Death of SMS greatly exaggerated

by Candice Jones, TechCentral

In the early days of mobile technology, the short message service, better known as SMS, became a global phenomenon as consumers, against all predictions, took up the service with vigour.

The first SMS services were established in 1993, but the technology only really took off in the late 1990s. Now, trillions of text messages fly across the world’s mobile networks every year.

In Africa, free online messaging services sprung up like weeds and operators started to include SMS packages for pre- and post-paid offerings. SA operators are still collectively raking in billions of rand in revenue from texting.

However, those billions have started to decline in recent years. Operators and analysts say new data services and instant-messaging (IM) products are the reason. IM applications like BlackBerry Messenger have become a preferred way for many consumers to interact using text.

World Wide Worx MD Arthur Goldstruck says his research shows that between 2009 and 2010 SMS spend by SA consumers dropped from 16% of their total monthly bills to 12%. That, he says, is the “most dramatic drop we have seen to date in the amount customers spend on SMS”, he says.

During the same period, World Wide Worx’s research shows average data spend increased from 5% to 8% of their bills. “This is a strong indicator that data is taking over from SMS,” he says.

Goldstuck says the popularity of smartphones is the reason for the shift. “Services like IM cost a fraction of a cent [per message], and other services like BlackBerry Messenger cost nothing,” says Goldstuck.

He says mobile operators have long inflated the price of SMS, with the cost of texting still as high as 80c/message on some networks and tariff plans.

Premium SMS services used for competitions and polling are even more expensive. “[Telkom’s] 8ta was the only operator to realise that it could play with SMS when it launched with its 50 free SMSes for every five sent. It showed the true cost of SMS to the operators,” he says.

Other providers have yet to match 8ta’s service and Goldstuck says it’s a clear sign that the “chickens have come home to roost for operators over the cost of SMS”. Although SMS revenues are declining, Goldstuck says the service will have a “long tail” and will be used in certain contexts for years to come.

Pieter Streicher, MD of BulkSMS.com, agrees that SMS revenues are declining. However, he says it’s not because of cheap data-based IM applications.

Rather, he says the decline is due to mobile operators including more free SMSes in bundles and other promotional packages. “Take, for example, the MXit service. It has been around for seven years and that hasn’t resulted in a decrease of the number of SMSes,” he says.

MTN and Vodacom’s most recent financial results presentations both show a marginal increase in the number of SMSes sent, even though there has been a decrease in the revenues generated.

The International Telecommunication Union also doesn’t believe there is a dire future for SMS, predicting that by 2013 the number of text messages that will be sent worldwide will climb to 10 trillion a year.

Streicher says SMS is “inelastic”, unlike voice. “If prices go up or down, you don’t see an increase or a decrease in its use.”

IM will not kill SMS because the technology is too fragmented, he adds. “For SMS, all you need to know is the recipient’s telephone number and not whether the person is online or what services they are using.”

He says customers using IM also have to download applications before they can use the services and at least 27% of smartphone users worldiwde have never downloaded an app. “With SMS, it’s already ready and available when you receive the phone,” he says.

He also points to the increased use of SMS by business. “Companies won’t use instant messaging to send commercial messages. SMS will always be entrenched in this environment,” Streicher says.

Cloud Computing Definitions – SaaS – PaaS – IaaS

By Michael Hanson

Marketing isn’t just about branding, creative, etc. – marketing accounts for the rise in global technology usage and stands poised to embrace the “Cloud”. The Cloud is a virtual environment that precludes the purchase of servers and other technology components to deploy websites, social media sites, etc. Amazon, Rackspace, Microsoft and Google have offerings in this space and there are three acronyms that marketers need to understand when deploying future marketing strategies – no matter which vendor you utilize. The three most typical deployment models are:

SaaS – Software As A Service. Pronounced “SASS”. Simplest deployment method which allows software to be tapped from a cloud computing resource rather than relying on software installations and implementations.

PaaS – Platform As A Service. Pronounced “PASS”. Intermediate deployment that steps away from simply renting applications from the cloud by leveraging the cloud as an operating system (platform). This also eliminates expensive network upkeep as most service providers provide routine maintenance and upgrades as a part of their SLA (service level offering).

IaaS – Infrastructure As A Service. Pronounced “I-AS”. The holy grail of cloud computing! You access / rent everything from the cloud … this means servers, storage space, routers, and other hardware, networking capabilities, operating systems, and applications. This allows for the ultimate degree of scaling as your projects (and customers) dictate.

Real World Social Media – The Power of Networking

by Michael Hanson on his Uncommon Perceptions blog

I’ve spent the past 2 years and 9 months working diligently on an AACSB accredited MBA at the University of St. Thomas in Minneapolis, MN. The university requires successful completion of 17 classes, 2,200 hours of class time and a LOT of group projects of their MBA candidates – whether you attend full or part-time. My decision to attend St. Thomas was made for a variety of reasons (including their AACSB accreditation) but as I look back on the past 3 years or so – one criterion stands above the rest … the people.

