SMS will remain a key source of data revenues
Since SMS was launched in China in 2000, it has become a major source of telco data service revenues. In recent years, the operators have introduced a wide variety of new data services, including MMS, location-based services, and mobile TV. They have also reduced call charges and offered higher handset subsidies bundled with mobile data services. As a result, the proportion that SMS has contributed to telcos data revenues has declined; industry data shows that the proportion fell from 60 per cent in 2007 to 45 per cent in 2008.
However, SMS has the advantage of being low cost, and sending SMS messages during important festivals is now well-embedded in Chinese culture. For these reasons we expect it to remain an important business line for the foreseeable future.
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