Mainland SMS use expected to triple
The number of short message services (SMS) text messages sent over phone handsets in the mainland will more than triple this year, providing a major source of revenue for mobile operators, according to a study by Pyramid Research.
The report said SMS volume would increase from 19 billion messages last year to 60 billion this year.
The author, Hong Kong-based analyst Connie Hsu, said the rapid growth resulted from the relatively low cost of sending a text message and the popularity of games and other SMS services.
It costs the equivalent of about 10 HK cents for a text message compared with 50 HK cents for a voice call.
Ms Hsu said as the number of mobile-phone subscribers in China increased to 500 million by 2007, there would be a revenue windfall from text messages for operators and content providers.
'By 2007, SMS revenues in China will surpass US$17 billion. China will generate greater SMS revenues than all of western Europe combined,' she said.
Pyramid said SMS revenue last year was US$234 million; this year, it was expected to hit US$750 million.
Ms Hsu said Chinese consumers still lagged behind counterparts elsewhere in Asia, where SMS has been extremely popular for some time.
Handset makers had overcome problems with character input that held back earlier adoption in China, and mobile operators were encouraging use through low pricing and revenue-sharing deals with third-party content providers, she said.
The most avid users of SMS are young, urban residents who have been using mobile handsets for some time.
Despite the growing number of commercial services using SMS, more than 90 per cent of the traffic is still between individuals, according to the study.
The boom in SMS and projected uptake of the more advanced multi-media message service (MMS) are expected to provide a boost for China Mobile and China Unicom.
Ms Hsu said both had been struggling with declining average revenue per user, and that SMS and MMS would gain momentum as revenue drivers.
Pyramid predicted exponential growth of SMS use would provide opportunities for foreign players, particularly as content providers.
'Providers in South Korea and Japan are in an ideal position to leverage their data service expertise in China,' the research group said.
