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Sprint to raise mobile messaging rates April 1

Sprint Nextel, the No. 3 wireless carrier in the United States, is following through on its decision to raise the rates it charges for all SMS and MMS messages associated with standard-rate and free-to-end-user programs. What recourse do marketers have?

The profit margins for campaigns based around mobile messaging tend to be slim, and Sprint?s half-cent increase on SMS and 2.5-cent increase on MMS, which will go into effect April 1, could make such initiatives cost-prohibitive for many. Small- and medium-sized businesses are likely to be the ones most affected by Sprint?s decision, although it is an open question exactly how much of the rate increases these marketers will be asked to shoulder.

?I?ve talked with more than 20 SMS resellers in the last year that target SMBs, and I think there are just a handful that are competing at rock-bottom prices with prices below $0.08 per message,? said Sandy Martin, director of mobile initiatives at Mobitrove, Ft. Lauderdale, FL.

?Most providers seem to offer messages in packages that range between $0.25 and $0.50 per message,? she said. ?In most cases, the reseller will likely absorb the price increases without passing it onto the SMBs.

?The market is too competitive and SMBs have too much uncertainty to ask them to pay more.?

Mobile messaging mess
Sprint?s decision to raise its text-messaging and multimedia-messaging rates by April 1 could jeopardize the profitability of SMS-based and MMS-based marketing.

Sprint contacted the aggregators it works with, which in turn contacted their customers to pass along the news of the impending rate increases.

While Sprint's rate increase does not apply to premium SMS, it is still a big blow to mobile database and customer-relationship-management marketers that rely on mobile messaging.

?My general reaction is that carriers obviously should be free to run their business as they see fit, but what is disturbing is the lack of transparency,? said Jason George, CEO of Telescope Inc., Los Angeles. ?[Sprint] talks about cost recovery, which is same thing T-Mobile said before raising its messaging rates, but I?m curious which costs they are talking about.

?They already charge consumers [for messaging plans], so it seems to be double-dipping,? he said. ?The MMA and other trade organizations should get involved?where does it stop, and what is the framework for making these decisions?

?There is not much discussion about this and Sprint doesn?t share its rationale for the decision.?

Mr. George echoed many marketers? sentiments when he said that he would like a clarification of the guidelines carriers put forth for making these types of decisions that affect service providers and consumers.

If a vendor pulls its service out from Sprint, consumers would want to know why.

Sprint's decision to increase messaging rates could put some service providers out of business, as there is not much margin, per Telescope.

?We launch campaigns with clients based on a certain price list, and then three months later they go up, which is not good,? Mr. George said. ?It is about communication and clarification of the decision-making process.

?I would think that Verizon and AT&T have the same issues as Sprint and T-Mobile?Verizon talked about a three-cent price hike before,? he said. ?Let?s say every carrier puts a half-cent charge [on standard-rate messaging]?that is a fairly major cost hike.

?If there is an extra charge in the value chain, someone will have to bear that cost, and that could impact the growth of messaging-based marketing?some marketers will decide not to run SMS or MMS campaigns due to the increased costs.?

Some mobile marketing service providers are accusing Sprint of creating an unlevel playing field by raising its text-message rates but not charging more for messaging via other channels such as social media (see story).

?I?d like to hear the rationale behind the get-out-of-jail-free card Sprint is giving to Twitter and Facebook,? Mr. George said. ?Doesn?t it also contradict what they are saying about cost recovery, because carriers are getting chewed up by the traffic from those sorts of services?

?What are the criteria for Twitter and Facebook to not be levied charges?? he said. ?Communication has been lacking.?

ChaCha draws a line in the sand
In the wake of Sprint's messaging rate hikes, ChaCha, a questions-and-answers service that operates via the short code 242242, has decided to exclude Sprint subscribers from receiving responses to their inquiries via SMS.

If the math for a particular business model does not add up, vendors must make difficult decisions.

