www.anrt.net.ma
SMS: a killer application for mobile services
in Developing Countries?
Mohamed El Kadiri
Technical director
Moroccan Telecom Regulatory Agency (ANRT)
elkadiri@anrt.net.ma
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content
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Success story of Mobile Telephony
SMS usage growth
SMS benefits for users
SMS benefits for Operators
Concluding remarks
Customers: Mobile up / Fixed down
Pe rce ntage of mobile custome rs out of
the total te le phone custome rs
90%
1999
85%
2002
80%
64%
70%
55%
60%
50%
66%
64%
53%
66%
53%
38%
40%
31%
30%
17%
20%
10%
0%
A lgeria
Tunisia
Egypt
Jordan
Morocco
Turkey
France
0,00%
-5,00%
-3,73%
-10,00%
Spain
Lebanon
Portugal
Italy
-0,44% -0,01%
-1,58%-0,67%
-3,43%-1,59%
-7,85%
-11,81%
-15,00%
-15,26%
-20,00%
-25,00%
-18,80%
-23,36%
-30,00%
Mo r o c c o
S lo v a k
Re p u b lic
3
Est o n ia
Cz e c h
Be lg iu m
Ca n a d a
Re p u b lic
Source ITU database
Mobile Boom: the moroccan example
Acces: 97% of the population is covererd
Tariffs
Flexibilty and adptation to way of live
-> 61.0
- 68.0 -61.0
- 75.0 -68.0
- 80.0 -75.0
- 80.0 -86.0
- 110.0 -86.0
- <- 110
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GSM boom and F2M substitution:
some reasons
Evolution of Mobile Communication tariffs
(Incumbent post payed tariffs)
GSM Tarifs/fixed tarifs
Monthly acces
fees:GSM/Fixed
20,0
Installation
fees:GSM/Fixed17,3
Tariffs(Dh)/min
18,0
6
16,0
5
4
14,0
GSM tarifs/Fixed tarifs
97 Telecom Act
( VAT excluded)
12,0
GSM2 license
4,0
4,0
3,2
10,0
7,5
8,0
5,7
3
6,5
6,0
0,3
1,9
1,9
1,3
2,0
0,2
1,0
0,6
Morocco
Lebanon
Algeria
Tunisia
1,5 4
1,8 5·
0
0,0
Jordan
2,0
2
1
3,1
4,0
3,2
Egypt
1995
Local tarifs
1996
1997
1998
1999
2000
Moroccan case:
0,160
•Competition
0,140
0,120
0,100
1999
2000
0,080
2001
2002
0,060
0,040
0,020
0,000
Algeria
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Lebanon Morocco
Jordan
Egypt
Tunisia
•The GSM tariffs are challenging
the fixed tariffs
•QoS of Fixed Services (billing,
commercial..)
2,0
2001
Prepaid domination of the mobile market
Prepayed
Post payed
Incumbent: Itissalat Al Maghrib
6000000
New entrant MediTelecom
2500000
5000000
2000000
4000000
1500000
3000000
1000000
2000000
6
1000000
500000
0
0
2000
juin-01
déc-02
août-03
déc-03
2000
juin-01
déc-02
août-03
déc-03
Custome profile
52%
33,1%
48%
28,9%
31%
23,9%
35%
14,1%
12%
Men
Women
14%
8%
18-24 years 25-34 years 35-44 years 45-59 years More than
60 years
Less than 300$/mth
Mobile Usage by age: 70% less than 35 years old
300 to 600$/mth
more than 600$/mth
revenu: 56% with less than 700$/mounth revenu
Less than 25$
34,7%
25 to 50$
32,2%
Monthly Mobile
com expenses
50 to 100$
More than 100$
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No response
18,4%
14,7%
GIVEN THE DEVELOPMENT OF MOBILE , THE FIXED SERVICE
SHOULD FOCUS ON BROADBAND AND DATA TO BUSINESSES
For illustration
situation by End 2000
•Penetration of mobile
•Per 100 inhabitant
Best of 2 worlds
80
Switzerland
Italy
70
Portugal
60
Mobile
Societies
Spain
Greece
Move towards
residential
narrowband*
50
Sweden
Norway
UK
Germany
France
Belgium
Australia
Japan
USA
Internet
Societies
40
30
Chile
20
Argentina
Mexico Morocco
Peru
10
Poland
Romania
Hungary
Emerging
Societies
Move towards
Enterprise
Data/Internet
0
0
5
10
15
20
25
30
35
40
45
50
•Internet usage
penetration
•Percent
8
Source: ITU Yearbook of Statistics 2000, The Internet Almanach
Document illustrated by Mckinsey
Personnal SMS usage is growing
SMS / customer/ mounth
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Launched in 92 by
Vodafone, SMS did not
encounter a great success
as soon as it was launched
It took off around 1998 –
1999, and since then,
became essential to both
operators and clients
It is becoming a killer
application: Email for
Phones!
