<UK mobile phone SMS market.
1. Overview.
SMS or short-message service allows short text messages to be sent
between customers of mobile phone networks. SMS is claimed to have
been invented by Dutchman Cor Stutterheim. It was originally intended
as a means for operators to contact their customers. The first text
message was sent on December 10th, 1992 by engineer Neil Papworth on
the Vodafone network. He sent the message “MERRY CHRISTMAS” to his
colleagues. By 1999, text messages could be used to send SMS to other
networks. SMS proved to be extremely popular especially with young
people as a means of communication. An enhanced service is now
available, Multi-media messaging or MMS allows video, pictures and
words to be sent.
SMS has seen huge growth from 1999. By December 2000, 756 million
message were sent per month which represented a growth of 300%. In
the period January to March 2003 (fourth quarter) 1.7 billion SMS
messages were sent, generating £400 million in revenues. On average
this equates to over one message per subscriber per day.
The success of SMS took the operators by surprise. There was initially
little promotion of the service. The original advertising campaigns
were targeted at the wrong group (business people). Later campaigns
targeted the youth market which had adopted SMS.
The operators failed to bill prepay customers as they did not have
links in place between the SMS centres, billing system and the prepay
platform were not in place. Although prepay phones supported SMS, the
prepay literature did not mention this. Young people soon realised
that they could send SMS for free and exploited the service. It took
operators several months to implement charging for pre-pay customers.
A message was sent to users informing them that there would now be a
charge which resulted in a decline in usage of between 25 and 40%.
Gradually the usage increased back to its previous level.
The service was difficult to use ad messages originally took time to
enter. The youth responded by developing a new language of
abbreviations to save time.
The operators had problems handling the traffic created by SMS. Prices
were not reduced as they could not cope with an expansion of traffic.
In 2000 technology began to be used that allowed users to change their
ring tones. This developed into a billion dollar market.
Lessons to be learnt.
1. Market research initiatives could have been used to predict the
success of SMS. Carrying out consumer trials could have helped to
indicate the appeal of SMS and in particular to identify the youth
market as the major user. Advertising campaigns could then have been
targeted at the correct group.
2. Lack of co-operation between the networks delayed the success of
SMS as initially the service could only be used on individual
networks.
3. Making the system more user friendly would have helped to ease its
use.
4. The infrastructure should have been in place to cope with demand
and billing.
5. An efficient pricing strategy needed to be implemented.
References.
http://in.mobile.yahoo.com/smshistory.html
http://www.textually.org/textually/archives/cat_sms_a_little_history.htm
http://www.guardian.co.uk/business/story/0,3604,668379,00.html
http://www.cellular.co.za/news_2000/news-12232000_uk_sms_boom_shows_no_sign_of_end.htm
http://uk.gsmbox.com/news/mobile_news/all/30904.gsmbox
2. Number of subscribers.
The total number of UK mobile phone subscribers is 49,677,000(source
Oftel). This is split between the four major operators as follows:
Vodafone – 12.1 million
O2 – 12.05 million
T-Mobile – 12.21 million
Orange – 13.31 million
Ownership of mobile phones.
400,000 children under the age of 10 own mobile phones.
http://www.cellular-news.com/story/9500.shtml
3. Market share.
Subscribers market share.
Vodafone – 24.4%
O2 – 24.3%
T-Mobile – 24.6%
Orange – 26.8%
Revenue market share for text & picture messaging.
Vodafone – 33.1%
O2 –21.9%
T-Mobile – 19.1%
Orange –25.9%
Volume and market share for text & picture messaging.
Vodafone – 1,250 million24.7%
O2 – 1,678 million - 33.1%
T-Mobile – 849 million - 6.8%
Orange – 1,290 million - 25.5%
http://www.oftel.gov.uk/publications/market_info/2003/mobile/q4mobile0603.pdf
Detailed analysis.
A breakdown of SMS revenues, market share and volumes per operator is
given at the following sites for each period.
January-March 2003
http://www.oftel.gov.uk/publications/market_info/2003/mobile/q4mobile0603.pdf
October –December 2002
http://www.oftel.gov.uk/publications/market_info/2003/mobile/q3mobile0403.pdf
July-September 2002
http://www.oftel.gov.uk/publications/market_info/2003/mobile/q2mobile0203.pdf
April – June 2002
http://www.oftel.gov.uk/publications/market_info/index.htm#a
Figures back to 2000 can be found at
http://www.oftel.gov.uk/publications/market_info/2002/mobile/miu_mq4.pdf
4. Average costs.
Sending an SMS costs on average 10p. Virgin Mobile (part of the
T-Mobile network) has started charging 3p per message. This could
potentially spark a price war.
http://www.nordicwirelesswatch.com/wireless/story.html?story_id=3065
http://www.maltatoday.com.mt/2001/0930/local5.html
5. SMS users.
Around 64 percent of mobile phone users have sent an SMS message
(source MDA).
http://www.instantmessagingplanet.com/wireless/article.php/2226191
Percentage texting.
According to the Work Foundation:
90 % of those aged over 65 have never texted.
