The wireless industry was built on voice communications, but increasingly consumers are texting almost as much as they’re talking, and they’re not doing this because they’re afraid of going over on their minutes. The trend toward using thumbs instead of vocal chords is causing a shake-up in both messaging innovation and the way carriers view voice and data pricing.
Nielsen tracked more than 60,000 wireless bills from the first quarter of 2009 to first quarter of 2010. During that time, the average number of voice minutes used per wireless customer has declined gradually from 742 to 709 minutes per month, while the average number of billed messages increased sharply over the same time period, from 493 monthly texts to 675.
Flat voice usage paired with exponential growth of SMS and other messaging technologies, as well as the emergence of data-driven services like VoIP over 3G, are giving rise to an upheaval in not only the way consumers communicate but also the way they pay for our wireless services. Here’s a look at how one of the best deals in the wireless industry is driving innovation and getting cheaper by the day.
TEXTING IS CHEAP
There’s been a lot of talk recently that texting is grossly over priced given that it costs carriers next to nothing to send a text. Wisconsin Senator Herb Kohl was so incensed that he launched a congressional inquiry into how carriers were setting prices for text messages, implying allegations of price fixing.
In a blog post on Nielsen Wire, Roger Entner, senior vice president of research and insights for Nielsen’s Telecom Practice division, says that texting in the United States is incredibly cheap compared to other parts of the world and only getting cheaper.
Entner compares texting to the newspaper and magazine market. He likens paying per text to buying a copy of The Wall Street Journal for $2 every day. That can get expensive. But if you subscribe to the Journal for a year and pay $119, you’re seeing an 80 percent savings. The same is true for bucket plans, and as users text more, the price of each text actually drops.
Apparently, American teenagers are getting the best bang for their buck. According to Nielsen, teens (aged 13-17) in the United States send 3,146 messages a month. Those under the age of 12 were sending about half that, at 1,146 messages per month.
When asked whether the teen segment’s penchant for texting will drive voice even further into the ground as they grow into adults, Entner says he expects voice usage to stay right around where it is. “There’s no replacing voice once you enter the business world,” Entner says. “They’ll be forced to start talking as they enter the workforce.”
TXT 4 FREE
If you’re not buying Entner’s conclusion that texting is indeed cheap, then Pinger hopes you’ll believe that absolutely free is as cheap as it gets. Pinger’s app, TextFree for the iPhone, allows users to text all they want for nothing. The idea is simple: Text all you want in an ad-supported client, with a unique phone number provided by Pinger; and call it your texting number.
Greg Woock, co-founder and CEO of Pinger, says the number of advertisements that TextFree serves up has allowed the company to offer the app, which originally sold for $5.99, for free. Woock says Pinger plans on adding free voice, using VoIP, later this summer.
As for his views on voice, he says it’s becoming a secondary feature for wireless customers. “We’re actually calling the new app, TextFree with voice, because the emphasis is really on texting,” he says, adding that the strength of the ad-supported model set up for TextFree will allow it to offer truly free voice.
Woock says that pretty much every day is a record-setting day for both the number of texts send through Pinger’s system and the number of ads the company serves. “Right now, we’re approaching almost a billion ads served per month. On a daily basis, we’re serving around 32 million ads served, but that number is going up daily. Literally every single day is a record day in messages and ads served,” he says.
THE UNIQUE PEEK
In the beginning, there were phones that did only voice. Slowly, texting became a core feature for any cell phone, given that you were willing to pay for it. Today, that scenario is happening in reverse, with messaging- and social-centric phones that are marketed toward teens whose main focus is thumb-based communications. But what about a phone that eliminates voice altogether?
Enter the Peek Classic and Peek Pronto, BlackBerry-style devices that feature a full qwerty keyboard, a color display and little else. The Classic, which sells for $19.95, can only handle e-mail, while the Pronto, which sells for $59.95, can handle e-mail and SMS. They’re examples of an extreme business case, but the company’s survival over the past couple years is a testament to the power of messaging, whether it be e-mail, IM or SMS, on a mobile device. Originally marketed toward the consumer set, Peek seems to be finding a niche as a device for small businesses.
“It’s ideal for small and medium business that don’t want to pay to outfit all of those frontline employees with a smartphone,” says Peek CEO Amol Sarva, adding that messaging by itself is less of a distraction for workers and can lead to higher productivity.
The devices get their connectivity through T-Mobile. Users can purchase monthly unlimited rate plans at $19.95, with incentives for buying up front in quarterly or yearly installments.
Sarva says the Peek devices have been big with hotels, where housekeeping, maintenance staff, front desk and management can share detailed information among their team. He also says that the European market could be a boon for the company going forward due to roaming charges unique to those markets.
“The value proposition varies for different markets, and Pan-European roaming is one of the real pain points for business users. One day of roaming across Europe, when you get say 50 e-mails, would cost you 20 or 30 Euro. So the Peek service is 12 euros for unlimited use across the whole market.”
Peek operates on Spotnik, the Pan-European roaming network, and Aircel in India.
The devices will be getting an added boost of functionality in the form of Google Voice. While users won’t be able to actually receive or place a call, callers will be able to leave voicemails for Peek users.
VIDEO’s NOT KILLING THE SMS STAR
CTIA estimates that more than 1.2 trillion text messages were sent or received in 2009. ABI expects that messaging services will drive revenues across all mobile messaging categories, generating global revenues of $177 billion by 2013. Numbers like those are made by consumers latching onto a valuable service and using it a lot. While video calling may be all the rage right now, the little old SMS is still the king of the hill when it comes to simplicity, ease-of-use and reach.
In Iran, texting nearly started a revolution, and in the United States, it has elected the next pop star on American Idol. Either way, it’s a pretty amazing feat for 140 characters.