Source ART France
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SMS boom
Nbre of SMS by mounth in the world
SMS exponential growth in trafic and operator’s
revenue (European case)
Source: ART France:« Note d’analyse N°5 » (Feb 2004)
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SMS: a precursor for Mobile Internet?
• Wireless Internet development could be strategic for
increasing Internet penetration in developing countries
where:
– the number of mobile phones is much greater than the
number of PCs.
– mobile phone subscribers exceed fixed lines subscribers in
many countries.
• In the mean time, SMS is taking advantage of these
factors and could be a “good precursor” of Internet use.
• Getting the habit of using mobile phones to get information
would certainly play an important role in mobile Internet
adoption.
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Well adopted by Users in developing
countries
• Price: On average, the cost of 1 SMS is a half of voice minute for
postpaid and less than a quarter for prepaid.
• Tremendous demand for entertainment applications such as games,
chatting and other types of interpersonal communication:
• Tendency to affect the usage habits for clients.
– Substitution Process: Preference to transmit the message through an
SMS than through a voice call: Deaf Telephony, competing with voice
telephony.
• Practical way to communicate without disturbing
• Well appreciated in events: in Morocco, religious holidays greetings
by SMS create a network saturation, and delivery can occur up to 24
hours later.
– Development of new information inquiry process and habits: A
didactic benefit moving from “voice only” to “data also”.
SMS= stepping stone to Mobile Internet
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Good opportunity for operators in developing countries
• Service can be available to all mobile users both in the prepaid and
post-paid form, so potential market is very important
• Easy to implement and to use
• Easily adaptable to all kind of existing and new services (chatting,
advertising, news delivery, value added services in different languages….)
• Cost competitiveness with good margin due to SMS low costs.
• No major issue with the quality of service ( except from the fact that
there is no guarantee with respect to the delivery status of the
message)
• No major regulatory constraints
• No threat in the short term perspective from 3G services
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Greater opportunity for operators
in developping countries
•
Where a structured information is difficult to find, SMS became more useful. It
may be used as a competition advantage:
–
–
–
–
–
–
Weather checking
Stock exchange quotations
Entertainment services
Transportation services
News
Innovative personal services: example of Market Price quotation for
agricultural goods in Senegal.
– Personal services: example of a Moroccan Bank using SMS to inform
customers in a quasi-real time when the money is transferred to their
families. SMS is seen by the customer and used by the bank as a
comparative advantage vis a vis the moroccan dispora (more than 2
millions with good income).
•
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Apparition of content and application developers exclusively for SMS.
Financial impact for Mobile Operators
•
During the 2000-2002 period : Decrease in
revenues generated by communications from
the fixed to the mobile network
–
–
–
The resulting decrease in ARPU during this
period was attenuated by the increase in
revenues from Short Messaging traffic.
In some cases, the ARPU experienced an
increase because of the use of SMS!....
SMS represent an important part of the total
mobile operators revenues ( 7 to 20 % for some
operators).
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•
This tendency should be confirmed as new
mobile data applications are developed
•
These new non voice services created a new
dynamic in the mobile market.
•
In Developing countries, the long term
perspective associated with the development
of third generation network promise a brighter
future
( only few years of operations for many GSM
operators)
Source: ART France:« Note d’analyse N°5 »
(Feb 2004)
Next steps: MMS/GPRS
• SMS is becoming the basic messaging service, with the apparition of
more advanced messaging services. It is well introducting non voice
service for mobile.
• « MMS » (Multimedia Message Service) : Considered as a premium
service compared to the basic SMS service.
– Takeoff : Price and economic model adaptation
(Push Model vs Pull Model under which the subscriber pays a monthly amount to
receive an information package)
• GPRS
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Concluding remarks
• Mobile is dominating in developping countries
• Voice: still the killer application
• SMS:
– Email for Phones
– first step in Mobile Internet, MMS will help.
• Broadband acces will fit more with high income
customers. Take off would take place with rhe
developpment of:
– fixed broadband access. Key issue. We need at least two legs
for walking.
– Contents developpment for specific market needs.
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www.anrt.net.ma
Thank you
for your attention
elkadiri@anrt.net.ma
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