The SMS payout

Whether it meant to or not, Verizon Wireless has opened up a can of worms. Last month, VZW notified short message service aggregators through its billing provider, OpenMarket, that it would begin charging them a 3-cent fee for every automated text message they send over the Verizon network for their content provider customers.

Verizon later backed off, saying the notification wasn't yet firm and that it merely meant to open up a billing dialogue with its customers. But the damage already was done. Content providers that had built their business models around mobile terminated message alerts were up in arms, as were the SMS aggregators that distribute the messages. Though Verizon Wireless has implemented no fee yet, it has raised the question of whether mobile operators should collect revenue from business-to-consumer traffic beyond that which it already collects from its subscribers.

It's a debate that some in the industry would like to have. The Mobile Entertainment Forum wants to call the equivalent of a peace summit between the operators and content providers to discuss what effect any possible fees would have on content providers and consequently on traffic in their networks. Jim Beddows, president of MEF Americas, acknowledged that a per-message fee may be necessary for carriers to recover the costs of building and maintaining their SMS infrastructure, but he said that an across-the-board fee could kill off the growing SMS alert and content distribution market. The MEF surveyed its membership and found that the fee would affect content providers differently — some being forced to suspend service, while others could more readily absorb the cost.

The biggest danger is not knowing. Verizon's fee increase is now in limbo and so, too, are the future plans of content providers. In response to that uncertainty, one mobile marketing firm, Waterfall Mobile, is freezing its messaging rates to customers until the end of 2009.

“This policy and program does contain some risk, but we felt it was necessary,” said Matt Silk, executive vice president of Waterfall. “We want to keep this industry going, even if it costs us in the short term.”