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The European MMS market is expected to be worth $4.9bn (£3bn) in 2006, far less than the $9.1bn (£5.6bn) that was generated in 2002 by the simple text messaging service, SMS, Datamonitor said.
While MMS will help offset declining SMS revenue, expected to fall by $1.4bn (£856m) across Europe by 2006, the multimedia service will not help mobile phone operators achieve their targeted mobile data revenues of between 20% and 30% by 2005.
"In most countries, you still can't send a MMS between different carriers and if you use two different handsets to send a message even over the same network, you'll notice a dip in quality," Datamonitor said. "Interoperability, particularly between different carriers, will be a big boost for MMS."
Numerous operators, including Orange and T-Mobile International, have begun to sign MMS interoperability agreements.
The MMS market needs a greater choice of phones and handsets with longer-life batteries.
Many operators view multimedia messaging as a way to prime customers for 3G mobile broadband services, to be rolled out beginning this year.