Telenor Norway finding needs to be placed into context

By Pamela Clark-Dickson

In Telenor Norway’s recent announcement about the changes to the way in which it offers mobile phone plans, the mobile operator referred to internal research it recently conducted, where it canvassed 3,000 mobile users about their mobile communications requirements. The research was carried out in order to tailor the two new bundled price plans that Telenor Norway will introduce on Apr. 11, 2011: Komplett and Prat.

One of the findings of the research was that, for the first time in Norwegian history, according to Telenor, mobile users are saying that surfing the Internet using a mobile phone is more important to them than sending SMSs. Unexamined, that statement may send more than a few mobile operators into a tailspin, not to mention other companies working in the mobile messaging value chain.

However, I don’t think that this finding should be cause for panic. For a start, Telenor Norway has not revealed any further information about the methodology of the survey, so it’s unclear whether the sample was broadly representative of the mobile operator’s subscriber base – although it is likely for the sake of credibility that it was broadly representative – nor were the actual questions disclosed.

Beyond questions about the methodology, it should be noted that Telenor Norway is one of the few operators that reported a decline in SMS traffic year-on-year over the Christmas-New Year period – others included Sweden’s Tele2 and 3 and the Philippines Globe Telecom. The operators attributed the decline to the growing use of mobile social networking, which would fit in with the survey finding. Interestingly, however, Telia and Telenor Sweden both saw a small increase year-on-year in their SMS traffic over Christmas-New Year, indicating that any substitution of mobile social networking for SMS still falls a long way short of being a trend.

Another data point worth noting is that SMS traffic for Telenor Norway and Sweden’s Tele2 and 3 also declined year-on-year in 3Q10, which is the latest quarter for which Informa Telecoms & Media’s World Cellular Data Metrics has data. It was a similar picture for a number of other operators in the Nordics and Scandinavia, with the exception of 3 Denmark which saw its SMS traffic increase 49.7% year-on-year.

But in other countries in Western Europe – and indeed for two-thirds of the 269 mobile operators in 121 countries in seven regions tracked by Informa in 3Q10 – SMS traffic growth continued at varying rates. Operators in France, Germany, the UK, Austria and the Netherlands all saw SMS traffic grow in excess of 20% year-on-year, indicating that SMS remains an essential, well-used and in-demand service for mobile subscribers in developed markets in Western Europe, as it is in other regions.

The fact that SMS is a universal and standard service on mobile devices may in fact have influenced the responses of the participants in Telenor Norway’s survey, in that mobile users expect that they will be able to access voice and SMS on any device that they purchase, and therefore they may tend to discount the ability to send SMS as a decision factor. But subscribers cannot assume that they will be able to access the Internet on every device that is on sale from an operator, which is why they might give a higher importance to being able to surf the mobile web on the device they are seeking to purchase.

The finding that survey participants believe being able to use the Internet on their devices is more important than being able to send SMS has not prevented Telenor from including SMS and MMS in its Komplett package, including its FriFamilie unlimited voice, SMS and MMS offer for family members. The mobile operator has also stated that it will use SMS as well as the Internet and e-mail to communicate the new plans to its customers.

Meanwhile, Informa Telecoms & Media forecasts that SMS traffic will grow at a compound annual growth rate (CAGR) of 11.8% between 2009 and 2015, reaching 8.1 trillion events by 2015, though its share of total messaging traffic will fall from 71% of total traffic in 2010 to 45% in 2015. Similarly SMS revenues will increase at a CAGR of 5.4% over the forecast period, reaching US$136.9 billion by 2015, but SMS’ share of total messaging revenues will fall from 80.8% in 2010 to 68% in 2015.