Free text messaging? Free SMS? Who wouldn’t want that? It seems that’s the hot topic just about now — getting the telcos to give up their more than Php50 billion a year revenues on SMS service.
About a decade ago, SMS was just a value-added service and it came free with a subscription to your mobile provider. However, the growth of consumer use for SMS prompted them to switch to paid service. That didn’t stop people from texting until the Philippines became globally becoming the SMS capital of the world.
Since last month, there have been some lobbying to make SMS free again. It’s a nice idea but something I don’t think will happen in this lifetime. Why?
- More than 50% of the revenues from wireless services come from cellular data (SMS). Who would want to just give that up?
- A zero-revenue-but-growing-operation-cost is a dead end business. What business would spend for something that it’s not earning from? Even the free umobile service gets to drop a ton of ads to your phone in order to survive.
- Telcos charge each other for interconnection. If everything is free but the charges remain, the smaller telcos would end up paying gazillions to the bigger telcos.
- SMS will eat up a portion of the cellular voice revenues — why call when you can text for free?
If SMS becomes free, the telcos would eventually stop improving network capacity and everyone will suffer the Sun Cellular effect.
So how about a middle ground?
- On average, only less than 10% of a telco’s subscriber base are post-paid. Most are in prepaid. How about putting in place a flat-rate unlimited SMS service to those in post-paid plans? This is good for consumer-loyalty and the additional traffic to the network is minimal so it’s a win-win.
- Time-based charging. Telcos will charge the normal rate during peak hours and offer it free during off peak hours. Of course, telcos should not charge each other the interconnection fees during off peak hours to level the playing field.
- Number-coding scheme. MMDA did that with road traffic, maybe we can also do the same with SMS traffic? Everybody gets a day free SMS depending on the ending of their phone number.
Whether SMS rates go down or not, total SMS traffic volume will still increase nationwide. It has been like that for the last 10 years. In fact, I think the rates have relatively gone down — what with those all-day text promo and bulk pricing offers.