52 % of 45-54 year olds have never texted.
93% of 16-24 year olds have texted.
69% of all users text friends. 80% of 16-24 year olds text friends.
http://www.theworkfoundation.com/pdf/mobile_chap2.pdf
According to Oftel 58% of UK mobile customers send text messages and
63% receive them. Those that text send on average 19 messages per week
and receive 18. The biggest users are the 15 to 34 year old age group
who send on average 19 messages and receive 20 messages per week.
Most messages are personal (95%). Information services account for 9%
and interactive games, competitions and voting each account for 5%.
There is a high degree of satisfaction amongst SMS customers, with 92%
of users reporting that they are satisfied with the speed of text
delivery. 85% are satisfied with the overall value for money.
http://www.oftel.gov.uk/publications/research/2002/q9mob_r0702.htm#ch6
SMS marketing.
http://www.bravesky.com.au/braveSky/news/content.htm
6. Major players.
There are four major players – Orange, Vodafone, O2 and T-Mobile.
Orange
Orange is the UK’s largest mobile phone network operator.
Revenue £2540 million (2002/2003)
Operating profits - £688 million (2002)
Average revenue per customer - £259
Revenue from SMS £412 million
Average revenue per customer for SMS - £37
Non-voice services account for 14.3% of UK revenues.
http://web.orange.co.uk/
http://www.thisismoney.com/20030305/nm60011_s.html
T-Mobile UK (formerly One 2 One)
Revenues – £1750 million (2002/2003)
Profits E545 million
Average revenue per customer 29 Euros.
Revenue from SMS £309 million
References:
http://www.silicon.com/news/500018/1/5620.html
http://www.t-mobile.co.uk/
http://www.british-american-business.com/2003/magazine/pages/180.htm
O2 (formerly BT Cellnet) http://www.o2.co.uk/
Revenue £2.75 billion (2002)
Profits £298million (2002)
Revenue from SMS – £354 million (2002/2003)
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2002/05/30/cnouk30.xml
Vodafone
Annual report 2003.
http://www.vodafone.com/assets/files/en/sfs_2003.pdf
Revenues – £33,926 million (year ended 31 March 2003)
£29,799 million (year ended 31 March 2002)
Profits - £941 million
Revenue from SMS – £262 million - £452 million (2002/2003)
References
http://www.vodafone.co.uk/cgi-bin/COUK/portal/ep/home.do
Revenues, customers.
http://www.vodafone.com/article/0,3029,CATEGORY_ID%253D20701%2526LANGUAGE_ID%253D0%2526CONTENT_ID%253D10148,00.html
http://www.ananova.com/news/story/sm_596990.html?menu=
http://www.euromonitor.com/Cellular_communications_services_in_UK_(mmp)
http://www.rim.net/news/press/2002/pr-15_04_2002.shtml
http://www.jrn.columbia.edu/studentwork/reutersjournal/tech/pg97.html
<Additional links:>
UK SMS use levelling off?
During May 2003 British SMS users sent approximately 1.66 billion text
messages which equates to a 55 million per day average. The figures
were similar in April 2003 but higher in March 2003 at 56 million per
day. One year ago the average was 44 million per day.
According to the Wireless World Forum SMS services to experience 156
percent growth by 2004.
http://www.cellular.co.za/news_2002/012402-mobile_youth_spearhead_predicted.htm
1.65 billion texts were sent in June 2003. On average 55 million per
day (source Mobile Data Association).
http://www.cellular.co.za/news_2003/081203-uk_sms_usage_sours.htm
2001 data
http://www.cellular.co.za/news_2001/02222001-uk_text_messaging_nears_a_billio.htm
Over 80% of sms users are young people.
http://www.wirelessweek.com/index.asp?layout=article&articleid=CA90527
SMS directory enquiries market could be worth up to £63 million in the
UK.
http://www.wirelessdevnet.com/news/2003/233/news3.html
Orange annual summary 2001.
http://www.orange.com/english/annualsummary/operationalperformanceuk.htm
Market Report 2002
http://216.239.51.104/search?q=cache:IOV_qQLiIR4J:www.dynmark.com/UK%2520Mobile%2520Messaging%2520Sector%2520Review%2520October%25202002.pdf+uk+sms+market+million&hl=en&ie=UTF-8
Data on type of messages sent.
http://216.239.33.104/search?q=cache:fEYZL6WrHt4J:www.mobilespring.com/docs/Fast_Facts_022802.pdf+uk+sms+market+million&hl=en&ie=UTF-8
SMS meets TV
http://www.smsmeetstv.com/presentations/cmg.pdf
------------------------------------------------------------------------------
UK mobile phone insurance market.
1. Overview.
In 2002, 700,000 mobile phones were stolen. Two-thirds of victims are
aged between 13 and 16.
Despite a high level of mobile phone crime, less than 30% of mobile
phones are insured. 20% are insured via specific mobile phone
insurance and 10% through house insurance. Contract phone owners are
more likely to have insurance (49%) than pre-pay owners (21%).
