SMS in South East Asia: 3 different paths

Cultural, calligraphic  & technical factors at play in explaining diverse text messaging markets in region

The Association of Southeast Asian Nations (ASEAN) account for over a quarter of global SMS traffic. At the same time, they have widely diverse SMS markets that can be classified into 3 groups: 1) Indonesia and the Philippines where texting is a way of life and SMS revenues remain vital to the industry; 2) Malaysia, Singapore and Thailand where 4G networks and smartphone adoption is pulling cellphone owners to use Over The Top (OTT) alternatives for messaging; and 3) Indochinese nations where SMS never really took off with a key factor being limited availability of local character sets on cellphones.

Indonesia and the Philippines are in a class of their own both within ASEAN and the world. Filipinos send more text per user than any other country on the globe while Indonesia has the largest volume of SMS traffic in the region. Texting is a vital part of mobile operator revenues in these two countries generating US$ 3.5 billion in 2014 and accounting for almost 2/5ths of the total in the Philippines and a little over 1/5th in Indonesia. Though there has been some substitution by Internet-based texting applications, there has not been a wholesale decline, thanks in part to smart operator management trading extremely low text prices for volume. SMS is a way of life in both countries where as far back as 2008 it was cited as a “killer application” in the Philippines (SIDA, 2008, The innovative use of mobile applications in the Philippines) and the 2010 Indonesian census is referred to as the "SMS Census" (PRB, 2010, Communication Surprises in the 2010 Indonesian Population Census). The use of the Latin alphabet in these countries has also been a major factor driving texting. 

The smartphone revolution is impacting text markets in Malaysia, Singapore and Thailand. This trio has the highest smartphone penetration in the region and at 88% of the population, Singapore has the 2nd highest smartphone penetration in the world, after the UAE. While both Malaysia and Singapore had high texting usage in the past—partly due to widespread use of English and in the case of Malaysia, the Malay language using the Latin character set—it has been declining rapidly since 2010. SMS never really took off in Thailand due to the calligraphic challenge of typing Thai on a small cellphone. Any hope of it doing so effectively died when operators were awarded 3G frequency and rapidly migrated their subscribers to the new networks to avoid paying revenue sharing fees with the government. Thai operators have been actively promoting smartphones and SMS is estimated to account for only around US$100 million of total mobile service industry revenue in 2014.

Use of Khmer on cellphones in Cambodia

Indochina nations such as Cambodia and Laos suffer from the same problem as Thailand in that they not use the Latin alphabet. Worse, since they are relatively small markets, there was not a major effort to include Khmer and Laotian on older cellphones. Only around a third of Cambodian cellphones were Khmer-enabled in 2013. This figure had risen to almost two thirds in 2015 thanks to rapid adoption of smartphones but means that users will use Internet-based messaging rather than SMS. Another problem is that so many Cambodians were used to not having Khmer on their older handsets they just assume that smartphones don't either (see: Mobile Phones and Internet in Cambodia 2015). Countries in Indochina also persist with higher off-net pay as you go SMS tariffs. This detracts from the major benefit of SMS--it can be sent to any subscriber and not just those that have downloaded an Internet messaging application.

Click to enlarge

Cable Broadband Brief

North America has half the world’s cable modem subscriptions

Cable modem technology has the biggest impact in Singapore

Broadband access over cable television networks (“cable broadband”) occupies a unique niche in high-speed Internet access markets. While not as popular as DSL or as glamorous as fiber optic, cable broadband nevertheless is a significant high-speed Internet technology in certain countries and regions. It is also an important source of intermodal competition.

Cable broadband has a number of attractions. Advertized speeds are generally faster than the Digital Subscriber Line (DSL) technology used over wired telephone networks. In the high-income members of the Organization for Economic Cooperation and Development (OECD), advertized cable broadband speeds are twice as fast as DSL (see chart).  Version 3.0 of the Data over Cable Service Interface Specification (DOCSIS) supports download speeds of 160 Megabits per second (Mbit/s).  A speed test of a cable broadband connection in Washington DC indicates download bandwidth of 25 Mbit/s, faster than 96% of Internet connections in the US (see chart).

There is a significant base of cable television subscriptions in some countries. China and India have a quarter of a billion cable television households between them. But the ability to provide cable broadband requires upgraded cable plant. In many developing countries, there are hundreds of small analog cable television networks without the scope to make the necessary investment to provide broadband services. In some countries, regulatory barriers inhibit cable operators from providing broadband. What would have been attractive Greenfield sites in Africa and the Middle East have instead largely opted for satellite delivered multichannel television. In other countries new operators deploying wired networks are going straight to fiber broadband and offering Internet Protocol TV (IPTV).

Despite these challenges cable broadband remains significant. It is the second largest fixed broadband technology after DSL accounting for around one in every five fixed broadband subscriptions. At the beginning of 2011, there were 98 million cable modem subscriptions around the world. Just over half are in North America and almost one quarter in Europe. There are hardly any in Africa or the Middle East. Although the proportion of cable modem subscriptions has shrank due to growing fiber optic connections, nevertheless it continues to grow in absolute terms—12% a year between 2005-2010. 

Three metrics are useful to analyzing cable modem subscriptions :

1. As a % of total fixed broadband subscriptions—measure of impact
2. As a % of households—measure of penetration
3. As a % of cable television subscriptions—measure of take-up (in some markets there are more cable modem subscriptions than cable television households due to business subscriptions)

A few countries are in the top ten in all of these metrics (see infographic). Singapore stands out, ranking first or second in all three indicators. The island state provides ideal conditions for cable broadband.  Wireline competition is essentially limited to the DSL service of the incumbent Singapore Telecom. Second, cable television has been the only multichannel viewing option since direct to home satellite dishes are forbidden except under certain conditions.  The island’s cable provider StarHub has responded to these opportunities by upgrading its network to the latest technologies. It was the first in the world to offer 100 Mbit/s download speeds using cable modem technology when it implemented DOCSIS 3.0 in 2006.  

Several other countries—Chile, Israel, Malta and the USA—are also among the top-ranked nations in cable broadband metrics. All have dynamic cable operators that have been aggressive in upgrading their networks and competing for broadband consumers with incumbent telephone operators. Operators in all these countries offer 100 Mbit/s cable broadband services, though prices and value differ widely (see chart).

It seems unlikely that cable broadband will make fresh inroads in new markets where it does not exist. But for countries that do have the cable broadband option, it helps to diversify the high-speed market and provide consumers with additional options. 

Top SMS countries, 2003

The background for this chart stems from an April 2004 article stating that Germans led the world in SMS usage in 2003 (See "Germans are world SMS champions"). None of the statistics in the article were correct. For example, the article stated that Germans--who are not even ranked in the top ten by the number of SMS sent per subscriber per month--led the world by sending 200 million SMS a year. This is less than 1 SMS per subscriber per month and is clearly wrong. The German telecom regulator reported that Germans sent 20 billion SMS in 2003, or some 27 per subscriber per month. This only ranks Germany number 22, far behind the Philippines, where the average mobile subscriber sends some 200 text messages a month ranking that country tops in the world. This rectifies an earlier misunderstanding in the Asia Pacific Mobile Multimedia Outlook report where Singapore had been ranked ahead of the Philippines. This was picked up by one news article Tops in text: Singaporeans edge Pinoys. It turns out that the Singaporean data included both SMS sent and received. The data are now correct in the chart to show only sent text messages.
See 2009 update.