SMS use intensity changes in the age of ubiquitous mobile Internet access – A two-level investigation of residential mobile communications customers in Germany

• Investigates demand interrelationships between SMS and mobile Internet (MI) services.
• Such interrelationships are likely to be affected by consumer heterogeneity.
• This notion is tested from October 2011 to October 2013 in a sample of 11,526 customers of a mobile network operator in Germany.
• Overall, outgoing SMS traffic decreased sharply whereas MI usage intensity increased over the 25 study months.
• Nevertheless, customer heterogeneity with regard to the relationship between MI and SMS use intensities is very large.

Using data of 11526 residential postpaid subscribers of the German subsidiary of a multinational mobile network operator (MNO) extracted from the firm’s customer and billing records, this investigation empirically examines the association between monthly mobile Internet (MI) data traffic volume generated by consumers and their monthly number of SMS sent at the within- and between-subjects levels over 25 months from October 2011 to October 2013. Multilevel analysis of the time-varying and -constant study variables suggests that, in spite of a sharp decrease in the average/median number of outgoing SMS between the first and the last study month, customer heterogeneity with regard to the relationship between MI and SMS use intensities is very large. The number of customers with a negative within-person regression slope for MI data volume is almost as high as the number of consumers, whose slope is positive. Subscribers, who are most likely to reduce their SMS volume in parallel to an increase of their MI data traffic, are persons, who (1) are heavy SMS users in the initial study period (October 2011), (2) are female, (3) have a longer MNO tenure, (4) are currently in an SMS flat price scheme, (5) are presently equipped with an Apple iPhone or a Samsung Galaxy smart phone and (6) put their current handset into operation more recently. Implications of these findings for service-marketing strategies of MNO and for future research on demand interdependencies between relatively newly introduced and well-established mobile communications services are discussed.