Commentary

T-Mobile Text Fee Revives Marketer Opposition

Texting-B

The backlash has already begun against a reported fee of one quarter of one cent T-Mobile USA plans to impose on businesses for each text message they send over its network starting October.

The charge could have an impact on a range of companies including Twitter, Facebook and SMS marketer 4INFO, which send billions of text messages to millions of users. While T-Mobile has so far not confirmed the new fee, 4INFO CEO Zaw Thet said the company was notified about the fee last week by T-Mobile. (T-Mobile didn't respond to a media inquiry about the fee today.)

As others have pointed out, the step isn't without precedent. Verizon Wireless in 2008 tried to impose a charge of three cents per text alert only to back off the idea after sparking loud protests from text companies. Of course, the cost to mobile consumers since then has typically increased to 20 cents per text without a messaging plan.

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Now 4INFO's Thet and others are sounding off over the proposed T-Mobile "text tax," though, at a quarter of a cent, it's smaller than what Verizon planned to charge.

"We recognize the economic realities of the times, but it is very disappointing that T-Mobile is taking this action against their own consumers and the mobile industry," said Thet in a statement. "This action will stifle (or reverse) growth of mobile messaging service businesses, harming not only consumers but also T-Mobile itself."

He went on to predict that message volume will go down as businesses pass the costs of such programs to consumers, and consumers shift to carriers that can provide full access to mobile content. 4INFO sends out messages including sports scores, status updates and special offers on behalf of publishers including Yahoo, AOL, Zynga, CBS and IAC. "The implications of this move from T-Mobile are far-reaching and damaging in the long term," added Thet.

Separately, advocacy group Public Knowledge weighed in, saying the text fee would amount to a "market-power" tax on every business that uses text messaging. "There is no indication that the cost that any carrier charges aggregators and mobile service providers to send messages reflects the actual costs of transmission. Similarly, there is no indication that a cost increase reflects any increase of the cost to transmit the message," said the nonprofit's legal director, Harold Feld, in a statement.

If T-Mobile is successful, Feld expects other carriers to follow suit with their own text fees on business-to-consumer messages. He called on the Federal Communications Commission to step in to stop the carriers from using their powerful position in the market to impose such charges.

As the smallest of the major U.S. carriers, T-Mobile would seem to have less leverage than Verizon in pushing ahead with an SMS fee. But it's probably bargaining that charging a quarter of one cent instead of three cents, or even a penny, will give the measure a better chance of acceptance. So far, though, it doesn't sound as if text companies and other groups are any more open to the move than they were two years ago.

3 comments about "T-Mobile Text Fee Revives Marketer Opposition".
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  1. George Simpson from George H. Simpson Communications, September 16, 2010 at 6:31 p.m.


    “If T-Mobile moves forward with its “twitter tax” that is rumored to begin on Oct 1st, ChaCha absolutely will drop T-Mobile from our service. T-Mobile is a carrier that doesn’t understand the realities of content businesses including Facebook, Twitter, ESPN, and ChaCha. ChaCha has more than 15 million monthly unique users for whom we answer over 2 million questions every day. The vast majority of these answers are delivered by SMS text. T-Mobile is already getting paid by subscribers for these texts and they are paid something already by aggregators/publishers. Now, they plan to impose an egregious and unacceptable tax.

    “Given that the costs to deliver text are miniscule, T-Mobile already makes profits from what they charge their customers, aggregators, and publishers. There, T-mobile is “triple dipping.” We don’t see any reason for this, other than greed.

    “This will be unfortunate for T-Mobile users who will either need to switch to another carrier to enjoy texting services, or access similar services via the mobile web and/or mobile apps (for which T-Mobile gets nothing incrementally). Starting today we will make it clear to our T-Mobile users that ChaCha would still be available on other carriers and/or via the mobile web or mobile apps.

    “If T-Mobile moves forward they will give their subscribers reasons to consider other carriers and/or prevent defectors from AT&T/Sprint/Verizon from considering T-Mobile. Also, their proposed pricing move will completely stifle innovation in the space, further harming T-Mobile customers.

    “ChaCha knows that our real-time “answers” and dbase of billions of answers is valuable and can be leveraged within any of these platforms. We prefer that T-Mobile not take this step, but if they do, we will no longer provide our free SMS service to T-Mobile and shift the traffic to other carriers and platforms. It’s unfortunate for T-Mobile subscribers since they will miss out on ChaCha and many free services because of this short-sighted move by T-Mobile.”

    Scott Jones
    ChaCha
    CEO

  2. James p Campbell from LTE Network LLC, September 17, 2010 at 8:03 a.m.

    Mr Jones you are not alone in your discontent for such a fee. However, as the paradigm shifts from charges per text to overall costs per data usage, I suggest messaging content companies begin preparing to support some degree of fees associated with the networks in which their product is delivered upon. Are you really suggesting any fees will be passed on to your users? Your choice to drop T-Mobile from your service essentially eliminates a potential 150 Million worldwide customers from your service... Bold decision for sure!

  3. Jennifer Trull from Truklin Enterprise, September 29, 2010 at 5:48 p.m.

    I don't think it's unfair for T-Mobile to charge companies that use their platform and services to make a profit. It's greedy, to be sure, but they seem confident that demand can withstand their greed. I think they'll be able to get away with it, if they're not court-smashed for anti-trust issues in letting certain cronies off the hook. As long as they charge everyone the same fees and don't discriminate, then it's up to the "info service" whether they care to pay and the customer to decide if they're no longer getting enough free texts. In my experience, people are remarkably apathetic. As long as their own bill doesn't get jacked up, it's all good.

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