The power of social media has enamored both marketing and sales organizations over the past few years. In fact, when I began my MBA coursework, Facebook was still a “college” thing rather than the behemoth it is today. Twitter was called Twttr. And the iPad didn’t exist.

Social media’s influence and impact continues to grow and to be debated but will surely be with us in the near term. However, we must not forget the power of being social in the real world.

The true power of social networking exists in real life as it has for generations. The ability to hold a conversation, to emote, to share and to laugh (without the use of LOL or emoticons) will quickly become a lost art form if we forget the most important aspect of our day-to-day the lives … the people we interact with, cherish, work with, or even dislike. No amount of Facebook likes or posts, Twitter Feeds, Apps, Texts, etc. can replace real world communication and networking. They can enhance or compliment the experience as any technological innovation should do.

While I’ve learned a great deal about marketing, statistics, decision-making, strategy, and yes, even social media during my pursuit of an MBA … as I reflect on my experiences it becomes readily apparent that no amount of technology or innovation replaces the fundamental power of being social – IRL.

(that’s Twitspeak or SMS for In Real Life)

HTC Sensation, Flyer headed to SA

HTC, the Taiwanese handset manufacturer that recently overtook Nokia in terms of market value, is bringing a host of new Android smartphones to SA as it seeks to capitalise on its rapid international growth.

The company has announced it will introduce the HTC Sensation, a 4,3-inch, dual-core smartphone — seen a direct rival to Apple’s popular iPhone product — in June. The Sensation will be available exclusively through Vodacom during the launch phase and, according to HTC’s localy distributor, Leaf Wireless, will cost about R5 300 out of contract.

The Sensation, which TechCentral had the opportunity to take through its paces at Thursday’s launch event, features a dual-core 1,2GHz Snapdragon processor and an 8-megapixel camera that can shoot high-definition video at 1080p resolution. It runs the Android 2.3 operating system from Google.

HTC has also announced that its new tablet computer, the Flyer, will go on sale in SA in the next few weeks. The 420g Flyer, a 7-inch Android tablet, will be available through all local network providers. The tablet market is hotting up, with Apple, Samsung and Lenovo, among others, all take the wraps off new products in recent months.

Of interest to the youth market, HTC has also said it will introduce the ChaCha and Salsa handsets in SA. Both phones feature a dedicated Facebook button for one-touch access to popular social network used by more than 600m people worldwide. Both phones run Android 2.3.

Other devices HTC is bringing to SA are the Desire S, the Wildfire S and the Incredible S — all upgrades to existing products.

Staff reporter, TechCentral

Telkom and Neotel do battle over local loop

By Candice Jones, TechCentral

Neotel has filed a complaint against Telkom at Icasa

Neotel has fired the first salvo in what could quickly become a ferocious battle over access to Telkom’s copper cable network. TechCentral can reveal exclusively that Neotel has filed a complaint with the Independent Communications Authority of SA (Icasa) against its rival, asking the authority to give it access to the fixed-line incumbent’s local loop.

In a submission to Icasa, dated 23 March, and which includes copies of full correspondence between the two operators, Neotel has set out the reasons it believes it should be given immediate access to Telkom’s “last-mile” infrastructure of copper cables into businesses and residential homes.

A lot is riding on the outcome of Neotel’s submission because it could mean the difference between local-loop unbundling taking place in 2011 and a lengthy, drawn-out process that could take years.

The telecommunications industry has been awaiting Neotel’s complaint to Icasa with bated breath as it represents a litmus test for using facilities-leasing regulations as a way of achieving local-loop unbundling. It’s believed Icasa will use the complaint to force unbundling to happen in the short term, instead of having first to go through a process of developing detailed regulations to manage the process.

Icasa dropped a bombshell on the industry last year when it said Telkom’s copper infrastructure represented an “essential facility”, meaning its competitors could request access, using regulations that were published in 2010.

Essential facilities include any telecoms infrastructure that is required to provide services to customers. Undersea cables and the local loop are specifically mentioned in the Electronic Communications Act, which governs the sector.

In many markets, incumbent operators like Telkom have used their control of this infrastructure to squeeze out competition by charging high prices for access.

Icasa’s facilities-leasing regulations are meant to prevent abuse by dominant players.

Communications minister Roy Padayachie wants the local loop unbundled by November, and if Neotel’s complaint is upheld by Icasa, the process can begin in earnest.

Neotel was always the most likely candidate to test Icasa’s facilities-leasing theory, and it first made a request to Telkom to access the local loop in November 2010.

