By not offering messaging services to prepaid subscribers as standard, Cingular Wireless is seeking to encourage customers to adopt postpaid services and to sign one or two year contracts. If prepaid subscribers can be encouraged to migrate to postpaid, revenue will be secured for a period of time and the company will be rewarded with a more stable subscriber base. Cingular Wireless also hopes that encouraging the adoption of postpaid services will lead to an increase in average ARPU. While there is logic behind this strategy, Cingular Wireless is missing out on revenue that it could otherwise be attracting. Almost 20% of Cingular Wireless' customers use prepaid and if they were all able to use SMS as a default service, Cingular Wireless would see its messaging traffic increase. By restricting prepaid SMS Cingular Wireless is reducing subscriber take-up of SMS.
Like the other major US operators, Cingular Wireless is mindful of the potential of messaging and is seeking to educate its subscribers. Messaging services are promoted on the company's homepage on its website and within the messaging section there are clear instructions as to how to set up and use the services, as well as links to the websites of various handset manufacturers where further details can be found.
By offering picture messaging, Cingular Wireless is keeping pace with the other big players in the USA. Its strategy of bringing MMS to market is its next step and will reinforce its network services and should boost network traffic, which stood at over 1.6 billion SMS in 2002. Traffic trebled over the course of the year 2002, from 200 million messages in the first quarter to 600 million messages in the final three months of the year. This steady increase was undoubtedly aided by the introduction of interoperability in Q1 2002.
Over the course of 2002 revenues derived from SMS increased by 257%. Cingular Wireless has confirmed to EMC, however, that data revenues (of which SMS represents the major part) contributed less than USD 1 to subscriber ARPU in Q4 2002, meaning that data revenues accounted for approximately 1.9% of total revenues for the period. With the continued promotion of its messaging portfolio, both on the consumer and the corporate side, Cingular Wireless is looking to increase its messaging traffic, which will in turn lead to an increase in data revenues.
EMC World Cellular Data Metrics tracks SMS traffic data, MMSC contract awards, launch status and tariffs among other mobile data indicators including MMS traffic for key operators worldwide.
For more information on EMC World Cellular Data Metrics see http://www.emc-database.com
