October 10, 2008

Verizon Wireless Plans To Charge (Soak) Both Ends of SMS Text Messages

Greetings. The New York Times has revealed that Verizon Wireless, who already makes a bloody fortune on the high cost of text (SMS) messages that they charge Verizon subscribers, now plans to also start demanding fees from the firms who send text messages to those same customers.

The current scheme appears to be for a $0.03 charge per SMS message. Doesn't sound like much, but as noted in the old Pajama Game song Seven and a Half Cents, those pennies add up fast, especially if you're sending millions of SMS messages to Web users who have come to depend on those notifications.

On a cost-per-bit basis, text messages can be insanely expensive in the U.S. A few months ago, TechCruch calculated that at $0.20/msg, AT&T SMS data was priced at $1,310/MB!

Note a familiar marketing pattern ...

First, you wait until outside services establish their business models based on a known cost (in this case SMS charges) incurred by users. Then, once those SMS-dependent services are really rolling, and subscribers are fully dependent, you drastically change the rules and charging methodologies in midstream.

For companies sending a lot of text messages to subscribers, we're talking big bucks, costs that will have to be dealt with somehow and/or services that might need to be curtailed -- perhaps at least to Verizon Wireless users for now in many cases.

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

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

I hope that Verizon customers, and text message 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--

Posted by Lauren at October 10, 2008 08:46 PM | Permalink
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