Sprint has started charging ½ cent to the text messaging service providers hired by the likes of financial institutions and media companies to distribute news updates and alerts to consumers. As a result, ESPN, the Weather Channel, and MSNBC have stopped sending SMS messages to their subscribers on the Sprint network.
This is not good news for financial institutions, billing, and collections companies who have effectively used the SMS channel to reach their customers.
Here’s Sprint’s rationale:
“When the business model was originally created that enabled businesses to send texts to consumers without paying a fee, there was no charge because carriers were trying to encourage businesses to adopt texting as a way to reach consumers,” Kiefer said via email. “Today, with the dramatically rising use of texting by businesses, Sprint needs to recoup the cost for providing this capability.”
As the GigaOM post points out, consumers already pay for all text messages, inbound and outbound. What’s even worse, frankly, is the fact that the mobile operator’s costs for delivering a text message is near zero because it makes use of existing telecommunications infrastructure. So, this move by Sprint could be seen as effort to improve its financial performance.
One can have a little sympathy for the position the mobile operators find themselves in. It is hugely expensive to build 3G and now 4G data networks. But SMS is not. It’s been nothing but pure profit. Just when the text channel is becoming a widely accepted alerting system for financial institution customers, one they already pay for, at least one MNO is willing to degrade its value as an alerting and content delivery channel. Cautious issuers will hesitate to sign up for Visa and MasterCard fraud alerting and card usage messages. And that’s a shame.