One afternoon spent watching teenagers beam short text messages to one another's cell phones in a Helsinki park is enough to convince even the most cynical observer that wireless technology has transformed the way we communicate.
Now Europe's mobile operators are hoping to turn a fad into a cash cow with a new SMS (short message service), or person-to-person messaging, format: so-called pull marketing, where customers request specific information through their phones and are willing to pay for it.
So far, aside from sending and receiving individual messages, SMS has 'pushed' information such as sports scores, stock quotes and weather. Customers sign up for the alerts they are interested in at a mobile portal; the alerts either come free with an obligatory ad or are paid for by credit card. Operators make money each time the portal company sends an SMS message.
The problem with push technology, mobile operators and content providers say, is that it's all one-way traffic. "Pushing is no big deal — pulling is the future," says Stanislas Chesnais, chairman and chief operating officer of Netsize, a French dotcom startup that offers SMS technology to link content providers and mobile operators.
Here's how pull works: imagine you'd like to see the movie Shrek. With a pull service, the theatre operates two mobile phone numbers that mobile users can call to send text messages — one for show times and one for film reviews. You send the message 'Shrek' to the first number and receive the show times for the day via SMS. This costs 30 euro cents.
Then, wanting to learn more about the film, you send another message saying 'Shrek' to the second number and receive a short review of the film. The charges show up on your mobile phone bill; the operator and the movie theatre get a cut.
SMS can be used to deliver any kind of content or service adapted to the text format, including price-comparison services, real-time traffic information and financial news. But users could also send SMS messages to certain numbers to purchase digital music downloads, ring tones and personalised phone logos.
But SMS, and pull marketing in particular, is hardly the answer to Europe's severe wireless headache. Just a couple of years ago, a similar form of pull marketing for the web was poised to turn the world of advertising on its head. That revolution never materialised.
Then there are the long-term prospects of SMS to consider. SMS traffic contributes 10 to 12 percent of European mobile revenues, with the highest usage in Scandinavia and the lowest in France.
The use of SMS information services will increase until 2003, when revenues from the services will top £61.6m. But by 2004, revenues will begin to drop off, according to research company IDC, levelling out at just over £45.5m in 2005. That's when graphic-rich third-generation phone services are expected to usurp their text-based predecessors.
In the meantime, person-to-person messaging will account for the lion's share of SMS revenue, says IDC. Maybe the world is full of silly love notes. And, mobile operators want to know, what's wrong with that?
IDC is a company in the IDG group, as is PC Advisor.