Will 2009 be the year for Mobile Instant Messaging in Latin America?

Subscriber usage behavior clearly shows that the Latin American market is ready for a solution such as GSMA Personal IM, also known as SMS 2.0 (Telefonica Spain, Acision) or Instant SMS (Comverse).

The chart above measures three elements: Data ARPU (x), mobile penetration (y) and average number of SMS messages per user per month for several Latin American countries(1).

The countries with SMS usage in the region are Venezuela, Argentina and Ecuador; with Colombia having the lowest SMS usage. These countries also have a higher data ARPU; this is not surprising as in Latin America 70% to 90% of data revenue comes from SMS.

What's relevant here is subscriber SMS usage, surpassing 100 messages per user per month as in the case of Venezuela and more recently Argentina; this tells us that heavy users are actually having live conversations using SMS; in other words, a segment of subscribers uses SMS as Instant Messaging, with a higher number of messages going back and forth per conversation than the average 2.5 we normally see in SMS conversations.

Personal IM is a sophisticated network based service that requires interaction with a handset application and deployment of client based solutions can be somewhat complicated, especially when operators have a large number of handsets in the market. Its success will also depend on providing the service to the mass market and not to a small niche of postpaid subscribers with high end handsets. However, in Latin America subscribers tend to spend more on handsets than on services, this means that a large subscriber base have the right type of handset that supports client based services such as Personal IM.

In addition, a large segment of subscribers is already using SMS as an Instant Messaging tool. This means that mobile operators are not offering a solution to meet subscribers' needs, and are leaving money on the table.

With voice revenue flattening and even declining in most of the region, and with mobile penetration fast reaching saturation in the more advanced markets, operators need to find new sources of revenue. Increasing data revenue is one of the options operators have to address this issue and Personal IM is a service with a high probability of success.

Mobile IM has been very successful in the USA and Australia (Portal IM) and somewhat successful in Europe and Asia (Personal IM). In Latin America, however, we still have to see operators pay serious attention to this service. Telefonica Movistar launched an initiative for SMS 2.0 and Brazilian operators are working on a joint effort to launch GSMA Personal IM but we have not seen any live deployments yet (see update below).

I am being facetious with the title of this post since a little more than a year ago I published a post titled Will 2008 be the year for Mobile Instant Messaging in Latin America? It obviously was not, but maybe it will happen in 2009!

UPDATE FEBRUARY 11th, 2009 1:44 pm EST

GSMA's Personal IM project latest e-newsletter contains some interesting updates that are very relevant to my post. In addition to four new launches in Asia and Europe, I want to highlight their announcement that they expect "significant developments in Latin America in the coming months – including the launch of interoperable PIM services in Brazil". Brazilian operators have been working on this project for several years and it's great to see their efforts come to fruition.

There are two very important elements in the Brazilian project: first of all, the participation of all major GSM operators; secondly, they are following the GSMA Personal IM initiative, with interconnection between operators and SMS.

Some interesting data from their newsletter:

Fast Facts

• 70 countries involved
• 106 operators involved
• 40 operators with live IM services
• 2.4 billion (2) subscribers covered globally by operators committed to the initiative

(1) Statistics based on data projection from Pyramid Research for 2008. Actual usage shows the numbers for mobile penetration in Argentina are higher, reaching 100% and SMS average usage is also expected to be higher for 2008. Actual usage not available at the time this post was prepared.

(2) GSMA Wireless Intelligence, January 2009