Verizon denies text fee hike imminent
Verizon Wireless is refuting reports it will introduce a 3-cent fee for all mobile-terminated messages delivered across its network. According to an email sent last week by Verizon billing partner OpenMarket, the operator planned to append a 3-cent charge to both standard-rate and premium text programs. But in a subsequent email distributed to the press, Verizon spokesperson Jeffrey Nelson writes "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."
According to Nelson, the rate hike outlined in the OpenMarket email "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." He adds that Verizon Wireless has not increased the per-message cost to aggregators since introducing its messaging service in 2003, and the carrier has "never envisioned a cost to consumers or content companies, but rather on content aggregators themselves." In an interview with The New York Times, Nelson maintained Verizon Wireless has not set any specific price for text delivery or a date a new fee might go into effect: "There is nothing imminent, November 1 or any other date."
For more on the Verizon text rebuttal:
- read this New York Times article
Related article:
Verizon reaches messaging milestone
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Comments
Posted by TC Baer | October 13, 2008 - 12:52pm
Verizon must believe their industry peers and customers are fools.
My statement is based on the Verizon spokesperson saying, "we are exploring ways to offset significantly increased costs for delivering billions upon billions of text messages each month."
Whoever authorized that statement doesn't know the business or technical aspects behind SMS. The marginal cost of messages is going down to almost zero. SMS is an old technology that Verizon has profited from on a massive basis.
Aggregators have reduced the variable costs associated with SMS by providing operators like Verizon a single point of aggregation, so that they don't have to deal with the high number of service providers that are adding value to Verizon's commodity Voice, WAP, and messaging products.
A standard SMS will range in size from 1 - 160 7-bit characters, which consumes less bandwidth than 1 second of voice conversation. Verizon is proposing that 60 SMS (less bandwidth than 1 minute of voice conversation) would cost $1.80 on a wholesale basis.
At a time when Verizon is touting their highspeed broadband (EV-DO) wireless offers, it strikes me as strange that anyone should pay more for the most commoditized service in the wireless value chain.
The rationale for Verizon's move is plain and simple. First, their losing market share and valuable customers to AT&T with the massive success of their Apple iPhone offering. Second, Verizon Wireless' parent company is seeing massive losses in their fixed-line telephony business. Third, Verizon has been the slowest to innovate and the most like to behave like an oligopolist -- with price increases despite customer increasing loyalty and profitability.
Plainly put, Verizon's underperforming in other business segments and they believe this is the best way for them to win the revenue shell game.
Posted by Scott Springer | October 17, 2008 - 10:55am
This isn’t the first time that Verizon has upset millions of people. Back in 2007, there was its shortfall fee – a $2 monthly charge that was levied to clients who didn’t use their long distance service. Now, Verizon has come up with another creative approach to revenue creation – charging 3 cents for every text message processed on its network. Of course, this charge would arrive on the eve of mobile marketing’s explosion in the US. Clearly, Verizon has seen an opportunity to capitalize on a rapidly emerging market, but its actions, however, do little to embrace the market’s growing acceptance of mobile as a very serious and relevant marketing channel.
This new cost, albeit still in “proposal stage” according to Verizon, comes as a shock to everyone in the mobile landscape. The announcement that the imposed new fee would start on November 1st, has not allowed for any significant discussions or greater consideration for the subsequent impact to the industry, and consumers. Verizon, by acting in such a short-minded and selfish way, has marred our industry – everyone from messaging aggregators, content partners, mobile marketing providers – and has potentially set mobile marketing in the US back 5-10 years.
If Verizon’s new messaging charge does go ahead on November 1st as threatened, thousands of providers will also be forced to increase their price structures, including ours. This will completely upset the model upon which our industry has been built. But then again, a selfish and short-sighted company wouldn’t care about that. Simply put, this move by Verizon is not conducive to the greater advancement of mobile marketing being considered and conducted by so many companies at a time when they need it more than ever.
Scott Springer,
Vice President, Strategic Services
SmartReply, Inc.
