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Multimedia messaging: "slow growth for another four years"

The report tries to be up-beat. It talks of "over 20% of mobile users worldwide" using MMS in 2007, and talks of "exponential growth from that point" - but the clear implication of ARC Group's research is that in the next two years, it will be slow at best to take off.

It sounds impressive when you say: "Around 25 billion messages a year, or just over 2 billion messages per month will be sent in 2007," - which is the public expression by ARC of its findings. And it predicts that MMS traffic will start to grow exponentially after 2007, "once the viral effect of MMS begins to take hold."

But for a mobile industry hoping for a big MMS boost in the next two years, the news will seem grim.

"This conservative take-up of MMS," says Karen Walsh, part of the ARC Group team that produced the report, "is due to factors such as lack of interoperability and roaming agreements between mobile operators, low numbers of mass-market handsets, and limited third-party business models."

The main function of MMS will be as a content delivery mechanism, according to the new report, which forecasts that nearly 50% of the 25 billion messages in 2007 will be for content-to-person (C2P) transactions. Importantly, this C2P use will generate 71% of the operators' overall MMS revenue by 2007. The premium nature of the content, according to Walsh, will allow service providers to offset the low overall level of usage against the value of the 20% who do use MMS.

The leading application type and associated services most likely to drive MMS uptake at the outset are based on P2P relationships, e.g. picture messaging and video messaging. Future drivers will include services linked to messaging, such as in-game dialogue or applications sent as messages.

Sex is going to be part of the "picture" of course. "The report affirms that the interactive capabilities allied to the enhanced graphical capabilities of MMS will see applications based on adult content proliferating," says Walsh, rather coyly. She goes on to conclude that MMS brings enhanced capabilities to various application categories including entertainment, LBS, infotainment and mobile advertising.

The meat of the report, of course, wasn't being released publicly; it will be the key concerns of pricing, billing technological challenges - and issues relating to revenue share between network owners and providers of content within the network. All observers have commented on the absurdity of current billing plans, with MMS, SMS and GPRS all being available for moving bits around at vastly different prices.

The report concludes bravely that although the industry is facing numerous problems from the economic to technological, MMS has immense support from operators, and other parties, and will play a pivotal role "as a medium for demonstrating the potential of new mobile services." It remains to be seen if it will actually contribute anything to mobile revenues in the next five years, however.

ARC Group publishes in-depth strategic reports and provides consultancy on wireless internet, wireless technologies and infrastructure, digital broadcasting, broadband access, telematics and optical communications.