Sprint Refunds and Message Flow Changes

Starting with the June billing period, Sprint will start deducting refunds from the outpayments made to content providers. Previously, Sprint was not accounting for refunds. Sprint has also implemented a new message flow whereby subscribers are 'validated' before the premium content is delivered and billed. This means that subscribers who cannot be billed will no longer be able to receive premium messages or make phone calls. These subscribers are 'hotlined' which means that when they attempt to make a phone call, they will be redirected to Sprint's customer service hotline. ReminderConnection will start returning a specific error code for hotlined subscribers.

Summary Table of Carrier Requirements/Restrictions

It's often hard to keep track of what is allowed and what isn't. Because of that, we've created a table summarizing all carrier requirements and restrictions related to operating common short code (CSC) campaigns, both premium and standard rated, in the US.

You can download the table here. Let me know what you think. Drop me an email: travis[at]reminderconnection.com

Global Messaging 2007

The fourth annual Global Messaging conference took place this year in Monte Carlo. Analysts are predicting a continuing growth in the volume of SMS messages sent worldwide. In 2005, yearly SMS traffic reached the 1 trillion level. For 2010, estimates vary between 2.3 trillion and 3.2 trillion.

According to John Delaney, principal analyst in Ovum's Consumer Group, there are five reasons for the success of SMS:

1. Simplicity: everyone can use it.
   
2. Ubiquity: everyone has it.
   
3. Awareness: everyone knows about it.
   
4. Critical Mass: everyone can receive SMS and knows how to read it.
   
5. Reliability: SMS messages don't get lost all that often.

According to Cellular News "A key industry trend reiterated at Global Messaging 2007 was that in the mature markets, mobile networks are starting to acknowledge the important role of wireless applications service providers (WASPs) and aggregators in growing the A2P market. In the experience of mobile operators, the higher percentage paid out to WASPs, the more revenue the mobile operator makes from messaging. Mobile operators in the United Kingdom currently offer the highest payouts in the global messaging market."

Let's hope U.S. carriers get the 'message'.

Verizon Content Rating

Verizon is in the early stages of releasing a new content rating system for off-portal content. All short code programs will need to be categorized in one of four different content categories. All Verizon subscribers will also be categorized in one of four content categories. If a content provider is attempting to deliver content to a subscriber in a 'lower' category, the content download will fail and a specific error will be returned to the content provider, who will need to send a message to the subscriber alerting him/her that the content is not available.

The four content categories are :

Verizon content/subscriber categories

Category	Recommended Age Group
C7+	Age 7+
T13+	Age 13+
YA17+	Age 17+
Filter Off	Age 18+

The subscriber classification can be changed by parents by logging in to their Verizon account. The default subscriber classification is T13+. The content classification is set by the content provider and actively audited by Verizon to prevent abuse. The default content classification is T13+.

Timelines for implementation have not been communicated. While this potentially opens the door for content providers to offer adult content, Verizon has made it clear that only the first two content categories will be allowed for now. There is no firm date at this time for when content in the later categories will be allowed.

US Premium SMS Revenues

Telephia released the first ever study on Premium SMS in the US. Over the course of the first quarter of 2007, a total of 74 million premium SMS transactions were processed across all carriers, for a total retail value of $273 million.

A couple of interesting statistics:

• Mobile content downloads dominate in value (79% of total revenue). Average premium transaction value is $7.27
  
• Off-portal content downloads now account for 32% of all mobile content downloads.
• TV based voting and sweepstakes account for 47% of total volume, but that total is probably based on a few stand out hits like 'Deal or No Deal', who accounts for half of that volume. Average premium transaction value is $1.
  
• Based on Q1 results, we can now safely say that 2007 Premium SMS revenues will exceed $1 billion.

Detailed results are posted below.

Q1 2007 Premium SMS Volume and Retail Value

Category Type	Volume (000)	Volume Share (%)	Revenue	Revenue Share (%)
Mobile Content	29,544	40%	$214.9M	79%
Voting/Sweepstakes	34,716	47%	$35.4M	13%
Chat/Community	5,497	7%	$5.7M	2%
Other	4,208	6%	$17.4M	6%

Here are some thoughts about these numbers:

• The high transaction value associated with mobile content ($7.27) clearly indicates that the vast majority of all mobile content downloads is charged on a monthly subscription basis. If that is the case, roughly 10 million users are currently signed for monthly subscriptions, or about 4% of all mobile subscribers in the US.
• Furthermore, if we assume that binary content subscriptions (ringtones, wallpapers, games, etc.) typically cost $9.99 per month, where as pure text subscriptions (horoscopes, jokes, etc.) cost $4.99, it follows that 54% of all mobile content subscribers sign up for text alerts, and 46% sign up for ringtones.
• It is clear that most premium sweepstakes and voting contests run at a $0.99 price point.
• It is interesting to see that voting+content account for over 90% of all revenues. This means that other premium sms categories such as chat, dating, and micropayments haven't really taken off yet. This is hardly surprising given the limited support amongst carriers as well as the severe restrictions that some carriers are imposing on such programs.

Verizon and Reverse Auctions

Verizon Wireless now requires all premium billed reverse auctions to include some form of added value content (text alert, joke, trivia, etc.). This is due to the changing legal landscape causing reverse auctions to be considered as games of chance and no longer games of skill. Without the added value component, reverse auctions could be viewed as an illegal form of gambling in some states.

Although this provision specifically applies to reverse auctions (and not general sweepstakes), we do feel that the next step will probably be to extend it to premium billed sweepstakes. We encourage content providers to start modifying their premium sweepstakes and reverse auction campaigns accordingly.