In a move that sets a new and potentially major precedent in the text messaging services market, content and messaging companies are going to have to cough up some dough if they want to deliver their goodies to Verizon Wireless customers.
The nation’s No. 2 carrier has informed partners that it will add a 3-cent fee for every MT (mobile terminated) message processed on its network beginning Nov. 1. MT messages typically include text alerts, interactive voting notifications and SMS search responses.
The fee is in addition to current MT-messaging fees, which typically cost the sender anywhere from a fraction of a penny to a few cents. The new charge applies to both standard-rate and premium programs, according to the e-mail notification (see below), but not to text-giving or free-to-end-user campaigns. (Free-to-end-user refers to any text campaign where the sender absorbs all the costs and the customer is not charged for receiving the message. Such campaigns have yet to be widely deployed in the United States.) The move is sure to spark outrage among a host of players in the space who use MT messages to deliver text-search results, provide real-time news and sports updates or deliver horoscopes or other information.
Countless companies could be affected by the new fee, from players in the booming SMS-search space (4INFO, Google Inc. and ChaCha) to media companies (CNN, ESPN and local outlets) to mobile-couponing startups (Cellfire) to banks and other institutions that use mobile as an extension of customer services. The new fee could even impact the political arena, where high-profile candidates such as Barack Obama are using text messaging to woo voters and keep supporters informed.
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Verizon Wireless representative Brenda Raney said the new fee was necessary to cover the carrier’s overhead in delivering MT messages.
“Just like any business, we reassess our charges to make sure they align with our costs for providing the service and sometimes it becomes necessary to make adjustments,” Raney said via e-mail. “In this instance, this is the first increase the company has implemented since the service began in 2003.”
The notice was distributed by OpenMarket, the Seattle-based division of Amdocs Ltd. that handles billing issues for Verizon Wireless, Sprint Nextel Corp. and others. OpenMarket earlier this year informed Sprint Nextel partners that the carrier would be “strictly enforcing” new revenue-share penalties for vendors who violate Mobile Marketing Association guidelines.
The news comes on the heels of antitrust concerns and class-action lawsuits over the rising cost to wireless users for sending text messages. Verizon Wireless and other carriers have over the past several years increased from 10 cents to 20 cents the cost of sending text messages, which caused Senate Judiciary antitrust subcommittee Chairman Herb Kohl’s (D-Wis.) to raise concerns over the issue. The situation has also given rise to more than a half dozen class-action lawsuits on the topic.