"Effective April 1, ChaCha is being forced to shut off service to our SMS text customers on the Sprint network due to an exorbitant fee increase from the carrier," said Scott Jones, founder/CEO of ChaCha, Indianapolis. "Sprint currently charges their customers for text messaging and charges text providers like ChaCha for access to the Sprint network.

"Now Sprint has added another fee for certain text providers, making it cost prohibitive to continue our free, real-time answers service on which Sprint customers have come to rely for over three years," he said. "We find it particularly unfair that other, much larger SMS text providers such as Twitter have been exempted from the Sprint SMS increase.

"ChaCha is willing to compensate Sprint for access to its customers via SMS, but not at a level that is uneconomical for its free, ad-supported service."

Sumotext weighs in
Mobile marketing service providers from sea to shining sea have expressed outrage at the increase in Sprint's SMS and MMS rates.

"As I've said before, a carrier can charge whatever they want to access their network - that really isn't the issue here," said Tim Miller, president of Sumotext Corp., Little Rock, AR. "The issue we keep raising is that a carrier can't pick and choose who pays and who doesn't, at least not in America.

"In America we have laws designed to combat anti-competitive practices that tend to lead to a dominant position in a certain vertical, including predatory pricing and refusal to deal," he said. "We hoped that by raising these basic issues to T-Mobile in September, and again to Sprint last month, that each would reconsider their positions and return us to a level playing field.

"But after reading Sprint's response to last month's article, it sadly appears that they would rather defend their preferential treatment of Twitter and Facebook in the antitrust litigation that is sure to come."

Aggregators? emails to their customer base
A prominent United States-based aggregator sent out the following email to its customers:

Important Notice: New Sprint Commercial Terms
Dear Customer:
This is to inform you of new commercial terms that may affect your business. Effective April 1, 2011, the following fees will be implemented:
Messaging Charges
All SMS and MMS messages associated with standard rate and Free-To-End-User programs running on the Sprint network will be assessed a per-message charge as follows:

Messaging Type, Per-Message Charge
Standard rate SMS: $.005
Standard rate MMS: $.025
FTEU SMS (available on CDMA only): $.0025
SMS and MMS messages associated with premium programs will not be assessed these additional Sprint charges.

These fees will only be applied to programs on the Sprint and Nextel networks. Programs on Boost and Virgin Mobile will not initially be included in these charges.
The charges referenced above are in addition to existing messaging fees [charged by the aggregator].
Mixed Traffic Short Codes and Changes to Campaign Status
Standard rate SMS and MMS messages are limited to text-based content only and must each be on a unique short code separate from premium services campaign elements unless approved in advance in writing by Sprint. 
Mixed short codes currently running both premium SMS services and standard rate SMS services will have two options as listed below:
Option A 
 ? Separate standard and premium campaigns onto distinct short codes
 ? Standard rate short code would be classified as standard campaigns
 ? Premium short code would be classified as premium and could only run premium campaigns
Option B
 ? Continue running standard rate and premium campaigns on the same short code

 ? Short code would be classified as standard rate and message traffic on that short code would be subject to the per message charge
If you are unclear as to whether your short code is classified as a premium or mixed short code, then please contact your Account Manager.
Standard rate SMS and MMS text messages should not contain embedded URLs, multi-media content, coupons, non-related ad content or WAP Push content.
Please contact your Account Manager with any questions.

Another aggregator issued the following statement to its customers:

Dear Valued Client,
This is to notify you of changes Sprint has made to its Off-Deck Marketplace. As a result, [this aggregator] and its clients are now bound to the following:
Effective April 1, 2011, for short codes identified per below Short Code Classification Summary, Content Providers will be charged for each mobile originated (MO) and mobile terminated (MT) Non-Premium Service SMS Text Message at the rate of $0.005 per message (SMS Transmission Fee) above any existing message fees in your present contract.

For Non-Premium Service MMS messages, Content Providers will be charged for every mobile originated (MO) and mobile terminated (MT) Non-Premium Service MMS message at the rate of $0.025 per message (MMS Transmission Fee) above your current contracted MMS rates if applicable.

