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Broadband Access
Social networking profitability and the role of SMS
An interview with Alan Pascoe, Senior Manager of Product Marketing, Tekelec
by Beth Nicholson, TelecomEngine
Social Networks are buzzing. Currently experiencing enormous market growth, it seems whether it is for business or for personal use, everyone is connected in the social networking web. In this interview Alan Pascoe, senior manager of product marketing at Tekelec discusses how people are using these networks and the role that SMS plays. He examines how operators can cost effectively handle the escalating traffic loads, who is paying for surge and explains how operators can better capitalize on this networking boom.
TelecomEngine: Everyone has heard of social networking and almost everyone knows what Facebook, LinkedIn and Twitter are, but just to be clear, can you define social networking?
Pascoe: From our point of view, social networking is really a virtual community where people with liked-minded interests or particular hobbies can get together and share information online with other members in the community.
TelecomEngine: How do people use these networks? Why are they so popular? Is it just a fad?
Pascoe: There are things about social networks that make them extremely intriguing and, to some people, extremely perplexing. I don’t think it’s a fad; social networking is here to stay. What may change is the type or location of social networks, as new ones continue to gain popularity. A couple of years ago, MySpace had a larger market share, Facebook was up and coming and no one had heard of Twitter. But now, MySpace is on the way down, Facebook is very big and Twitter has the hype. People will go where they see the value, and that means that people can actually change social networking. I do think that social networking is here to stay, but I can’t tell you which social network site is going to be on top two years from now.
TelecomEngine: Why do you think it’s so popular? What’s the draw?
Pascoe: It’s a way that people can connect to like-minded people, very easily and very quickly. They can be in different parts of the world and they can talk about topics that interest them and friend people very easily. They can share photos and stories and information in a very simple way.
TelecomEngine: A large part of social networking is done on the handset. How are people using their handsets to connect to social networking?
Pascoe: Mobile social networking requires a connection and a user interface, which would be an application on the handset. The connection is set via operators that have two distinct networks. There is the circuit-switched world which carries voice and SMS. And there is the data side, primarily used for Internet connections, which carries chunks of data. So from the social networking view, you can have an application on your handset, like a Facebook application. You would also have a connection over the data network of your wireless carrier that would then end or terminate at the Facebook server, which would handle your request.
In the majority of cases, that data network is actually used for social networking. Twitter, however, uses a very limited amount of characters, 140 to be precise. A lot of Twitter is actually done using SMS messages, which do not use the data network.
TelecomEngine: With the surge of Tweeting and updating, how do operators cost effectively handle the escalating traffic loads?
Pascoe: From the social networking point of view, they would have to build up their IP infrastructure. There are plans from standardization bodies within the industry to try to build all IP networks which can carry data in a very cost-effective way.
SMS/texting has always seen the forgotten child of the network operator in terms of delivering data. Because that’s really what it does. You have 160 characters per SMS message to send data. Twitter is really the first social network that captured the potential of SMS. SMS provides you some advantages over any other medium. One of which is real time. SMS typically can guarantee real time around the world. Twitter is such a competitive interface because it utilizes texting, enabling people to reach a lot of other people very quickly.
TelecomEngine: Who is absorbing the cost of all this texting?
Pascoe: That’s the big dilemma at the moment. There are two contrasting models for subscriber billing for SMS. Taking out bundle messages, there is the rest of the world model and then the U.S. model. In the U.S. model the sender and the receiver both pay for SMS charges. In the rest of the world, only the sender pays. And that’s where the problem comes in. Twitter is actually integrated into almost every U.S. carrier. The business model is still viable. The problem comes in the rest of the world because the receiver does not pay.
For example, if you have a wireless handset you can roam around the world. If you were with a carrier in the U.K. and you are in Germany, you are attached to another network. If someone sends you a Twitter update, there is going to be an international roaming charge associated with that message. Because you don’t pay for it, the operator within the U.K. has to pick up that tab. The U.K. operator looks at who originated the message, they see that it is Twitter and then they send Twitter a large bill.
TelecomEngine: What is out there in the market that can help operators capitalize on this networking boom?
Pascoe: Smartphones are around 20% of all sales this year in the wireless market. That’s going to grow up to 33% within three years. It is the smartphone users who are linked to the applications which will help drive the usage of social networking sites. But there are some difficulties with IP-based or data messaging which are very hard to overcome.
For example, let’s say that you have an iPhone and you download an application from that allows you to access social networking sites. If you turn off that application, that’s it. You won’t ever get a notification till you start up that application again. There are issues around that. IP connections drain the battery if you try to keep those smartphones attached to the network. So if you leave the application running your battery will quickly die, but if you don’t leave the application running then you’ll never get the updates in real time.
SMS could help with this – and it’s part of the reason why Twitter has taken off. Because SMS is not attached to the data network, but attached to the circuit-switched network, you can always receive an SMS. You receive an SMS if your phone is on with no issue with battery or notifications.
Alan Pascoe, Senior Manager of Product Marketing at Tekelec, has more than 12 years’ experience in telecommunications with o2 UK, o2 Germany and Tekelec solving core network and value-added service challenges for carriers. His strong background working for mobile network operators has given him a unique insight into the current problems of messaging networks and the challenges facing operators evolving to next-generation architectures.
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