Free texting app not a threat to wireless providers’ texting revenues, Gogii says

Posted on August 22nd, 2011 by admin | Comments

The Wire Canada

August 17, 2011 - 4:28pm — By Mark Burgess

A new app that’s giving away free phone numbers for texting in Canada
will do more to keep people within the “telephone ecosystem” than it
will hurt wireless providers’ texting revenues, app maker Gogii Inc.

The makers of textPlus—who announced last week that they would offer
free phone numbers to its Canadian users—say that apps for
smartphones, iPods and tablets that allow free texting to phones are
good for the wireless industry.

“One of the big value-adds we're bringing into the market is that,
this huge rising tide of connected devices—iPod Touch, iPad,
tablets—generally don’t have a relationship with a traditional
carrier,” said Gogii founder and president Austin Murray, who spoke to
The Wire Report on a call with the company's CEO, Scott Lahman.

“We enable these devices to become addressable to text messages. So
we’re bringing a whole slew of devices into the marketplace that
essentially is raising the volume of text messaging, because every
time I send a message on an app from my iPod Touch, I’m getting a
response from someone in the traditional mobile telephony world,”
Murray said.

TextPlus launched in the U.S. in 2009 and “took off from day one,”
Lahman said, adding that it made the top three in the app store in its
first week and has been located in Android’s top 10 social apps.

In Canada, the application launched in February 2010 and has been
downloaded two million times.

It has 20 million downloads worldwide, Lahman said.

The app had operated by using short texting codes, but Lahman said the
company responded to users who asked for phone numbers.

“They wanted to be a little more addressable by their friends. We
offer you the ability through a short code to reach any of our users,
but there’s nothing more intuitive than just giving out a phone
number,” he said.

“By assigning a phone number to an iPod Touch user, they’re much
easier to reach for their friends. Furthermore, when they send out a
message and it comes from a phone number it’s more easily recognizable
and they’re more likely to get a response.”

TextPlus has partnered with Iristel, a voice-over-Internet protocol
operator that Austin said has a broad inventory of phone numbers
across Canada.

The app is offered on iPods, iPads, iPhones and Android phones and
tablets. Lahman said the company is hoping to have a BlackBerry
version soon.

Wireless companies are relying increasingly on data revenue as average
revenue per user for voice services declines.

In the second quarter of 2011, BCE Inc., Rogers Communications Inc.
and Telus Corp. all reported growth in data usage as subscribers moved
to smartphones in record numbers.

“This growth in wireless data revenue reflects the continued
penetration and growing usage of smartphone and wireless laptop and
tablet devices which are driving increased usage of e-mail, wireless
Internet access, text messaging and other wireless data services,”
Rogers said in a release in July.

The companies do not specify data revenues from texting, but the CWTA
says Canadians sent 56.4 billion text messages in 2010, a 60 per cent
increase from 2009.

In December 2010, wireless users sent an average of 235 text messages per month.

Roberta Fox, head of telecom consulting firm Fox Group Consulting,
said text message revenues remain important to wireless carriers.

“Texting and email and WiFi and video traffic, which is going to be
growing tremendously, is really where the carriers are depending on
growth,” she said in an interview.

Fox said providers could develop their own versions of the textPlus app.

“They’re usually ‘me-toos’. The new players will come out with things
and the legacy guys will copy. But I don’t know if they would want to
do free texting,” she said.

Patricia Trott, a spokeswoman for Rogers, said in an email that
services like textPlus aren’t new and that Rogers could provide
services beyond what such apps can offer.

“Our customers can count on affordable text plans, including unlimited
text options (for as low as $15) that work with all phones and not
have to worry about cross platform compatibility issues, having wifi
connectivity or having to send out a new separate number to all their
contacts to stay in touch,” Trott wrote.

She added that Rogers offers additional free features and texting
bundles to the U.S.

“We'll continue to evolve our offerings to add value for our
customer,” she wrote.

The Canadian Wireless Telecommunications Association (CWTA) says apps
like textPlus can boost traditional text messaging.

Marc Choma, the CWTA’s communications director, said he doesn’t think
wireless providers see the service as a threat to their texting

“In terms of giving customers what they want, certainly texting is a
huge component of what Canadians are doing with their wireless
phones,” he said in an interview.

“We don’t really see any decline in that. Applications like this are
growing text messaging as well.”

Fox said textPlus is not likely to interest business customers but is
likely a “consumer play for a niche market, which is still a huge

Lahman said textPlus users are often between the ages of 13 and
17—teenagers who cannot afford a phone or are not allowed one but who
use iPod Touches.

“Worldwide, teenagers and young adults are the people that embrace
texting as their voice, as their principal form of communication.
That’s something that our company’s always recognized, that we want to
innovate for this audience,” he said.

The company makes money through mobile advertising with banner ads at
the bottom of the screen.

Lahman said the company does not sell user information and that users
can buy out of the ads permanently with a small fee.

The company also sells personalization options like sound packs.

Austin said providers have viewed the service favourably so far
because it helps to maintain SMS messaging as a central service.

TextPlus turns the fast-growing segment of the “connected devices”
market into phones, Lahman said.

“What we’d like to do is work more closely with the carriers to help
them address these connected devices, whether through partnership with
us or helping to provide our service. That’s kind of our goal in
working within the ecosystem,” he said.

Choma said individual arrangements can be reached with individual carriers.

“I can certainly see the value in that and not just this particular
app but any type of application out there for wireless. Certainly, I
think carriers would be happy to take a look to see if there is
something there that they could offer their customers,” he said.

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