T-Mobile Rumored To Be Raising Prices For SMS Messages, Mobile Marketers Beware

T-Mobile reportedly plans on raising prices for SMS messages sent over its network beginning on October 1st.  Though it’s a minor price adjustment, it could indicate a slippery slope if and when other carriers decide to do the same. The proposed price hike would increase the charge for standard-rate messages — both mobile-originated and mobile-terminated …   Read More

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T-Mobile reportedly plans on raising prices for SMS messages sent over its network beginning on October 1st.  Though it’s a minor price adjustment, it could indicate a slippery slope if and when other carriers decide to do the same.

The proposed price hike would increase the charge for standard-rate messages — both mobile-originated and mobile-terminated — sent over the T-Mobile network by $0.0025 per message.  While the increase is minor, it adds up exponentially for aggregators and mobile service providers who send millions of messages on a daily basis.  When the price goes up for those in the middle, the extra cost is passed along to consumers.

You may remember a while back when Verizon Wireless attempted to raise SMS prices by three-cents and was forced to retract as backlash from the industry ensued.  T-Mobile likely took this into consideration and is trying to tread lightly by attempting to raise the price by a very small amount.  The problem, however, is if T-Mobile is successful in doing so, other carriers will surely follow suit, representing a slippery slope that could lead to several minor price hikes overtime.  In the end, it’s aggregators, mobile service providers, mobile marketers and consumers who will pay the price.

The carriers have quickly realized that by increasing rates for SMS, they can substantially increase revenue generated from a highly captive audience — mobile marketers and service providers — that unfortunately have no other choice but to comply.  Carriers have a hold on the mobile ecosystem and their decisions have far-reaching implications for anyone and any business operating within it.  We’re keeping a close eye on T-Mobile’s price hike and will report back on the implications when and if it comes to fruition.

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4 comments

  1. mobileStorm, 4INFO, Public Knowledge Respond To T-Mobile’s SMS Price Hike :: mobile marketing watch | Prepaid MVNO

    […] it’s come to light that T-Mobile will likely institute a $.0025 price increase for each SMS sent over its network, […]

  2. Potential Bad News for SMS Marketers | Mobile Marketing and Technology

    […] mobile-originated and mobile-terminated, sent over the T-Mobile network by $0.0025 per message. T-Mobile Rumored To Be Raising Prices For SMS Messages var a2a_config = a2a_config || {}; a2a_config.linkname="Potential Bad News for SMS Marketers"; […]

  3. Giff Gfroerer, i2SMS

    This is like killing the goose laying the golden eggs.

    Short codes and mobile messaging are already highly overpriced. We lose 20 accounts for every account we win solely based on cost. Folks think it is just too expensive. Compare short code fees to URL fees. $10 a year versus $24,000 per year.

    What the carriers are doing here is forcing marketers to find alternatives to the short code marketing platform.

    Let's take a look at what the carriers did with premium short codes and mobile payments. The carriers wanted 40% to 50% of the charges. For a while, this made them a great deal of money. But then what happened? It invited the likes of PayPal, Google Payments, Apple and the likes into the mix, that now will control the mobile payment industry, cutting out the carriers.

    If the carriers had only not been so greedy, and said sure, we'll do it for 5% or even 8%, everyone would have left them alone. So, as a result, they will be cut out.

    This is what is going to happen with SMS unless the carriers REDUCE charges and not increase charges. The carriers are only doing this because the CAN. Their profit margins on SMS are greater on SMS than any other division in their company. But they THINK they can do this and get away with it.

    Yes, they can, in the short run. This has been the history of the carriers in the U.S. Short term thinking. This might increase revenues for the next few years, but it is sure to drive innovation to discover an alternative to SMS.

  4. A Tier2 Aggregator

    While carriers have a right (and some would say obligation, as they are public companies beholden to their shareholders) to get whatever the market will bear they do run a risk of killing the goose that laid the golden egg. Why they would choose to add costs to a subset of their service that is actually growing and generating enormous profits is mystifying – one would think that they would want to do whatever possible to reduce the friction in generating more business, not add to it.

    Carriers may be slow-moving but they're not stupid. If this doesn't evoke some kind of reaction from the Tier 1 and Tier 2 aggregators T-Mo notch the cost up again in six months and then other carriers will join in. Eventually they'll price themselves out of the market and all of the successful – and highly profitable – SMS programs that generate high margin revenue for them will be replaced by apps, HTML5 sites and out-of-compliance SMTP email-to-text usage.

    Regulation isn't the answer – market movement is. When T-Mo required a cumbersome double opt-in process for people to vote on American Idol the program simply didn't support T-Mo and told viewers that if they were T-Mo customers they couldn't vote. After an immediate outcry they changed their mind and simplified the process. A similar approach needs to be taken here.

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