Messaging Mania

They're huge in Europe and Japan, but will wireless-messaging services provide the gift of instant revenue for U.S. carriers?

Ross Buckenham believes the hype. Maybe it's because his company has invested more than $5 million to build out its wireless-data network in the United States. Maybe it's because he's betting that the messaging phenomenon in Europe and Asia will enjoy the same kind of success here. Or maybe Buckenham, WebLink Wireless president, believes in wireless-messaging services because he has signed up more than 2.4 million subscribers to date.

He is convinced that messaging will reach the same level of popularity in the United States as it has in Europe and Asia.

"It's just a matter of how quickly will this arrive," he said.

With carriers such as AT&T Wireless, Sprint PCS and Web- Link Wireless offering an array of services, devices and price points, messaging (SMS, instant messaging and text messaging) is finally here in a big way.

According to Rebecca Diercks, Cahners In-Stat Group director of wireless research, messaging will be the primary driver of wireless data in the next few years. A recent Ovum survey of 1,027 U.S. wireless subscribers revealed that 53% were interested in e-mail and messaging services, the second-highest consumer-demanded service behind wireless-Internet access.

The wireless industry reports that, worldwide, 9 billion SMS messages were sent in August 2000 alone, and predicts 15 million SMS messages will be sent each month by December 2000, compared to 1 billion a month just a year and a half ago. U.S. carriers have high expectations and are jumping into messaging services feet first.

U.S. Consumers Get the Message AT&T Wireless recently introduced AT&T 2-Way Text Messaging, free and unlimited through Feb. 28, 2001. AT&T's service allows users to send, reply to, forward, store and retrieve messages from a compatible wireless handset. Messages of up to 150 characters can be sent between phones and e-mail addresses, and the service is available on four Nokia digital multinetwork phones: 5150i, 6160m, 6162m and 8260.

"AT&T Text Messaging is a fantastic complement to voice services - customers can choose their chat: voice or text," said Kim Whitehead, AT&T senior vice president of marketing, in a press release.

Jeff Hallock, director of consumer marketing, said Sprint PCS offers four services: AOL's Instant Messenger (AIM); short mail, a Sprint PCS-to-Sprint PCS SMS that allows users to enter a phone number and send a message (the equivalent of 2-way SMS in Europe); wireless chat, only for Sprint PCS customers currently; and wireless e-mail.

Sprint PCS' wireless version of AIM enables subscribers to send and receive text messages on wireless phones. The 61 million people who already use AIM on their PCs can use AIM on wireless phones and the same buddy lists on their PCs to send messages to available friends and family. Users only can send and receive instant messages (IM) to and from other AOL subscribers, but Sprint PCS subscribers who aren't already AIM users also can register a screen name, and create and maintain a buddy list for free. This service, available on 15 Sprint PCS digital phones, allows users to send real-time text messages from phone to PC, from PC to phone, and to and from e-mail addresses.

"We tried to find those things that people use on the Internet, the Web-based services people like to use, and extend them to the wireless space," Hallock said. "If you look at the huge installed base of Internet and PC users, we think that's a great way to scale up our service quickly and provide customers with access to those communities they already belong to like AIM."

WebLink Wireless provides wireless e-mail, IM and information services for 2-way devices such as Motorola's T900 and Glenayre's AccessLink II. Its nationwide 2-way wireless-data network uses IP and ReFlex technology, and covers about 95% of the U.S. population.

Last year, WebLink began selling the T900, a device for wireless IM in 7,000 major retailers such as Best Buy and Radio Shack.

"In 2001 we're going to start to see in this country the explosion of wireless IM," Buckenham said. "It's going to be wireless IM on multiple platforms, there'll be AT&T and Sprint phones that do messaging, but there will also be these 2-way devices that are purpose-built for messaging."

And Buckenham said T900-type devices with keyboards may appeal to messaging-minded consumers more than numeric-keypadded cellular phones.With cellular phones, "it takes about 13 keystrokes just to type `hello,'" he said. "It is really painful to do anything but very lightweight messaging."

Numeric keypads haven't hindered the messaging mania overseas. But the average European only sends about two messages a day on cellular phones. Buckenham said Web- Link's U.S. consumers send an average of 15 a day.

"If somebody were to receive an occasional message, they'll say `I'm just going to do short messaging on my phone,'" he said. "But if you really like messaging, you will probably want a purpose-built device with a keyboard that runs on a AA battery for almost a whole month, is always on and big enough to fit in your back pocket."

Hallock said messaging is one piece of an overall Wireless Web offering that includes games, entertainment, information and transaction services, as well as the ability to make calls.

"On some level, it can be conceived to be a little competitive, but at this point, we're taking it at a different level, which is to bundle up voice and data services, Web-based applications and appealing devices like MP3," he said. "We're trying to provide customers with the option to have it all in one."

Internet-messaging carriers want some of the wireless action, too. Yahoo recently partnered with WebLink to offer 2-way messaging services via Yahoo Web portals. Yahoo and WebLink will deliver personalized content and services, including Yahoo mail, to 2-way messaging devices.

"Major portals like Yahoo want to get their mail and IM delivered to a small mobile device that's branded Yahoo," Buckenham said. "Their brands are stuck on the desktop right now. Yahoo is on a lot of PCs, but not in a lot of pockets."

Instant Revenue? Although Hallock said he expects that messaging will "drive a good amount of usage" for Sprint PCS, he doesn't anticipate charging incremental fees for the services.

"We've created a pricing model so customers can use their minutes for either voice or data," Hallock said. "We're trying not to cut up different buckets too much because it just gets too confusing for customers."

After the free promotional period, AT&T Wireless Text Messaging users can continue the service for $4.99 a month, which allows them to send, receive and reply to up to 500 messages. Additional messages sent and received cost 10 each. A second option offers users up to 250 incoming messages per month at no charge, and 10 each for additional messages sent or received.

WebLink offers a virtually unlimited package for $29.95. T900s start at $99.

"Cellular companies are advertising messaging on cell phones for a little less than that, but consumers are definitely selecting the T900 at our price points and are willing to pay a few dollars more for the convenience of having a keyboard and being able to send longer messages," Buckenham said.

SMS in Europe and Japan has been successful despite limited messages, low latency, small screens, numeric keypads, little network intelligence and additional fees. European carriers are charging more for SMS than for voice.

"The average price per SMS in Europe is 12.5, so already the networks over there are carrying a billion dollars a month of messaging traffic, which is phenomenal," Buckenham said. "It's amounting to something like 15% to 20% of carriers' revenues in some countries. That is a really good indication of how much people want instant messaging."

About 75% of i-mode usage is short messaging, and Japanese subscribers have to buy new i-mode-enabled handsets first.

According to Dierks, the driving market for messaging today is the Gen Y segment.

"We see a great opportunity with the youth and young-adult markets," Hallock said. "The AOL IM service is very popular among teens and so is chat, so we've tried to extend both of those."

Most of WebLink's customers - about 72% - fall into the Gen X or Y categories.

"The youth segment is a very attractive market because they appreciate the value of a wireless IM immediately, it liberates them from the computer," Buckenham said.

No matter who the target consumer is, the great messaging hype has finally turned into the greatmessaginghope.

"If you look at our Wireless Web, messaging is the No. 1 link on our homepage and we expect it to be very popular," Hallock said. "It remains to be seen exactly how big it will be, but we think it's one of the key applications that helps people understand why they need the wireless Web."