Verizon Will Charge Companies 3 Cents Per Text Message Sent To Their Subscribers
For the better part of five years Verizon Wireless (NYSE: VZ) has allowed companies to send text messages to its subscribers without a fee, but the carrier is telling its partners that will all change Nov. 1, RCR reports. That’s when Verizon Wireless will begin charging 3 cents per message processed on its network. Scores of companies that use SMS as a backbone for their business are certainly going to be affected by the new fee. Everything from text alerts to interactive voting notifications and SMS search will be caught in the cross hairs. According to the email notification sent out by the carrier, the fee will apply to standard and premium programs, but not to text-giving or free-to-end-user campaigns.
The potentially industry-rattling change comes while projects like Barack Obama’s text messaging campaign is getting attention as a new form of political engagement and texts are routinely being integrated into TV shows and alerts for major events like the Olympics. Moreover, the new fee will be implemented just three days before the presidential election. While plenty of SMS-based companies are scratching their heads today, wondering how to adapt their business models to survive the new hit on revenues, a larger question looms: Will the other carriers follow suit? As it is now, some carriers charge a fraction of a penny per message, but there hasn’t been a universal pricing model across the industry. The shift could very well mirror the rising costs of pay-per-use SMS, which have doubled from 10 cents to 20 cents over the past couple years.
Verizon Wireless issued a statement today, but did not provide specifics. A company spokesperson said: “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. In this instance, this is the first increase the company has implemented since the service began in 2003. This increase does not impact the charges Verizon Wireless customers pay for text messages nor does it impact charitable campaigns.”
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Comments (7)
Oct 9, 2008 7:55 PM
We spoke to our aggregator, (no names) earlier today who said they are pushing back on this, and that they don’t expect it to be applicable to their traffic… so far Openmarket seem to be the only ones affected, or at least notifying their customers.
“We recently notified text messaging aggregators that there will be an increase in the fees they pay for the services they receive from Verizon Wireless,” said Brenda B. Raney, executive director of corporate communications at Verizon Wireless, Basking Ridge, NJ.
RIGHT!! For the increased hassle and time it takes Verizon to provision short codes and new services - they are hands down the worst of US carriers - we now have the privilege of paying this absurd increase.
Charge something, but not this… we’ll see.
Oct 9, 2008 8:23 PM
This is what happens when industry consolidation leads to anti-competitive actions and pricing. Government needs to regulate on this ASAP…..
Oct 9, 2008 11:10 PM
Carrier Extortion?
Audacious but anticipated move by Verizon. The wireless carriers do have every right and fiduciary responsibility to not only cover their network costs but earn a ROI…BUT…$.03 per MT…extortionary! The decimal for this fee should move to the left at least one ($.003) if not two ($.0003) places making room for the additional zeros that belong in a fair market rate. Additionally, to apply this fee on top of the already onerous revenue share of 35% to 40% that Verizon and the other carriers take on off-network premium transactions is mind blowing. Some questions:
1) Verizon: Is this a burden shift…are you going to reduce your consumer fees or is this a component of your plan to cover the debt exposure of your Alltel acquisition?
2) Verizon: Are you going to reduce your revenue share on premium transactions? Are you going to allow open alternative payment options so that off network content providers can explore opportunities to salvage their already ridiculously thin margins?
3) Senator Kohl (Chairman - Senate Judiciary Antitrust subcommittee): What are your and the other subcommittee members’ opinions regarding this matter? When the other carriers impose similar fees at the same cost level in the weeks to come are you going to explore the collusive nature of our wireless oligopoly in its dealing with the off network content/media sector of this market?
There needs to be a reaction, a counter offensive to this move that to some companies in this market, start ups in particular, is an act of economic genocide.
Call to Action: Google, Microsoft, Yahoo, NBCU, others of means and might…step up and confront this assault! Provide quarter to those in this ecosystem who cannot defend themselves from the carriers. Google, in particular, “DO NO EVIL”...standing on the sidelines of this one is in contraction to your mantra.
Please help….
Oct 10, 2008 8:13 AM
This new fee is directed at businesses that have chosen to follow the rules, regulations, best practices and Code of Conduct set out by the FCC, CTIA and MMA. The companies that use the mobile email modules, the url and the public gateways will not be effected by these fees even though they are the largest culprits for SPAM Text and are the root cause behind the class action lawsuits pending against all the US carriers. We used to call this “Biting the hand that feeds you”
Oct 10, 2008 10:33 AM
In the long carrier tradition of shooting the goose that lays the golden egg Verizon wil absolutely gut the third party sms business which has made the ownership and subscribership to their service so attractive to wireless consumers. Unbelievable. . . . . but as someone who has been dealing with carriers going back to 1989 this is entirely in character . . . . the data cost for that transmission can be calculated in hundreths of a penny . . . . $.03 per minute in addition to what they charge the consumer is usury. If they priced long distance minutes this way it would cost $7.00 a minute to make a long distance call . . . .
Oct 10, 2008 3:07 PM
Just use sites like jygy.com where you can text anyone in the US for free? not to mention the other cool texting features you cant do anywhere… just a thought.. fight the fees!
Nov 6, 2008 8:58 AM
I would like to ask if I had a text messaging service company. How would my company get paid, what would I charge & what would be my cost expenses ?