Premium SMS Billing Ends in the USA

by Bob Bentz

Like most providers of telemedia services, ATS had already pulled out of the premium SMS business in the USA.  A recent surge in unscrupulous cramming ended the industry, but you have to wonder why such alternate billing services seem to work without problems in most other countries, but are almost always problematic in the USA.  Industry veteran Bob Bentz discusses why.

King of Prussia, PA — Yesterday, AT&T, Sprint, T-Mobile, and Verizon announced that it will be terminating premium SMS billing for most services in the United States.

Bill Sorrell premium SMS ends

CRAM: Efforts by Vermont Attorney General Bill Sorrell led to an end of premium SMS services in the USA.

The move to end premium SMS service was spearheaded by Vermont Attorney General Bill Sorrell.  The move was made, in part, due to recent programs where consumers downloaded software on their mobile phones and unscrupulous premium SMS providers charged their mobile phone bills, apparently without the knowledge of those downloading the software.  This process is known as “cramming” and is, of course, illegal.  Hopefully, the government will pursue the providers of such services in the same manner that they pursued the end of what has been a very viable and legitimate business in most other countries around the world.

Political Fundraising, Charities Still OK for Premium SMS

It isn’t the total end of premium SMS billing, however.  Charitable donations via premium SMS, like the one that Mrs. Obama did after the Haiti hurricanes, will still be permitted.  And, in a move that should surprise nobody, Mr. Sorrell and other politicians will still be able to raise campaign funds via premium SMS.  Funny how politicians are exempt from the telemarketing Do-Not-Call list solicitations and now are holding on to premium SMS fundraising as well.

AT&T, Sprint, and T-Mobile had actually announced that they were terminating their program in response to the efforts by the Vermont Attorney General and the 44 other attorneys general that were involved in the discussions.  Verizon, however, had already announced its intentions to wind down its premium SMS program.  Verizon general counsel William Petersen said in a statement: “Verizon had previously decided to exit the premium messaging business because of these changes as well as recent allegations that third parties have engaged in improper conduct in providing premium messaging services to our customers. We are in the process of winding down our premium messaging business.”

“T-Mobile will terminate all billing for premium SMS, except for charitable and political giving, as soon as possible with as minimal impact on our customers as possible,” said T-Mobile CEO John Legere.  “We believe in making things right for our customers.”  I’m sure the recent cramming charges were a problem for T-Mobile and the other carriers, but no doubt the declining use of such services by the public and program sponsors probably made the decision a little easier for the business.  Many premium SMS providers, including ATS, had exited the premium SMS business due to other problems with it, most notably the inability to use shared short codes for premium services.

Why do Alternate Billing Services Work in Other Countries but Struggle in the USA?

Premium SMS was originally thought of as a viable alternative to the decline of 900 numbers.  And, it certainly made sense to think that way given the proliferation of mobile phones and the impact of text messaging.  But, the service never really caught on in the USA to the same extent that it did in other countries.  Certainly, the carrier take was very high, but it is in other countries too.  And, just like with 900 numbers, the initial participants were often bottom of the barrel late night television-type services.

There is no doubt that the cramming practices by these unscrupulous providers was a problem, but as one who has worked in alternate billing telemedia industry for 24 years, it is continually frustrating that the United States doesn’t seem to be able to make such services viable when they are completely viable in most other countries around the world!  In fact, there are no people that are more like US citizens than our friendly neighbors to the north; and, premium SMS continues to be a perfectly legitimate billing mechanism in Canada.

No doubt, the USA is probably the target of more unscrupulous providers given the shear size of its economy.  But, do the US carriers build in enough safeguards to protect itself against such less than altruistic services?  Are there holes in the carrier approval and testing process?  Why doesn’t the USA have a regulatory service like Phone Pay Plus in the UK?

And, most importantly, do we protect our consumers to a fault?

Let’s face it, I’ve had to give chargebacks to consumers over the years that told me that their “cat dialed the 900 number!”

We had no choice, because our government passed laws (TCPA) that said we are prohibited from making collection efforts if a consumer wanted a chargeback.  (Imagine buying a sweater at Macy’s, not returning it, but saying you wanted a refund.)

Maybe that’s the biggest reason why alternate billing services work without problems in so many other countries, but don’t work in the USA.



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