Cost preserves the value of SMS for business communications

The use of SMS as a business communications tool is growing exponentially and its use has shifted away from focusing on marketing to that of an overall medium for business communications.

While communications mediums such as telephone, fax and e-mail all remain crucial to the life of a business, it is SMS messaging using cellular technology that has revolutionised business communications over the last six years. Business communications rely on the sending of timeous information. SMS communications are used for internal business communications, notifications, reminders, alerts, marketing messages and the broadcast of information such as financial market trends.

"South Africa is the first country where SMS as a business communication tool has surpassed the use of SMS for consumer mobile content. This was one of the key trends that emerged at the Global Messaging conference held in London during May 2006," said Dr Pieter Streicher, managing director of BulkSMS.com, a division of Celerity Systems.

"It is not only due to the fact that South African banking institutions rely on SMS verifications for account transactions but that businesses across the board have found SMS an invaluable tool to communicating short messages to staff, suppliers and customers," said Streicher.

According to Streicher, the higher cost of SMS, compared to e-mail, is a benefit for business communications and ensures that SMS retains its value as a communications medium over e-mail as a corresponding form of business communications. There are three reasons why SMS will surpass e-mail as a business communications tool despite its higher cost.

SMS is ubiquitous. Messages can be sent globally via a single SMS provider, all cellphones can receive SMS, and there is a high uptake of SMS by users as more people have cellphones than have access to e-mail. A recent report by the World Wireless Forum, the South Africa Mobile Market 2006, indicated that the total revenues from messaging services will grow from R1.964 billion ($297 million) in 2005 to an estimated R2.996 billion ($453 million) in 2006.[1]

The second reason is the immediacy of SMS. SMS communications are succinct, instantaneous and delivered directly to a user`s phone irrespective of location (where there is network coverage). There is also a high likelihood of a SMS being read immediately when received, unlike e-mail where messages might only be opened days later.

Thirdly, SMS ensures less spam to an end-user. SMS is a "sender pays" communications medium unlike e-mail which is effectively a "receiver pays" medium. Unsolicited messaging is significantly reduced as SMS are predominantly sent to users who have a current commercial relationship with the business. The key differentiator between SMS and e-mail is the prestige associated with SMS communications due to the higher premium the sender pays for targeted messages to known users.

"Lowering the cost of a communications medium increases the likelihood for spam or unwanted messages. By keeping the cost of SMS above a certain threshold, most spam is eliminated. In some countries, the only form of spam that still pays is SMS scams using premium rate mobile services. Nevertheless, these scams have been easily controlled by cutting the revenue to the service provider," said Streicher.

According to Streicher, even though pressure should be brought to networks to reduce overall communications costs, there is value for the networks, businesses and users to maintain the cost of SMS to ensure the continued value of the service for business communications.

[1] US$ - Rand conversation rate of $1 = ZAR 6.61 as at 5 June 2005.