Bright future for SMS services

Cell phone owners who use short message services (SMS) to convey information may soon be using the wireless transmissions to make small payments, find the car of their dreams or participate in a TV survey. But while conventional text messaging has become popular for its affordability, the premium-price SMS service - needed to conduct more complex messaging procedures - costs three to 10 times more than regular service. Still, the prospect of higher costs has not deterred a number of companies from launching their own message-information services. In February, mojeauto.pl, an online auto dealer, started charging customers zł. 3 plus value added tax (VAT) per new car inquiry. Before launching the service, the Web dealer received 2,000 inquiries a month, of which only 120 led to sales. By charging customers for information, mojeauto.pl said the number of inquires has dropped to about 400 a month, although it still sells the same number of cars, according to Jacek Lisik, president of Internet Services, which operates the site. "Via this technique, we filter out those who just want to play from genuine clients who want to buy a car," Lisik said. As a result, mojeauto.pl saves time and money while mobile operators cash in on their premium SMS service.

"We are a pure medium, just like the post office," said Leszek Kamiński, spokesman for Polkomtel's Plus GSM, one of Poland's three mobile operators. On the back of mojeauto.pl's initial success, Lisik now plans to charge customers for used-car inquiries. "No better system has been developed for micro payments," he said. "I don't see any competition (for SMS-based payments). Credit cards haven't become popular tools for small payments." Short message service also promises to be the preferred method for buying from vending machines, paying for gas and parking, according to Plus GSM's Kamiński. For the time being, though, the market for SMS information services is still small. The three mobile operators refused to reveal their revenue from premium SMS service, but Jacek Kalinowski, spokesman for PTK Centertel, said turnover from the product accounted for about 10% of the company's entire revenue from the text messages. SMS service made up some 7% of PTK Centertel's revenue last year. "But the premium SMS is a growing market," said Michał Marczak, an analyst at Dom Inwestycyjny BRE Banku brokerage. Though telecom operators split SMS fees with their clients, mobile operators take the biggest slice of revenue, Lisik said.

But according to Marczak, that gap will narrow in the future. "The operator's costs of launching the service are high, so they want to have big profits at the beginning," Marczak said. "But as the volume increases the operator can reduce its participation in the fee to the benefit of the content provider." As for SMS-based payments, the service has attracted the attention of Internet portals, which charge users for site access. According to mojeauto.pl's Lisik, SMS is a good way to pay for online products. "The use of this method should keep growing," he said. "It's simple to use and Web users don't have to reveal their personal data online, which is necessary with credit cards."