Re: Verizon Wireless Plans to Charge Senders of Text Messages - NYTimes.com

[David Farber <dave () farber net>]

Begin forwarded message:

From: Lauren Weinstein <lauren () vortex com>
Date: October 10, 2008 9:24:48 PM EDT
To: dave () farber net
Cc: lauren () vortex com
Subject: Re: [IP] Verizon Wireless Plans to Charge Senders of Text  
Messages - NYTimes.com


> Maybe it is time to stop this rip-off on SMS messages.  djf

Dave,

You couldn't have said it better.  On a cost-per-bit basis, text (SMS)
messages are insanely expensive in the U.S.  A couple of months ago,
TechCruch calculated that at $0.20/msg, SMS data was priced at
$1,310/MB!

Note the familiar pattern:

First you get services to establish their business models based on
an SMS cost incurred by the subscriber (and those subscribers have
been urged by cell carriers to move to big-bucket or flat-rate SMS
plans of course).

Then once those SMS-dependent services are rolling, and subscribers
are dependent on SMS messages, change the rules drastically.  For
companies sending a lot of text messages to subscribers, we're
talking big bucks.

This may not be a network neutrality issue per se, but it reminds me
of the infamous remark by AT&T suggesting that (to paraphrase
slightly) "Google shouldn't be able to use our pipes for free" --
even though Google and AT&T subscribers are both already paying for
Internet services.

Most Verizon subscribers are already paying way more than they
should for SMS messages, and the SMS profit level for the carriers
is typically obscenely high.

I hope that Verizon customers, and SMS-sending services, all make it
clear to Verizon that this isn't a plan that Verizon's horn-rimmed
glasses wearing Paul Marcarelli can shove through with a simple,
"Can you hear me now?"

--Lauren--
Lauren Weinstein
lauren () vortex com or lauren () pfir org
Tel: +1 (818) 225-2800
http://www.pfir.org/lauren
Co-Founder, PFIR
  - People For Internet Responsibility - http://www.pfir.org
Co-Founder, NNSquad
  - Network Neutrality Squad - http://www.nnsquad.org
Founder, PRIVACY Forum - http://www.vortex.com
Member, ACM Committee on Computers and Public Policy
Lauren's Blog: http://lauren.vortex.com

- - -

> October 11, 2008
> Verizon Wireless Plans to Charge Companies Sending Text Messages
> By SAUL HANSELL
> Verizon Wireless this week told companies that send out text messages
> that starting Nov. 1 it will impose a fee of 3 cents for each message
> it delivers to the phones of its subscribers.
>
> That fee is in addition to the fee of as much as 20 cents that those
> subscribers pay Verizon to receive the same message.
>
> Text messages have become a popular way for companies to send bits of
> information to customers — sports scores, flight delays, bank balances
> or the latest updates from a social network.
>
> The charge by Verizon Wireless, the nation’s second-largest cellphone
> service provider after AT&T, may prompt companies that have been
> working to tap into the texting boom to rethink their strategies. Many
> may simply stop sending messages to Verizon customers.
>
> Steve Livingston, the director of marketing for mBlox, which processes
> text messages for companies including News Corporation’s MySpace
> social network and The New York Times, said the volume of messages it
> handles could fall by more than half.
>
> “Alert services and social networks don’t work at three cents,” he  
> said.
>
> Jeffrey Nelson, a spokesman for Verizon, said the company was
> exploring ways to charge fees to commercial senders of text messages
> to add a new revenue stream to its wireless business.
>
> “It is not a free service,” he said. “It didn’t cost us zero to build
> or to buy spectrum rights. What we do is we monetize those assets. It
> is why we created them.”
>
> But Mr. Nelson said the company had not set any specific price for
> delivery of text messages or a date that any fee might go into effect.
> “There is nothing imminent, November first or any other date,” he  
> said.
>
> Mr. Livingston and Zaw Thet, the chief executive of 4Info, a company
> that sends messages on behalf of Yahoo and USA Today, said Verizon had
> sent them information that was much more specific than what Mr. Nelson
> described.
>
> “We received a formal notification of a rate change,” Mr. Livingston
> said, adding that the short time frame would be disruptive for mBlox’s
> customers.
>
> “We have a lot of companies that have been working on their fall
> marketing campaigns,” he said.
>
> News of Verizon’s plans was first reported by the trade publication
> RCR Wireless News.
>
> Both Mr. Livingston and Mr. Thet said Verizon was discussing
> alternative pricing schemes with big senders of text messages. And
> they said that some payment to the wireless carriers was appropriate,
> given the growth of text-message advertising.
>
> “We want to find a way not just to create a toll but build the overall
> market together,” Mr. Thet said. “But in the short term, it means we
> will not be able to send content to Verizon customers.”
>
>
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