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American mobile phone users are beginning to take to SMS, but IM may be the future for wireless messaging in the US.

IDC's latest figures show that by 2007, there will be as many as 75 million SMS users in America, and revenue from the service to mobile operators will rise to about $1.9 billion in that year.

The growth ahead is evident now, the research firm says, with SMS subscribers doubling to 21 million in 2002. SMS traffic, meanwhile, climbed 300 per cent last year to hit 2.4 billion messages, as consumers began to embrace the service, mostly for personal messaging and entertainment.

But the market must be put into perspective: SMS traffic in the US is still a tiny fraction of the traffic in Western Europe, where in 2002 an estimated 186 billion messages were sent, according to data from Frost & Sullivan. It is expected that by 2006, traffic in Western Europe will hit 365 billion messages per year. Importantly, mobile operators in Europe are generating about 10 per cent of their revenues from SMS.

For their part, Irish mobile phone users are among the leaders in texting after places like Singapore and the Philippines, with ComReg figures showing that in the first three months of this year, approximately 660 million SMS messages were sent in Ireland. That equates to about 72 messages a month per subscriber, compared to about seven per American subscriber.

The reasons for the slow uptake of the service vary, but include the fact that many US operators only started offering two-way messaging services in 2001. What's more, many of the handsets in the US market were not equipped to send SMS messages until 2001. Meanwhile, since US wireless field is a mix of differing standards and technologies, it was only in late 2001 and early 2002 that SMS became generally interoperable between most of the US wireless telecoms.

But, the biggest reason why SMS has been in the doldrums in the US revolves around that fact that talk there is cheap. With local calls on fixed-lines charged under flat monthly fees and mobile operators offering thousands of "free" minutes with subscription plans, the attractiveness of SMS as a low-cost communications option never took hold.

IDC says that Americans though have shown a fondness for another type of messaging service - IM or instant messaging. The company says that by 2007 there will be 63 million IM users in America, which will be worth about U$1.9 billion. And, in that year, the company predicts that a staggering 44 billion wireless IM messages will be sent.

"Wireless users are discovering the utility of wireless capabilities like SMS and IM, which in turn represent a natural migration of existing communications behaviour from the PC to wireless environments," said Scott Ellison, program director in IDC's Wireless and Mobile Communications research program.

IDC recommends that the industry focus on implementation of IM interoperability as soon as possible, noting that the SMS subscriber market doubled in 2002 after the mid-year implementation of SMS interoperability by the major US wireless carriers. The company says that when different standards work together, Americans will embrace IM and drive the sector upward.

Such interoperability could soon arrive with Microsoft and AOL saying on Thursday that they would seek to make MSN Messenger and AOL's Instant Messenger interoperable as part of a legal settlement. © ENN

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