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June 05, 2008

Jumping on the Free SMS Bandwagon

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.

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17 Responses to “Jumping on the Free SMS Bandwagon”

  1. jaJa says:

    Number-coding scheme –> it is virtually impossible to implement promos based on mobile number endings as subscriber number series are arranged by start of number. It is not feasible still as it would create a sudden surge in traffic for subscribers with specific number series thus congesting network equipment creating bottlenecks.This can be compared to congestion problems when noontime shows launched promos where free load codes are flashed on tv. The sudden surge of traffic from subscribers trying to load created congestion during noontime.

  2. spidamang says:

    RE: number coding scheme

    People will just get more sim cards IMHO. :D

  3. deuts
    Twitter: deuts
    says:

    Will this free SMS prevent people from sending messages like this:?

    Greetings. Need cash? We offer U a NO COLLATERAL CASHLOAN fr 10K-500k 4 as LOW as 1.2%/mo. If interested, pls call MS. MAE ANN @ 02-4433253/4450695/09052959888.TNX

    Definitely not. As a matter of fact it will be the other way around. And I’m getting pissed by them. They start to ruin my day.

    So for me, I’d rather have the telcos trash the free 24/hr SMS promos and better increase the SMS rate to at least double that of today.

  4. @ deuts – I agree!

    I’d rather pay for SMS than have a callous thumb trying to delete every ad that’ll find it’s way to my cellphone…

  5. Yoru says:

    … or perhaps they could lift/extend the expiration of the airtime/sms credits :)

    But honestly, I don’t really find SMS rates THAT taxing compared to the basic commodities we need to buy.

  6. katexter says:

    Just a heads-up (and shameless plug na rin)…

    Our site offers free sms to members in a social network environment. We’re still working on features such as keyword forwarding, and phonebook uploading, so please bear with us.

  7. Jan Alvin says:

    Politicians are not thinking really hard of what would their actions will make.

  8. while I support moves to at lower domestic SMS rates, the government should also look into ordering telcos to lower international SMS rates. the average standard rates of globe, smart, sun for prepaid and postpaid accounts are one of the highest in the region. i suspect that the telcos charge a lot for international SMS to cash in on the many Filipinos who have family and friends abroad.
    if you want to see a comparative list of international sms rates in the region please see my post: http://ciudadista.wordpress.com/2008/06/01/government-should-also-lower-international-sms-charges/

  9. deuts
    Twitter: deuts
    says:

    @ la ciudadista

    I agree to you. I have been an OFW once. That is one thing our politicians should focus their energy instead.

  10. jhay says:

    All this talk about SMS being for free again is just a PR gimmick of the Arroyo administration to boost its image. They only have less than 2 years in office so it’s time to secure that graceful and safe exit.

    What they should look into is dismal state of customer service the telcos provide us customers. And lastly, the quality of their services.

  11. Wow, look how I’m disconnected with the Philippines News… I rely on Television so much for news stuff and I haven’t watched TV for a month already!

    PGMA planning to make SMS free-of-charge? DISASTER.

    What Madame President should and must do is to force these telcos to give us the technology that’s been there in-place for years. See, these telcos install and buy technologies and just implement these slowly. It is happening also in Malaysia, and this is outright deprivation.

    And concentrate on getting the Asean Charter approved by the Philippine Government before making SMS free-of-charge :/

    I wouldn’t mind paying for useful services than make it free-of-charge and suffer setbacks in the long-run.

  12. joseph says:

    There must be something fishy when the government suddenly thought of making texting free and consumer welfare in general. First, it was the plan to take over Meralco supposedly to lower down power rates. Next was to freeze the tuition fee hike on SCUs. Then, there was the government subsidy on farmers. Then free texts? The government just wants to take away people’
    s attention with ZTE, rising rice and fuel costs,etc.

  13. akira says:

    free sms will not be implemented anymore. but they’ll make text messaging about 60-65 centavos.read it in the inquirer

  14. Bigbird says:

    Poor Filipinos Blind for what truly is happening. Have you seen the congress hearing about this? Its like a circus full of clowns. If they really what it for free. Sana right from the start free na sya. Well a portion of it goes to the corrupt gov officials. The main reason why they dont want to lower the tax and targeting that interconnection charges to put the blame on the telcos. From business point of view its like the telco’s are printing their own money. 1SMS = PHP 1 ang baba ng value ng peso. Telco should also moderate their greed.

    http://www.gmanews.tv/story/98742/NTC-telecom-firms-to-discuss-lower-SMS-rates

  15. Steve Bumgarderner says:

    Say, does anyone know how to send an SMS text message from a PC via email to a cellphone whose provider is Globe Telecom? The email address that goes in the “To” box should be something like, “phonenumber@messaging.globetel.com”.
    Any input would be appreciated! Thanks.

  16. ProfessorX says:

    We have options.

    My whole family (wife-me-kid) is subscribed postpaid to SUN (unlimited sun calls, unlimited sun texts, free 250 texts to other networks). Most of our relatives have SUN cells, too. We are satisfied with the service and we pay only P350 monthly each plus phones are free. We also get new fones every 2 years. My monthly average sun-to-sun call is 200 minutes.

  17. Negosyotext
    Twitter: negosyotext
    says:

    You can send unlimited SMS for free with Negosyotext.com. You can send to smart, globe, sun, talk and text and TM

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