Verizon Wireless has put the word out that it’s going to start charging 3 cents for every mobile-terminated text message that goes across its network starting November 1, on top of the existing fees it already charges.
That “poof!” sound you just heard was the SMS content and marketing business in the US vanishing in a cloud of stupidity.
RCR reports “Verizon Wireless representative Brenda Raney said the new fee was necessary to cover the carrier’s overhead in delivering MT messages.” She also added this is the first increase levied by Verizon since 2003 — but what’s changed at Verizon that this huge increase is necessary to “align with [its] costs”? Per-message charges would naturally generate higher revenues as usage grows. It’s hard to see how Verizon’s cost for processing inbound messages could suddenly leap so high that it would have to raise the fee to “align” it.
Also keep in mind that Verizon subscribers get charged for incoming messages, whether on a per-message basis, or as a part of their bundle.
If this charge sticks, it will decimate the commercial SMS business in the United States. Content providers will have to try and suck up the charges, or decide to cut off customers of the country’s second-biggest operator. Neither choice is appealing, and it’s doubtful that very many business plans can adapt to either one. Are many people making more than 3 cents per sent message in revenue?
I’m optimistic that perhaps this new fee won’t stick. Aggregators and content providers will certainly push back, and I think that we may have reached a point where the user bases of services that send SMS messages, like Facebook and Twitter, would raise a tremendous stink should those services say something along the lines of “Verizon jacked up the prices, so we can’t send you messages any more.” That might, just might, help Verizon understand that all these companies sending SMS content to its subscribers actually make its service more useful and more valuable to its subscribers. Sticking the 3-cent fee on to these messages will kill them, in one way or another, leaving Verizon without the fee revenue, but also without the benefits these services bring to it. It has to realize that these services aren’t just red ink, and that they have a value that justifies their cost.
But should the charge stick, I certainly hope other US operators don’t fall in behind Verizon and jack up their charges as well. That, of course, is exactly what they did with the a la carte messaging fees they charge their users, which have jumped from 10 cents per message to 20 cents across the board. That “uncoordinated” action attracted some class-action lawsuits as well as the interest of some regulators and legislators, and a similar action here could (and hopefully would) attract more attention.
Anyhow, what are your thoughts? How badly is Verizon cutting off its nose to spite its face? And if you’re in this space, as a content provider, marketer or aggregator, how — if you can — will you cope?
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Certainly not a sharp move by the folks a Verizon. But I think our business model (www.saysomobile.com), and the industry in general, can absorb the cost with a little change in perspective.
What’s going to have to change is the expectation that it should only cost fractions of a cent to deliver a marketing message. Even at 3¢, mobile is still the most efficient direct marketing medium available (crazy-high response rates and low development and delivery costs).
And frankly, when compared to the horrible response rates email and the high development and delivery costs of direct mail (creative, postage and printing), this is still the future of direct marketing from where we sit.
Drew >> http://www.saysomobile.com
I agree, very strange move by Verizon when you consider the impact it may have on 3rd-party mobile services. The silver lining might be that providers begin to hedge toward non-SMS mobile data services. The $200+/MByte SMS party will eventually end… the Twitters of the world might as well get started now given that their customers have become mobile-web savvy.
-ASM
I have informed Verizon that will be losing a customer. I have 4 family members on my account.
The content provider paying for SMS has of course been the norm in every other country since day dot. Today you pay say 10 cents in Australia, 8 cents in the UK and perhaps even 15 cents in France and these prices were built into any SMS based activities. The travesty here of course is that none of the other countries charge the receiving party for the message IN ADDITION to this cost. I agree with Allan, focus on the web based services. US carriers have never properly supported the channel, there is more red tape than a Valentines Day wrapping party and the whole thing is confusing to the marketing world. Focus on open platforms, it is a smaller market right now but momentum is strong.
It’s possible to speculate whether there’s more to this VZW move then beats the eye. Perhaps a move to test the water, but I’m sure VZW could have guessed at the response. Perhaps a coordinated move by the operators to either raise the MT SMS cost across the board or trying to move people to mobile email plans? (unlikely, since when did US operators decide on a common strategy? and why would VZW agree to take the lead).
If they expected this cost to materialize in $30 CPM then they are so wrong. Average Mobile CPM today is already lower and it would only drop, not the other way around.
Anyway, a poor move by VZW, managing again (remember how US operators handled mobile code scanning?) to confuse an evolving marketplace. If anything, US marketers sitting on the fence will stay there longer, see where this curve ball end up.
Is this really such a bad thing? It only makes marketers tighten the targeting parameters when delivering SMS based offers and info. Services that are solely information providers will no doubt be hurt. Companies that have proven advermarketing models at one and a half cents will survive just fine at 3 cents. This move certainly tightens up the quality of information that is delivered to an end users phone. One of our real estate clients currently pays $100 per home sold when there is even a single text inquiry sent while the home is on the market. In that example the metrics still work just fine.
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That is some bull!!!…I have friends with alltell and we can hardly text at night because we don’t get each other’s messages for hours after the fact. Does anyone else have this problem