted the average per-user SMS figure will increase to eight by the end of the year. The overall MTS daily number of short messages increased from 70,000 in June 2000 to 170,000 at the end of the third quarter. Experts estimated that Vimpelcom (BeeLine) daily transmitted 200,000 SMS messages.
However, the increase was insufficient to cover losses sustained from a major ARPU decrease.
J’Son & Partners estimated the carriers would have had to increase the per-user SMS traffic from three in March to 200 in October-a 70-fold increase at existing prices-to cover the ARPU fall from US$67 in the second quarter to US$58 in the third quarter of 2000.
But Russian carriers are not yet providing a full set of SMS services, and there is room to expand. There is no e-mail, SMS-information or SMS-chat. In the meantime, they have invented SMS-paging, which allows a subscriber to call an operator to send a message to a handset. The advantage is the message will reach a subscriber, even if the user is out of the service area when the message is sent.
Experts estimate that if the SMS traffic continues to increase at the current pace in Russia in 2001, the average per-user number might well reach 15 to 16 average messages in the Moscow area. J’Son & Partners said this would bring the carriers US$25 million by the end of 2001, an amount that is inconsiderable regarding their total incomes, but is still a three-fold increase compared with their SMS proceeds at the end of 2000.
