Commander Taggart
01-23-2008, 02:52 PM
http://news.yahoo.com/s/ibd/20080122/bs_ibd_ibd/20080122tech01
Txtspk Rise GR8 Hope For Carriers
Reinhardt Krause Tue Jan 22, 5:45 PM ET
Many mobile phone users know what this means: R8s r goin ^.
Yes, rates are going up, as wireless phone service providers have steadily hiked fees for sending text messages the past 12 months. Raising these fees has been a factor -- along with growth in music download services and in wireless data use overall -- in booming data revenue growth for wireless firms. And data growth is key for wireless firms as subscriber growth slows.
In January, Verizon Wireless raised the price of sending and receiving text messages to 20 cents per message from 15 cents.
Last year, AT&T (NYSE:T (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q?s=t) - News (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q/h?s=t)) and T-Mobile USA hiked their rates to 15 cents from 10 cents, and Sprint Nextel (NYSE:S (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q?s=s) - News (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q/h?s=s)) raised its fee to 20 cents per message from 15 cents.
Text messaging is booming. Nearly 80% of U.S. 18- to 24-year-olds use text messaging, says research firm In-Stat. Text messaging -- formally SMS, for short message service -- set records in 2007, says the Cellular Telecommunications & Internet Association trade group.
In voice services, wireless firms have successfully moved customers to costlier rate plans with bigger buckets of minutes. Wireless firms hope to do the same with messaging plans, says John White, an analyst at Portio Research.
"SMS has been a huge success in the U.S. the past two or three years," White said. "What they're doing is pushing up the price of a la carte text messaging while promoting their bundle deals. They're trying to push customers to a bundle deal."
The price hikes are a win-win for wireless firms, he says. Customers will sign up for messaging bundles or will pay the higher per-message fees.
"Maybe nobody has noticed," White added. "There are millions of thumbs clicking away, people banging away on text messages, and they're not noticing the extra $10 on monthly bills."
Text messaging takes up little bandwidth on wireless networks. The recent price hikes aren't being driven by higher operating costs, analysts say.
Text messaging, which took off in the U.S. around 2003, accounts for about 45% of all wireless data revenue, say market trackers.
The CTIA's latest survey showed that the U.S. wireless industry recorded 28.8 billion messages in June, up 130% over June 2006.
AT&T says that in the third quarter its wireless customers sent nearly 24 billion text messages, more than double the total in the year-earlier quarter.
Market research firms expect text messaging usage to keep rising. That's because text messaging is tied to other emerging phone services, such as Internet search. And wireless firms are eyeing voice-activated services that let users dictate text messages.
Wireless users may get a few hundred or unlimited messages depending on rate plans, which range in price from $5 to $25 a month. Per-message fees kick in if users go above their rate plan limits.
Wireless firms say the per-message price hikes are intended to drive more customers to bundled plans.
Verizon Wireless spokesman Jeffrey Nelson says the recent price hike to 20 cents per text message should speed up the move to bundles.
"This is a great opportunity for customers not already on a text bundle plan to do so," Nelson said. "Many texters are already taking advantage of unlimited texting to other (in-network Verizon customers) or other messaging packages."
Verizon's third-quarter wireless data sales jumped 63% to $1.96 billion. AT&T's wireless data sales climbed 64% to $1.8 billion.
At its analyst conference last month, AT&T said e-mail and text-messaging revenue were up more than 50% in 2007, says a Goldman Sachs report.
Wireless firms, though, are tight-lipped about actual messaging revenue. "That is not something we break out," said Mark Siegel, an AT&T spokesman, in an e-mail. "Needless to say, our data revenues, including text messaging, are growing exponentially quarter after quarter."
Sprint Nextel raised it per-message fee to 20 cents on Oct. 1. It was the first U.S. carrier to go that high.
Leigh Horner, a Sprint Nextel spokeswoman, said "casual" text messaging users pay as they go, but heavy users buy bundles at $10 and up. "We encourage our customers to go unlimited (buy a bundle) if they're heavy text users," she said.
Even before the October price hike, Sprint Nextel garnered the most per-subscriber data revenue among U.S. wireless firms. It gets almost 17% of monthly per-subscriber revenue from data services. In the third quarter, Sprint's average monthly data fees per user were more than $10.
T-Mobile says it has no plans to go to 20 cents, says spokeswoman Cara Walker.
Wireless firms also are benefiting from a boom in picture messaging. Users sent 2.6 billion picture and multimedia messages in the first half of 2007 -- as many as were sent in all of 2006, says the CTIA. Wireless firms generally charge both the sender and recipient of picture messages.
As text and multimedia messaging boom, ring tones, another source of data revenue for wireless firms, has leveled off, research firms say.
White says most wireless firms outside the U.S. have been lowering text messaging prices to encourage higher usage. He says wireless firms are also including text messaging in prepaid rate plans.
Portio Research says global text messaging revenue will hit $67 billion in '12 vs. $52.5 billion last year.
