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Multimedia messaging services primed for growth

A number of problems that hampered growth in MMS traffic in recent years have been resolved, setting the stage for widespread adoption. This could boost operator profits.

July 24, 2006

Operators and vendors have worked hard to break down interoperability barriers by setting up "hub agreements" that allow consumers to send MMS messages seamlessly across networks.

According to a recent analysis by Belgacom International Carrier Services, more than 100 operators have so far linked up using such interconnect agreements to deliver multimedia messages in 58 countries around the world.

Sending photos, video and other data files on the mobile phone is also less cumbersome. Many mobile phones sold today allow consumers to send an MMS with just a few clicks. Some older phones required up to 12.

So what will it take for consumers to warm up to MMS?

The only major remaining hurdle today is the reluctance by operators to market MMS aggressively, says Anna Wolf, strategic product manager for Messaging at Ericsson.

In 2002, when the service was first launched, few phones had MMS capability. Consumers who tried to send MMS messages became frustrated, as did operators who saw little return on their marketing dollars, Wolf says.

It left consumers with the perception that MMS was complicated to use and expensive.  And operators, stung by their marketing debacle, moved their focus to other services.

Hype-driven industry
"We are working in a hype-driven industry," Wolf says. "MMS is not the hype anymore. It's become kind of boring, and operators want to be seen as innovative."

Erik Rosén, portfolio marketing manager at Messaging, says the problem should be easy to overcome now that interconnect agreements are finally in place and there is a critical mass of MMS-enabled phones in developed markets.

"This is the time for MMS usage to really take off," he says.

Many industry analysts agree. A recent Portion Research report predicts that mobile data will account for 20 percent of total revenue for network operators by 2008. Two years later, MMS should generate revenues of USD 50 billion annually - on a par with SMS revenues, the British research firm predicts.

Yatin Pahwa, general manager of marketing for leading Indian GSM operator Bharti, is not convinced MMS will reach the level of SMS any time soon. Today, nearly 80 percent of Bharti's 22 million customers send or receive SMS messages.

By comparison, less than 1 percent of the company's customers use MMS. Most other operators report similar adoption rates.

Pahwa says consumers still struggle with complicated settings required to transfer pictures over the packet-switched network. Many also find that MMS still requires too many steps, he says.

But Pahwa believes the increased interest in video and text blogging, along with the expansion of 3G networks, will gradually fuel MMS traffic. And once MMS takes off, he predicts it will, in turn, increase usage of SMS - leading to an overall rise in operator profits.

"All these things have an impact on revenue," he says. "Rather than cannibalizing each other, SMS and MMS will complement each other."