Torpedo fall short in Brazil
SMS, popularly known as ‘torpedo’ in Brazil, has been slower to catch on in this country than in other Latin American markets. In 2008, we estimate that the average number of text messages sent from Brazilian mobile phones is not much more than 10 per month, compared with about 140 in Venezuela.
This is mainly due to the high price of SMS in Brazil. In 2007, Brazilian operators were charging US$0.18 on average per message, while in neighbouring Argentina the cost was US$0.05. In Colombia an SMS was costing on average US$0.06 and in Venezuela US$0.03. In June 2007, Claro lowered its SMS price by 20% to R$0.30 (US$0.19), the lowest at the time in Brazil.
In mid-2008, TIM Brasil was charging R$0.39 and Vivo R$0.35 per message. Claro still charged R$0.30. Vivo, however, also offered several SMS packages, including one at R$14.90 for 100 text messages to be sent within a period of 30 days.
Reducing SMS prices would certainly lead to increased traffic, which would more than compensate for a temporary drop in revenues, but operators have been unwilling to test this theory; instead, they have blamed the low SMS take-up on lack of interest or ignorance on the part of the public rather than on high prices.
Nevertheless, mobile data is a promising source of revenue in this country. Given its size, Brazil is the largest market for mobile data in Latin America, with a growing demand for ringtones, mobile games, and Portuguese mobile content.
According to the latest official data, SMS traffic in Brazil increased by 20% in 2006, to 8.4 billion messages, compared with 7.0 billion in 2005. Around 90% of messages were person-to-person, while the application-to-person market accounted for the remaining 10%. Revenues from data services averaged about 7-8% of total operators’ revenues in 2006. During 2006, operators generated revenues of R$2.4 billion (US$1.2 billion) in SMS traffic.
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