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SMS down as wireless data texting keeps rising

BEIJING -- Short message services, which once experienced explosive growth in both revenue and volume in China, have now almost exhausted their potential after a more-than-decade development.

Launched in China in 2000, the services quickly became popular among most mobile phone users. Chinese people loved to send greetings, express their concerns, swap information or tell jokes via short words on cellphones.

During holidays, especially the traditional Chinese Spring Festival, millions of people will exchange blessings via text messages with family members, close or long-lost friends. More than 30 billion short messages were sent from Chinese people during Spring Festival this year.

From 2000 to 2008, the volume of short message-sending over the network of China Mobile Ltd., the nation's biggest telecoms carrier, rose to 607 billion from a mere 500 million at the very beginning. However, the rapid growth has dramatically slowed in the past three years. With a little year-on-year increase, the number of short messages sent via China Mobile network reached 736 billion in 2011.

China Mobile's revenue from its short message service fell to 46.5 billion yuan (US$7.3 billion) last year from a peak of 53.6 billion yuan in 2009. Shen Hongqun, deputy manager of China Mobile data business department, said wireless data traffic has replaced short message services to become the biggest revenue source for China Mobile's data business in the first half of the year.

Instead of a short message business, Shen said: “Wireless data traffic, applications and information services could be the most important parts of China Mobile's data services business in the future.”

Ted Chan, partner of the Boston Consulting Group, said the rapid development of short message services in the early years was largely due to it being highly cost effective. “Back then phone services were still relatively more expensive (0.4 yuan to 0.6 yuan a minute), while operators charged 0.1 yuan for a short message,” Chan told China Daily by email.

“The short message service was quite a cost-effective way to communicate, especially when you just need a quick reply and do not want to disturb others,” Chan said.

But as the smartphone penetration rate lifted in China, together with advanced 3G and 4G mobile technologies greatly improving network speed, more cost-effective services, including instant messaging tools and Weibo, have distracted customers from short messages.

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