Txtspk Rise GR8 Hope For Carriers
Reinhardt Krause Tue Jan 22, 5:45 PM ET
Many mobile phone users know what this means: R8s r goin ^.
Yes, rates are going up, as wireless phone service providers have steadily hiked fees for sending text messages the past 12 months. Raising these fees has been a factor -- along with growth in music download services and in wireless data use overall -- in booming data revenue growth for wireless firms. And data growth is key for wireless firms as subscriber growth slows.
In January, Verizon Wireless raised the price of sending and receiving text messages to 20 cents per message from 15 cents.
Last year, AT&T (NYSE:T (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q?s=t) - News (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q/h?s=t)) and T-Mobile USA hiked their rates to 15 cents from 10 cents, and Sprint Nextel (NYSE:S (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q?s=s) - News (http://us.rd.yahoo.com/dailynews/finance/ibd/bs_ibd/storytext/20080122tech01/26021609/*http://finance.yahoo.com/q/h?s=s)) raised its fee to 20 cents per message from 15 cents.
Text messaging is booming. Nearly 80% of U.S. 18- to 24-year-olds use text messaging, says research firm In-Stat. Text messaging -- formally SMS, for short message service -- set records in 2007, says the Cellular Telecommunications & Internet Association trade group.
In voice services, wireless firms have successfully moved customers to costlier rate plans with bigger buckets of minutes. Wireless firms hope to do the same with messaging plans, says John White, an analyst at Portio Research.
"SMS has been a huge success in the U.S. the past two or three years," White said. "What they're doing is pushing up the price of a la carte text messaging while promoting their bundle deals. They're trying to push customers to a bundle deal."
The price hikes are a win-win for wireless firms, he says. Customers will sign up for messaging bundles or will pay the higher per-message fees.
"Maybe nobody has noticed," White added. "There are millions of thumbs clicking away, people banging away on text messages, and they're not noticing the extra $10 on monthly bills."
Text messaging takes up little bandwidth on wireless networks. The recent price hikes aren't being driven by higher operating costs, analysts say.
Text messaging, which took off in the U.S. around 2003, accounts for about 45% of all wireless data revenue, say market trackers.
The CTIA's latest survey showed that the U.S. wireless industry recorded 28.8 billion messages in June, up 130% over June 2006.
AT&T says that in the third quarter its wireless customers sent nearly 24 billion text messages, more than double the total in the year-earlier quarter.
Market research firms expect text messaging usage to keep rising. That's because text messaging is tied to other emerging phone services, such as Internet search. And wireless firms are eyeing voice-activated services that let users dictate text messages.
Wireless users may get a few hundred or unlimited messages depending on rate plans, which range in price from $5 to $25 a month. Per-message fees kick in if users go above their rate plan limits.
Wireless firms say the per-message price hikes are intended to drive more customers to bundled plans.
Verizon Wireless spokesman Jeffrey Nelson says the recent price hike to 20 cents per text message should speed up the move to bundles.
"This is a great opportunity for customers not already on a text bundle plan to do so," Nelson said. "Many texters are already taking advantage of unlimited texting to other (in-network Verizon customers) or other messaging packages."
Verizon's third-quarter wireless data sales jumped 63% to $1.96 billion. AT&T's wireless data sales climbed 64% to $1.8 billion.
At its analyst conference last month, AT&T said e-mail and text-messaging revenue were up more than 50% in 2007, says a Goldman Sachs report.
Wireless firms, though, are tight-lipped about actual messaging revenue. "That is not something we break out," said Mark Siegel, an AT&T spokesman, in an e-mail. "Needless to say, our data revenues, including text messaging, are growing exponentially quarter after quarter."
Sprint Nextel raised it per-message fee to 20 cents on Oct. 1. It was the first U.S. carrier to go that high.
Leigh Horner, a Sprint Nextel spokeswoman, said "casual" text messaging users pay as they go, but heavy users buy bundles at $10 and up. "We encourage our customers to go unlimited (buy a bundle) if they're heavy text users," she said.
Even before the October price hike, Sprint Nextel garnered the most per-subscriber data revenue among U.S. wireless firms. It gets almost 17% of monthly per-subscriber revenue from data services. In the third quarter, Sprint's average monthly data fees per user were more than $10.
T-Mobile says it has no plans to go to 20 cents, says spokeswoman Cara Walker.
Wireless firms also are benefiting from a boom in picture messaging. Users sent 2.6 billion picture and multimedia messages in the first half of 2007 -- as many as were sent in all of 2006, says the CTIA. Wireless firms generally charge both the sender and recipient of picture messages.
As text and multimedia messaging boom, ring tones, another source of data revenue for wireless firms, has leveled off, research firms say.
White says most wireless firms outside the U.S. have been lowering text messaging prices to encourage higher usage. He says wireless firms are also including text messaging in prepaid rate plans.
Portio Research says global text messaging revenue will hit $67 billion in '12 vs. $52.5 billion last year.