EXECUTIVE SUMMARY

Objectives

The focus of this white paper is to evaluate the ability of FunMobility's FunMail messaging platform to help mobile operators enhance growth and profitability through mobile data revenues. The paper examines the current state of the U.S. mobile data services market and presents an analysis of the impact of existing mobile messaging services on mobile data revenues. Frost & Sullivan also analyzes how mobile operators (and device vendors) can leverage the FunMail solution to drive additional revenues from mobile messaging services.

Key Findings

The key findings of this whitepaper are as follows:

Growth of SMS

SMS volume is increasing exponentially in the U.S. mobile communications market. However, messaging continues to provide diminishing returns on a per-message basis due to the popularity of messaging-related mobile data plans (particularly among the heavy users of mobile messaging such as the teen segment). Frost & Sullivan believes that more than 85 % of total SMS volume in the U.S. mobile communications market is currently generated by mobile subscribers that use a messaging-related mobile data plan. Mobile operators will continue to see more SMS traffic under existing fixed revenue per month messaging plans - and the revenue-per-message will continue to decline.

Lower MMS Adoption

MMS adoption – especially when compared with SMS – has been significantly lower in the U.S. mobile communications market. MMS is largely limited to a 'photo sharing' type of experience and MMS in the form of picture messaging tends to be extremely rigid in terms of letting the mobile subscribers edit or customize images. Generally speaking, consumers' choice of content is limited to what is on their phone or has been sent to them by others. Additionally, creating a MMS on a camera phone requires a visual subject to be photographed to appropriately represent the communication. This is not a very smooth experience for the subscribers.

Decreasing Voice ARPU (and Importance of Mobile Data)

As the U.S. mobile market matures (with subscriber penetration approaching 90%) and voice revenues continue to decline, mobile data revenues have become critical for mobile operators to maintain ARPU levels. Mobile operators clearly need to continue to explore mobile data opportunities to increase revenues from their existing subscriber base – particularly opportunities related to messaging. However, the existing SMS and MMS service offerings have limited ability to generate premium mobile data revenues for the mobile operators. Adoption of messaging-related mobile data plans has taken the upside out of mobile operator revenues (and profits), while MMS adoption remains low to generate any significant premium mobile data revenues.

FunMail – Unlocking New Mobile Data Revenues

FunMail enables mobile subscribers to communicate visually through a wide range of emotional, fun and enjoyable images that are automatically matched to their text messages. With FunMail, mobile operators can convert simple, existing SMS usage behaviors towards an advanced, premium messaging product without requiring any changes to the user behavior – FunMail is like using SMS while delivering an MMS experience. This allows mobile operators to build on the popularity of mobile messaging to enable their customers to communicate in a fun and a unique way and execute on their 'self-expression' requirements.

Conclusions

Frost & Sullivan concludes that FunMail can unlock new opportunities for the mobile operators and has the potential to be a significant driver of mobile data revenues. With FunMail, mobile operators can address the existing challenges to generating premium SMS and MMS revenues and build on the popularity of mobile messaging to enable their customers to communicate in a fun and a unique way. Overall, the FunMail service is transparent, automatic, intelligent yet extremely easy to use and delivers enough value to be sold outside of a text messaging plan which will help the mobile operators generate premium mobile data revenues.

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