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Short Messaging Services (SMS) would be the key revenue driver among all Value Added Services (VAS) in mobile telephony in Asia Pacific and Japan (APJ) region, despite hype around data services. SMS in APJ are on pace to reach 1.9 trillion messages in 2009, a 15.5% increase from 2008, according to a Gartner report published recently. In 2010, SMS volumes are forecast to surpass 2.1 trillion, a 12.7% increase from 2009.

Multimedia Messaging Service (MMS) traffic also picked up in Asia during 2008, driven by reduced prices and increased uploading of pictures to social networking sites. Gartner believes that messaging traffic and revenues continue to be driven by new subscribers in developing markets.

China, the biggest market in the region issued 3G licenses in the January, this year. India, the largest market after China, has already began the formal process for 3G auction. Service providers are banking heavily on data services after the launch of 3G services in the two biggest market in the region. The report clearly contradicts the belief.

"Strong organic growth continues in Asia's developing markets, with marginal subscribers turning to low-cost messaging as an entry-level service," said Madhusudan Gupta, senior research analyst at Gartner. "In the mature markets of the Asia/Pacific region, SMS has seen sustained healthy growth as a result of steady price declines and increasingly generous SMS and data bundles."

However, carriers are expecting somewhat slower messaging traffic increases going into 2010, but in many cases there will still be double-digit-percentage increase. SMS growth will be slow as mobile markets approach saturation and other types of messaging, including mobile email and mobile instant messaging, increase in adoption. Integrated messaging clients on handsets will facilitate adoption of alternative messaging services, as will the use of alternative rich-messaging services on smartphones.

"'Big bucket' or large inclusive SMS and MMS bundles will also increase traffic by lowering the price barriers to usage," said Gupta. "At the same time, competition and network efficiencies will continue to drive down the retail price of SMS and MMS for consumers. Application traffic will continue to support growth, especially in the mature markets."

akhileshs@cybermedia.co.in