The lack of insurance is the result of the false assumption that
mobile phones are covered in household insurance. In reality 80% of
household insurance does not cover mobile phone loss.
Losing a phone is particularly expensive for Pay Monthly customers as
the handsets are heavily subsidised and replacement costs can be up to
ten times the original outlay.
In addition a huge volume of calls could be made before the owner
notices that the phone is missing. The Guardian highlights the case of
a mobile phone customer who was charged £1000 for calls made by a
thief.
A large number of mobile phone insurance claims are rejected. As many
as 40% are refused.
Mobile phone insurance has not featured prominently in the media.
According to Phones4U, customers do not appreciate the true value of
their mobile phones as they often get a phone free or only pay up to
£100 whereas replacement costs can be between £250 and £275.
A survey by Mobile Phone Centre found that accidents involving
toilets, beer and animals account for 21% of mobile phone claims.
References:
Market
http://www.icmresearch.co.uk/reviews/2002/telecoms-mobile-security.htm
Honouring of claims
http://money.guardian.co.uk/phones/story/0,13283,950219,00.html
Claims
http://uk.gsmbox.com/news/mobile_news/all/1836.gsmbox
£1000 bill for thief’s calls.
http://money.guardian.co.uk/phones/story/0,13283,981798,00.html
Protecting your mobile phone.
http://money.msn.co.uk/MyMoney/Insight/MoneySpinner/ThisWeek/mobilephoneinsurance/default.asp
A database has been set up to make mobile phones useless to thieves
however stolen mobile phones can still be used by reprogramming them.
http://www.gsmworld.com/news/press_2002/press_22.shtml
30% of customers insured.
http://tones.5u.com/phone_resources/you_and_your_moblie_phone.htm
10,000 per month stolen. Two thirds of victims are aged between 13
and 16.
http://www.met.police.uk/crimeprevention/phone.htm
700,000 mobile phones were stolen in 2002
http://www.cpwplc.com/cpw/media/mobilecrimes/
Insurance costs.
http://news.bbc.co.uk/1/hi/programmes/working_lunch/1840566.stm
Insurance costs between £25 and £100 per year depending on the level
of cover and who provides it.
http://money.msn.co.uk/MyMoney/Insight/MoneySpinner/ThisWeek/mobilephoneinsurance/default.asp
2. Major players
The major operators all offer insurance as do the major retailers.
Orange
Orange Care costs £5 per month or £60 per year. It charges an
administrative fee of £15 for claims.
http://www.orange.co.uk/services/orange_care.html#
Vodafone charges £29.99 per year for handsets without built-in cameras
and £39.99 for handsets with built-in cameras.
http://www.vodafone.co.uk/cgi-bin/COUK/portal/ep/browse.do?channelPath=/Vodafone%20Portal/Get%20more%20from%20your%20mobile/Coverage%20and%20price%20plans/Insurance&BV_SessionID=@@@@0411562240.1064147925@@@@&BV_EngineID=cccjadcjggfmkdfcflgcegjdgnfdffm.0
O2 offers a range of plans from £14.99 per year to $59.99 per year.
http://www.o2.co.uk/personal/productsservices/mobiles/mobile_insurance/0,,101,00.html
T-mobile charges £4.99 per month.
http://www.t-mobile.co.uk/Dispatcher?menuid=ctl_search
Carphone Warehouse
A range of policies is offered. Prices start from £1.71 per week.
http://www3.carphonewarehouse.com/commerce/servlet/gben-customerservices-Insurance
Phones4U
Charges £7.99 a month.
http://money.guardian.co.uk/print/0,3858,4547213-110124,00.html
3. Potential market.
Given the lack of penetration of mobile phone insurance and the high
crime rate there is a huge untapped market for mobile phone insurance.
In order to increase sales of mobile phone insurance:
Customers need to be educated about the value of their phone.
The risks of theft and loss need more emphasis.
There needs to be more media coverage.
A higher acceptance rate of claims will be needed to counteract
adverse publicity.
<Additional links:>
<Industry forecasts.>
<http://www.cellular-news.com/industry_forecasts/>
<Report SMS TV Forecasts 2002 – 2007>
<http://www.gii.co.jp/english/kt12168_sms_tv_toc.html>
<Search strategy:>
<uk "mobile phones" stolen >
<http://www-sj.google.com/search?sourceid=navclient&q=uk+%22mobile+phones%22+stolen+>
<uk sms market million>
<http://www-sj.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=uk+sms+market+million>
<sms history>
<http://www-sj.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=sms+history>
<"mobile phone insurance" survey>
<http://www-sj.google.com/search?sourceid=navclient&q=%22mobile+phone+insurance%22+survey>
<"mobile phone insurance" million>
<http://www-sj.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=%22mobile+phone+insurance%22+million>
<sms "lessons to be learned" success>
<http://www-sj.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=sms+%22lessons+to+be+learned%22&as_q=success>
<uk "mobile phone market" billion>
<http://www-sj.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=uk+%22mobile+phone+market%22+billion>
<Hope this helps.> |
