DENVER, United States—Spurred by recent announcements across the globe and a bold move by AT&T Wireless Services, network operators in the United States are scampering to open up their short message service (SMS) systems in hopes recreating the tremendous success of SMS in Europe.
“I think all the international activity has made the carriers step back and say, “Yes, we could participate in this,'” said Yankee Group Senior Analyst Linda Barrabee. “This is sort of the beginning of SMS interoperability in North America.”
By most estimates, the majority of the nation’s principal wireless carriers will follow AT&T Wireless’ lead and offer interoperable SMS messaging by early next year. That means most wireless users in the United States will soon only need to know a friend or colleague’s phone number to send them a short text message instead of their carrier’s obscure server address.
Only a short few years ago, mobile users in Europe and elsewhere had to remember those server addresses to send SMS messages—until Europe’s carriers began setting up interoperability systems. The task was made easier by the common GSM network the carriers all share.
“It wasn’t really until you could interoperate with other networks that it (SMS usage) really took off” in Europe, said Robin Hearn, a senior analyst with research and consulting firm Ovum.
Since that time, wireless carriers across the world have begun reaping the benefits of SMS messaging. Europe is undoubtedly the center of SMS activity, and in some cases SMS messaging accounts for more than 20 percent of carriers’ revenues. The popularity of SMS messaging in Europe has been so overwhelming that the GSM Association, which keeps track of global SMS use and is the body behind the SMS standard, has had to raise its estimates for SMS use from 200 billion to 250 billion messages sent this year. In addition, the association said it predicts nearly 6 billion messages will be sent during the approaching holiday season—”one for every person on the planet,” the association said.
As SMS use in Europe and elsewhere continues to grow and drive profits, analysts turn curious eyes toward North America, where SMS activity still accounts for less than 1 percent of carrier revenues. The reasons behind carriers’ leisurely attitude toward interoperability is varied, most agree, and hard to understand.
“I really don’t know,” Ovum’s Hearn said.
Perhaps carriers are unsure whether the youth market, which now drives SMS use in Europe, is big enough or ready for SMS use in the United States, Hearn said. Perhaps it is the tangled legacy systems and varied network technologies that have stymied attempts at interoperability, said the Yankee Group’s Barrabee. It simply could be low on carriers’ priority lists as they work to build out 2.5- and third-generation networks, she said. AT&T Wireless spokeswoman Danielle Perry said the carrier had just been waiting for a suitable technology to come along.
Whatever the reason, most agree interoperability is taking too long to happen. But recent events seem to have provoked the U.S. industry into action.
Just last week, Hong Kong’s six wireless carriers, which operate differing network technologies, announced a joint effort to offer interoperable SMS messaging. Hong Kong’s telecom regulator, Office of the Telecommunications Authority, played a role in organizing the new service. In addition, Canada’s four carriers earlier this month announced almost the exact same agreement, which was presided over by the Canadian Wireless Telecommunications Association (CWTA) and works through a product by CMG Wireless Data Solutions.
But most importantly for the U.S. market, two weeks ago AT&T Wireless took the intrepid first step by opening its network to SMS interoperability through a deal with InphoMatch Inc. Industry observers agree that AT&T Wireless’ move will force open the door to the U.S. SMS market.
“We believe that this will jumpstart the market,” Barrabee said.
“It is a very good thing,” Hearn said. “It had to happen.”
“It can only serve to drive use and adoption,” said AT&T Wireless’ Perry. “The more people that use the service, the more people use our service.”
Along with the praise heaped on AT&T Wireless is the notion that other U.S. carriers will soon follow the carrier’s lead.
Bert Katz, vice president of marketing for InphoMatch, said the company has already signed an SMS interoperability contract with another major wireless carrier in the United States, and that the carrier will launch an interoperable SMS service in the next four to six weeks. Katz said AT&T Wireless’ interoperability announcement lit a fire under the industry.
“We got calls (from carriers interested in interoperability) the day they launched,” Katz said. “All of them, or nearly all of them, will have launched a service like this by the middle of next year.”
So the question now appears to be how—how will the rest of the nation’s wireless carriers offer SMS interoperability? Barrabee said they likely will not pursue a joint solution because they have such differing legacy systems and diverse network technologies. She said it would take the carriers too long to come to an agreement over how the system would work.
And if Canadian carriers’ experience is any indication, Barrabee is right.
Peter Maathuis is vice president of corporate communications for CMG Wireless Data Solutions, the company behind the Canadian carriers’ recent joint solution. He said the actual negotiation process among the Canadian carriers was quite lengthy, lasting more than six months. And Canada’s market is smaller than the United States’, and the Canadian carriers didn’t have many technical issues—all signs that a similar type of joint deal in the United States would be a major undertaking.
However, it is an undertaking the Cellular Telecommunications & Internet Association (CTIA) is planning to attempt. On Friday CTIA held a conference call for its members to discuss SMS interoperability. According to a CTIA memo dated 21 November, CTIA will work to establish two working groups: one to address technical interoperability concerns resulting from differing network technologies and another group to discuss the inter-carrier relationships needed for interconnection and interoperability.
“CTIA will support the efforts of both groups, including the provision of antitrust counsel as appropriate,” the memo states.
Travis Larson, a CTIA spokesman, said the organization hopes to create a business-model template for carriers to use. He said multiple templates would likely be needed, and they could include bill-and-keep models, an interconnection deal or a type of roaming agreement.
Larson said CTIA is not new to the SMS interoperability issue, but that interest in it is “definitely ramping up now.”
“It’s my sense that carriers would like to see this sooner rather than later,” Larson said.
While CTIA has been involved in SMS interoperability before AT&T Wireless’ announcement, their efforts to date have been marginal, many in the industry agree. InphoMatch’s Katz said he had not seen much evidence that CTIA has been involved in serious interoperability negotiations among the carriers.
Regardless, SMS interoperability now seems to be a major topic of discussion, thanks to the efforts of international carriers and AT&T Wireless. Verizon Wireless spokesman Jeffrey Nelson said the carrier is weighing its options, looking for the best method to introduce interoperability.
“Carriers have talked about this for several months now,” he said. “We are interested in providing this kind of service.”
