mocoNews.net - Verizon Backtracks On 3 Cent SMS Fee; It's A 'Proposal' Up For 'Discussion'

Matt Kapko
mocoNews.net
Friday, October 10, 2008; 9:00 PM

Verizon Wireless ( NYSE: VZ) is backtracking on the 3 cent per-SMS fee it told partners it would begin charging for every message delivered over its network. And yet it still sounds like a fee increase is coming. Which companies get charged, how much and when is still at play to some extent. The OpenMarket memo sent out to partners (and obtained byRCR) that shined light on the new fee was simply a "proposal" that Verizon floated for "discussion," the carrier said. "Specific information in one proposal, which would impose a small per-message fee on for-profit content aggregators for commercial messages, has been mistakenly characterized as a final decision to implement," spokesman Jeffrey Nelson wrote in an email distributed to journalists. "We don't envision this type of change to in any way affect non-profit organizations or political and advocacy organizations." The draft proposal that was sent to a group of companies that do business with the carrier was "intended to stimulate internal business discussions and in no way should have been released to the public and represented as a final document."

Somewhere along the way though, plenty of potentially affected companies were under the impression that this was indeed a final decision. Verizon didn't clear the issue up yesterday when it sent out a brief statement about the fee increase. Quite the opposite in fact? "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" doesn't sound like much of a proposal. Verizon went on to point out that the new fee "is the first increase the company has implemented since the service began in 2003."

Singlepoint CEO Rich Begert's still under the impression Verizon will be implementing the new fee in a few weeks, and here's why. Verizon Wireless sent the him an addendum to their existing agreement yesterday that said the new fee was being implemented Nov. 1. There was no proposal-like language in the document. He read it as a significant change to their existing contract. "That was certainly my interpretation? This is kind of unprecedented ? because nothing like this has happened in the past," he told mocoNews.

The 3 cent per SMS fee would be equivalent to $30 per CPM, he pointed out. "That's very expensive when you have a lot of other costs associated with it as well? That totally upsets the economic model that the industry's been built around." And the impacts would ricochet throughout the mobile content space: "I think it has huge implications for the industry. Not only the content delivery, but advertising as well? This is totally unprecedented across the industry." The Verizon fees are "exponentially more" than the fraction charged for text message delivery by the other carriers, he told us. "I'm confused. I look at the fees that are already charged and I see those as reasonable."He didn't mince words when asked if Singlepoint might simply have to end business dealings with the carrier if the fee is put through: "I think that could be a very likely outcome." Of even more concern is whether the other carriers will follow lock-in-step if Verizon implements the fee. Begert: "Certainly there's a concern that others will attempt to replicate that."

Read Verizon's letter from today in its entirety after the jump...

From Verizon:As Verizon Wireless continues to review the competitive marketplace, we constantly work to provide additional value to our customers, employees and other stakeholders.

We are currently assessing how to best address the changing messaging marketplace, and are communicating with messaging aggregators, our valued content partners, our technology business partners and, importantly, our friends in the non-profit and public policy arenas.

To that end, we recently notified text messaging aggregators - those for-profit companies that provide services to content providers to aggregate and bill for their text messaging programs - that we are exploring ways to offset significantly increased costs for delivering billions upon billions of text messages each month.

Specific information in one proposal, which would impose a small per-message fee on for-profit content aggregators for commercial messages, has been mistakenly characterized as a final decision to implement. We don't envision this type of change to in any way affect non-profit organizations or political and advocacy organizations.

We have not increased the per-message cost to aggregators since our messaging service began in 2003, and we have never envisioned a cost to consumers or content companies, but rather on content aggregators themselves. That draft was intended to stimulate internal business discussions and in no way should have been been released to the public and represented as a final document.

At Verizon Wireless, we strive to provide our messaging customers with maximum value, and work to implement business decisions that encourage the use of messaging between individuals and organizations in both the marketplace of ideas and the commercial marketplace, and we will continue to strongly encourage the use of our services by charitable organizations as they perform their good works.

Related

Verizon Will Charge Companies 3 Cents Per Text Message Sent To Their Subscribers


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