Short Code Classification Summary:
Sprint now requires all short codes (new and existing) to be classified as follows:
Premium: the short code can only be used for administration of premium programs/campaigns.  Standard rated and/or FTEU campaigns are not allowable on these short codes. 
Standard Rated: the short code can only be used for the administration of standard rated programs/campaigns, and cannot be used for premium or FTEU campaigns.

Service fees of $0.005 per SMS MO/MT message and $0.025 per MMS MO/MT message will apply.

FTEU: the short code can only be used for Free to the End User campaigns and must be provisioned as such in PMG. Service fees of $0.025 per mobile originated (MO) and mobile terminated (MT) FTEU SMS Text Messages will apply (per prior Sprint alert, effective date: July 1, 2010).

Mixed: the short code can run both premium and standard rated campaigns, however Service fees of $0.005 per SMS MO/MT message and $0.025 per MMS MO/MT message will apply.
Effective March 8, 2011 any new program briefs for carrier submission must have the proposed message flows included below for approval and certification. Any program brief submissions without a completed Spending Limit portion of Section 7 will be placed in Request For Information status and not be considered for approval/launch.
Estimated May 1, 2011, all programs must contain Spending Limit MTs per below or be subject to in-market messaging monitoring (audits).  
Summary Highlights:
Sprint?s spending cap limit for non-chat programs for a subscriber is $100 of premium charges, per MDN, per short code, per month. For any grandfathered programs with transactional pricing, or short codes that support multiple subscription chat programs, the same $100 spending limit will apply.
Spending MTs are required once subscriber has reached $25, $50, $75 and $100 of premium charges.

Additional (triple) opt-ins required once subscriber has reached $50 and $75 of premium charges.

Triple opt-in messages should express cumulative premium charge dollar amounts reached (for example $50, $75), not the number of messages billed.
Sprint requires the below disclaimers in Spending Limit messaging for Sprint, Nextel, Boost and VMU:

 ? Amount of premium charges incurred

 ? ?Reply Yes to continue? statement at the $50 and $75 points (this must come after the premium charges incurred amount)

 ? Message & Data Rates disclaimer

 ? HELP and STOP instructions

 ? Once $100 of charges are incurred, CP must inform the subscriber that they have reached the spending limit. Charges can continue next month.
Specific violations/actions required will be included in the next distribution of the Sprint Short code Violations and Actions Required document, currently estimated for distribution April 1, 2011.
Spending Cap Notification Examples:
Spending over $25 notification MT e.g.: ?You have reached $25. AcmeMobileRingtonesClub:5 ringtones Sub for $9.99/mo.Reply HELP for help,Msg&Data Rates May Reply STOP to cancel? (157 char)
Spending over $50/$75 notification MT e.g.: ?You?ve spent $50($75),AcmeMobileRingtonesClub:5 ringtones Sub for $9.99/mo Reply Yes to continue. Reply HELP for help, STOP to cancel.Msg&Data Rates May Aply.? (151 char)
Reached $100 notification MT e.g: ?You?ve maxed your limit this month,Try again next month. AcmeMobileRingtonesClub Reply HELP for help, STOP to cancel.Msg&Data Rates May Aply.? (142 char)
[This aggregator] will provide further guidance as soon as Sprint makes any additional details available.
If you have any questions or wish to further discuss, please contact your Account Manager.

"A recent rumored increase in text messaging rates to providers of text messaging services by Sprint today came to fruition," said Gib Bassett, director of marketing at Signal, Chicago. "Firms like ours provide these services to help connect marketers with consumers, and the overall industry supports a vibrant mix of technology and services companies. 

"Although the increase at first blush seems small, any increase in the cost of accessing an important and growing marketing and service channel will have a ripple effect with some potentially bad consequences," he said. 

Final Take
Dan Butcher, associate editor, Mobile Marketer