Charging Senders of Text Messages

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dave Burstein <daveb () dslprime com>
Date: October 10, 2008 10:11:12 PM EDT
To: dave () farber net
Subject: Re: Charging Senders of Text Messages

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

Actually, it's long past time.

Usually, the best way to prevent abuses is competition, but that's  
been weak in the U.S. since Nextel and the old AT&T Wireless were  
gobbled up. Bank of America in a careful study concluded wireless  
rates had gone up 11% in the last year. Kevin Martin and others have  
been making speeches about how wireless rates are coming down, based  
on old data. If the historical rate of decline had continued, I'd  
estimate that mobile would have saved over $10B. The FCC is about to  
make two decisions that are crucial. One, announced tonight, is that  
Martin wants 20 MHz of spectrum opened up for a service that includes  
free low speed data for 95% of the U.S. (M2Z's proposal.) That will be  
especially valuable if the latency on the new network (probably WiMAX)  
is low enough that I can make VOIP calls. I hope that is included in  
the licensing terms.  T-Mobile is opposed, but testing by the FCC made  
clear T-Mobile  interference claims were wildly overstated. Kevin  
deserves all the support possible on this one, the issue of censorship  
aside.

    The $30B Verizon takeover of ALLTEL looks to get approved by  
December. It's just common sense that Martin should block it. Alltel's  
CEO Scott Ford said that without the acquisition they would have gone  
national http://www.talkbusiness.net/documentlib/DocumentViewText.aspx?DocumentID=459 
 .  That would mean a fifth national carrier, and Alltel, a $27B  
company, clearly has the ability to build nationally. All the  
commissioners have spoken about the need for more competition. It's  
simply not right they pass on a very simple way to make it so. Verizon  
shouldn't mind enough to destroy anyone's career. They are overpaying  
by easily $5B in the current market and wall street is calling it a  
bad deal.

    Common sense doesn't always prevail in D.C., but this chance for  
competition is so obvious any regulator  should grasp it.  (There's  
another issue, that Verizon has a terminating monopoly on delivering  
to a third of the U.S. wireless phones, for another day.)

db
p.s. France, India and China have recently ruled that carriers much  
share things like wireless towers and fiber inside the building. That  
makes an enormous amount of sense, because building four networks  
separately is an enormous cost. The Analysys broadband report  
calculates that much of Britain could afford fiber to the home if all  
the carriers shared ducts, etc.

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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