Islands in the Stream

Although many carriers have deployed only 1-way short message service (SMS) thus far, the business case for installing 2-way systems may be improving, and it appears that many carriers will take that plunge. This is a change from two years ago, when it appeared that SMS was destined to remain only a bad substitute for 1-way paging.

THE 2-WAY DILEMMAThe service is remarkably similar among GSM, TDMA and CDMA networks. The message size is 160 ASCII characters (7-bit ASCII) or 140 8-bit octets. Messages typically can be transmitted in less than 10 seconds from mobile to mobile, and they either can be mobile-originated or mobile-terminated. GSM networks always have both modes enabled, but most CDMA and TDMA networks have only enabled 1-way transmission (mobile-terminated).

Today, 1-way SMS typically is being used for customized data broadcast services. Subscribers go to an Internet Web site to establish a profile for the data they want sent and the time they want it sent. Once those conditions have been satisfied, the messages automatically are pushed to the subscriber's phone. The only way for a subscriber to take action on the information is to place a telephone call or revisit the Web site to change parameters. Of course, a 2-way SMS system becomes much more interactive and allows the subscriber to make changes or take immediate action with typed commands on the phone.

Although typically there is a monthly charge for subscribing to these push services, messages rarely are counted and billed separately. It essentially becomes a $3.99/month all-you-can-eat package in most situations. The $3.99 becomes incremental revenue for a carrier.

Perhaps the most important part of the process for the carrier is the time the subscriber spends updating his profile. After all, the user is gathering data through the carrier's portal, receiving brand impressions and getting closer to his carrier. These are the usage attributes that keep subscribers loyal and less likely to churn. In fact, the more sophisticated the user interface to the Web and the more options set, the less likely that user will be to switch carriers. There is a time investment made in the profiling, which is a very good reason for carriers not to leave this kind of computer work to third parties and be passive in the content delivery.

Given SMS' current status, what is likely to happen in the future? Will all systems go to 2-way, or will SMS be passed up by more advanced packet-switched data services carried on these digital networks?

BEHIND THE SCENESIt is important to first look at the technical state of the SMS infrastructure. As mentioned, the majority of the systems are 1-way, and the basic message-transport characteristics are identical across all of the major digital wireless systems. Another important note is that these systems are store-and-forward, typically for up to 72 hours, so if a customer sends an SMS message to a handset that is turned off, the message will stay in the network for up to three days. If the handset is turned on during that time, the SMS message will be delivered automatically.

At first blush, this looks like the making of a powerful interconnected wireless-digital-data network, but there is a catch. These SMS networks are not interconnected. There are some fledgling solutions out there to combat this problem, but right now if a subscriber wanted to originate an SMS message from a GSM carrier and deliver it to a CDMA carrier's subscriber, it wouldn't work. In effect, the SMS networks are islands not only within their airlink technology, but also across carrier lines.

This is fundamentally the biggest challenge that the wireless industry has to making SMS look more like a data network rather than a paging network. The success of SMS in North America often is compared with Europe, and strategists note that the Europeans are much more interested in it than we are. But rather than trying to isolate any cultural differences, focus on the fact that in Europe everyone has a GSM phone, and all of the GSM networks are interconnected. That basically means that you know how to reach any wireless phone subscriber if you have that person's phone number. The single standard makes it a sure thing, whereas here in North America the opposite is true. If someone gives out his mobile number, the recipient has no idea which wireless network the subscriber is on, what e-mail address is associated with that phone number, or whether he can respond. These factors keep the SMS network in North America from flourishing as the text-messaging network it could be.

ISLANDS OF COVERAGEUnfortunately, SMS network isolation is not only a technical problem, it also is a business concern. Several carriers have said that they don't want to interconnect their SMS networks with those of their competitors. They want to create that island of coverage hoping to force interested users into their technology camps. Incompatibility in the SMS networks becomes a competitive advantage to them, rather than a great stumbling block.

This probably will not sort itself out in time for SMS to reverse its current trend in North America. Although technically feasible, the business issues and lack of overall focus will keep the consumer portion of the SMS opportunity at bay.

One opportunity for SMS is machine-to-machine communications. As a simple yet efficient data-transport system, SMS provides an excellent 2-way data system for a variety of data applications. One of the most obvious is automatic vehicle location using the GPS. A GPS position can be sent in a single SMS message, along with a variety of other parameters about the vehicle or other mobile asset being tracked. Another application is remote meter reading, where 160 characters is more than adequate to send several accumulated reads as well as instructions on the forward channel. Because the developer of the system has prior knowledge of all the units being used, the islands-of-coverage problem isn't a show-stopper.

Another application for SMS is e-mail delivery. Because the e-mail goes directly to a handset, it is more convenient for subscribers than using a laptop or PDA. But again, SMS is not viable for e-mail unless it is a 2-way service. In a 1-way SMS environment, e-mail access really gets reduced to e-mail notification, and that application is much less compelling.

SMS networks need to be 2-way to do anything compelling beyond today's push content services. Given 2-way connectivity, the data market opens up as well as e-mail. The holy grail is to interconnect all of the competing SMS networks in North America to act as a single, unified data network. Although it would be great to see, it is not likely to happen before more appealing packet-switched data services step in to steal the thunder.