Sprint Nextel Corp. hopes to clean up the direct-to-consumer content business by hitting wayward partners where it hurts.
The carrier last month told off-deck content aggregators that it will be “strictly enforcing” new revenue-share penalties for vendors who violate Mobile Marketing Association guidelines. Partners who repeatedly stray out of bounds – by incurring high refund rates, for instance, or not reporting billing errors to the carrier – can forfeit every dime and lose their short codes, while those who play by the rules can see as much as a 10% bump in revenue splits.
“Non-compliant short code campaigns will receive penalties up to and including program termination from Sprint Nextel Boost networks,” according to a confidential five-page memo to aggregators obtained by RCR Wireless News. “Conversely, revenue share incentives may be applied for programs performing well on policy compliance.”
Sprint Nextel declined to comment on the new policy, which went into effect April. 1. But the document outlines nearly three dozen potential infractions – mandating price caps for content subscriptions, banning the use of the word “free” in some marketing campaigns, and requiring “help” and “opt out” information, among other things – and spells out penalties based on the number of transgressions and level of severity.
The policy also addresses mobile phone numbers that have been recycled and reassigned to new users. Carriers have been hammered by consumers who have received “new” numbers only to have pricey subscription services carried over from previous subscribers. The document was distributed by OpenMarket, the Seattle- based division of Amdocs Ltd., which handles billing issues for Sprint Nextel and other carriers.
Sprint Nextel’s move is the latest – and perhaps most severe – attempt by network operators to repair public-relations damage incurred in recent years by subscription services that have at times been fraudulently marketed and exorbitantly priced. Those campaigns – which sometimes generated massive revenues for ringtone sellers and their carrier partners – have drawn the ire of consumers on both sides of the Atlantic, prompting strong responses from regulatory groups in Europe and sparking at least two lawsuits in the United States. And many insiders say the bad press has shackled the mobile data space as a whole, leaving consumers leery of any come-on for wireless content or services.
Jamster was sued three years ago by a San Diego man who said his teenage daughter was hit with premium SMS charges after accepting an offer for a “free” ringtone. More recently, AT&T Mobility last month agreed to pay a $2.6 million settlement in connection with consumers billed for wireless content advertised as free; the payoff stemmed from a Florida lawsuit against Buongiorno S.p.A., an Italian content behemoth. Buongiorno has emphatically denied the allegations.
Support from vendors
Several direct-to-consumer players declined to comment on the new policy, underscoring the secretive nature of carrier/vendor relationships. But PlayPhone Inc. CEO Ron Czerny said that while sketchy marketing tactics seem to be fading away, he’s “excited to see” Sprint Nextel’s new policies.
“It’s still going on,” Czerny said of illicit tactics, “but I think that 70% of illegal practices have gone away. . We have a Carrier Business Group, and we hire outside (auditors) because we have to be 100% compliant. You have to be compliant when you deal with the carriers.”
Whether 100% compliance is even possible is questionable, of course, given the deliver complexities and inadequate billing systems that plague the off-deck world. And Sprint Nextel’s cut-and-dried new policies may be unprecedented in their rigidity, assigning payouts based on mathematic formulas. But while AT&T Mobility and Verizon Wireless declined to discuss their own revenue-share policies – or comment on Sprint Nextel’s new guidelines – both carriers said they work with content partners when problems arise. (T-Mobile USA Inc. failed to respond to a request for comment.)
“Obviously, we bend over backwards to ensure our customers aren’t hit with content they didn’t want; that can be in the form of content mis-marketed, unrequested, or inappropriate for other reasons,” Verizon Wireless spokesman Jeffrey Nelson said. “Again, in those situations, we’d work directly with an aggregator to determine if there’s a problem and ensure it’s fixed.”