Telkom's Andrew Barendse has rejected Neotel's request

According to Neotel’s complaint, it has requested that Telkom give it access to two telephone exchanges, one in Benmore Gardens in Sandton and the other in Rosebank, Johannesburg. Within these exchanges, Neotel has requested that certain aspects of the local loop be made available to it, including termination equipment, the main and handover distribution frames, and tie circuits.

It has also requested that Telkom make space in the exchanges for Neotel’s own equipment racks, either in cages or in a separate room. It wants to connect to its own fibre infrastructure located outside the exchanges.

Neotel made the request in terms of processes stipulated in the facilities-leasing regulations.

Telkom, however, appears to be steeling itself for a fight. It has clearly stated that it does not agree that facilities leasing is a means for other companies to gain access to the local loop and has declined Neotel’s request.

In a letter signed by Telkom’s wholesale account manager, Johan Botha, the operator argues that local-loop unbundling is “still enjoying the attention of the regulator, but is some way from being finalised”. He adds that Neotel is acting prematurely in requesting access to the infrastructure.

Neotel made a second and third request to Telkom in December and January, pointing out that the facilities-leasing regulations cover the local loop and that fuller local-loop unbundling regulations are not required.

However, Telkom isn’t relenting. In correspondence to Neotel, it insists that the access its rival is requesting falls under local-loop unbundling, not under facilities leasing.

“The entire purported request for the lease of copper last-mile facilities is a frivolous attempt on the part of Neotel to impress upon Telkom a convoluted interpretation of the facilities-leasing regulations in a manner that gives credence to the erroneous belief that facilities-leasing regulations contemplate the instigation of a regulatory process culminating in the unbundling of the local loop.”

Telkom has long argued with Icasa about the classification of the local loop as an essential facility and pushed the same argument in its responses to Neotel. Its understanding of the legal definition of an essential facility is a facility that “cannot feasibly be substituted”. However, Telkom maintains that the mobile operators have created a substitute, which it calls the “wireless local loop”.

The operator has also slammed Neotel for “persisting in formulating speculative requests which are clearly beyond the contemplation of the applicable regulatory dispensation”.

Icasa has previously indicated to TechCentral that it will apply its mind to Telkom’s argument that the local loop is not an essential telecoms facility.

In a last ditch attempt to get Telkom to reconsider, Neotel sent a letter to Telkom’s group executive for regulatory affairs, Andrew Barendse, on 2 March. “Having exhausted all available means to resolve this request amicably, Neotel offers Telkom one final opportunity to respond favourably to our facilities lease request within the next five working days, failing which Neotel will have no alternative but to refer the matter to the regulator.”

Barendse declined the request two days later, prompting Neotel to file its complaint late last month. An Icasa spokesman was not immediately available for comment. However, it is likely the authority’s complaints and compliance committee will hear the case.

EOH’s Bohbot downplays telecoms threat

by Duncan McLeod, TechCentral

Asher Bohbot, CEO of fast-growing JSE-listed IT group EOH, has downplayed the potential threat posed by telecommunications operators wanting to muscle into the business technology services market.

As convergence between traditional IT services and telecoms gathers pace, telephone companies are keen to expand their portfolios in the business IT services market.

This was evidenced a few years ago when Telkom tried (and failed) to buy Business Connexion. Since then, companies such as Vodacom and MTN have launched business divisions aimed at serving the corporate market with converged solutions.

But Bohbot says telecoms operators will struggle to move up the value chain and begin providing advanced IT services to corporate SA, especially in applications and middleware.

He says they will enjoy some success in the small and medium enterprise market, but will struggle to break into the corporate IT services space.

“One mustn’t underestimate them, but where they come from they have a consumer and connectivity mindset.”

Bohbot says over time operators may be able to build IT services businesses, but “we don’t see them as competition for now”.

“Operators that acquire IT services companies will take a battering,” he predicts. “It’s just a different business. It would be like me buying a meat company. Would we enhance their value? Probably not.”

He admits that cash-flush telecoms operators could easily afford to buy IT services companies — EOH’s market capitalisation is R1,6bn against MTN’s R255bn and Vodacom’s R115bn. “But what happens the morning after? By the time a transaction takes place, there will be nothing left.”

Bohbot describes operators as “process and technology businesses” and IT services companies as “people businesses”.

“EOH looks like a technology business, but we’re actually a people business. That gives us protection against a hostile takeover. I don’t mind it happening to our competitors because it would be more an advantage to us that a threat.”

IT services is a “complex” field, and “becoming more so”, Bohbot says. “It’s not a field that telecoms companies understand.”

As more IT services are delivered in the “cloud” (through online and centrally managed data centres), the line between technology services companies and operators is beginning to blur.

EOH has invested in its own network and data centres, and has established facilities at data centre operator Teraco. But Bohbot says this is not EOH’s core focus.