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A key advantage of Voice SMS in emerging markets is that subscribers don’t have to know how to read or write to use it. Even for subscribers in developing markets who can read and write, text messaging is somewhat limited because it’s only available in mainstream alphabets and languages. If a subscriber’s language isn’t supported, Voice SMS provides a solid messaging alternative. The technology also has obvious benefits for the visually impaired, who can use it as an alterative to text messaging as well.

One of the most common uses for voice SMS is in the car. Users can leave a personal message much more safely than trying to key in a text message while driving downtown in peak rush hour traffic.

A global view
Text messaging has experienced phenomenal growth in the past few years. SMS messages sent worldwide will jump from more than 900 billion in 2005 to over 2 trillion in 2008, according to industry analyst firm Research and Markets. Revenues for all of those messages could reach $72 billion by 2010, according to Gartner. New forms of SMS communication including voice and video will experience rapid growth in the next few years. These represent new technologies that typically attract younger, tech-savvy subscribers. They also satisfy increasing subscriber demand for more personalization options.

As has been the case for many new mobile technologies, Asia was the pioneer for VoiceSMS, with Malaysian mobile services provider DiGi launching its BubbleTalk service in January of 2005. There are currently about 30 operators offering voice SMS around the world. That number keeps growing as operators tend to launch voice SMS defensively once a competitor has beat them to it.

The overall market potential is huge. One reason for the anticipated growth is that most of the world’s 2.1 billion mobile phones are capable of handling voice SMS with no handset upgrades or network infrastructure changes.

And that’s a crucial point for any new mobile service. Those that are most successful won’t force operators to spend millions of dollars to upgrade their networks. They won’t force subscribers to buy a new phone. And they won’t have complicated downloads.

Cost counts
Successful new services all have revenue models that work. And they all start with the premise that the price an operator charges for a service is completely arbitrary. Why? The incremental costs of providing any service on a network that isn’t fully loaded (i.e., during peak traffic periods) are zero. The network is running 24 hours a day, even at 3 a.m. when there’s hardly any traffic on it. It’s lost opportunity for revenue much as empty seats on a plane that has taken off do not bring any additional revenue to the airline.

Every network has a busy period lasting from 30 minutes to several hours. For most networks, it occurs in the afternoon. That’s the only time when operators experience any significant costs. In essence, pricing is independent of the costs, at least on your own network.

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