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T-Mobile to Implement a Twitter Tax on Texts?

In a move that could impact text messaging offerings like tweets, bank alerts and sports scores, T-Mobile USA is planning to charge an additional toll to businesses that send texts over its network. Beginning Oct. 1, the carrier reportedly will charge a toll of one-quarter of one cent to businesses for every SMS delivered to its customers. That’s right, the Twitters of the world could soon have to pay to send your texts.

The move mirrors a similar — but much more costly — effort from Verizon Wireless two years ago. In 2008, Verizon (s vz) told its business partners it would begin charging three cents per text alert, but abandoned the plan after tremendous backlash from text companies that resulted in coverage in mainstream media outlets such as the New York Times.

While Verizon eventually (and lamely) dismissed its effort as a mere “proposal,” industry insiders have long expected other carriers to adopt similar charges to increase revenues from the business-to-consumer texts — a space that is exploding as corporations and social networks discover the value of communicating via text. The new toll may seem insignificant, but it could impact the bottom lines of a wide variety of companies like Facebook, Twitter, 4INFO and others that send huge numbers of texts to their users. T-Mobile representatives weren’t immediately available for comment, but I’ll update this post if and when I hear from them.

Related content from GigaOM Pro (sub req’d): What SMS Marketers Can Learn From the Ringtone Space

Image courtesy Flickr user TheTruthAbout.

16 Responses to “T-Mobile to Implement a Twitter Tax on Texts?”

  1. QUOTE
    COM_by_CRAIG Wednesday, September 15 2010

    Wow talking about price gouging! Let see if I got my math right. 2 bytes per character. 160 max character in a SMS. One text is 320bytes per 25 cents. For 1 megabyte (1,000,0000 bytes) that is 3125 SMS text. That comes to be $781.25/mb!!
    END of quote

    Tahoo already commented on the 100x inaccuracy.

    However, I’d like to make a seperate point about data costs vs rip off text prices, in the uk, an actual text message out of contract ranges between 4-12p.
    Using Com by Craig’s 320bytes per message figure, it would seem that 1GB of these messages (inc say a message header of 80? 400bytes)
    would cost = 1,073,741,824 bytes / 400 bytes (2,684,354messages) @ 4 pence
    =£107,374 per GB
    @12 pence
    =£322,122 per GB
    yet the cost of 1GB of data is…..well, on a realistic, long term thinking ISP, = £0.15 for a domestic user.
    Allowing for business equipment costs, upgrades, support, energy and depreciation, I suppose it could jump to £10 but I’m only totally guessing and I made my point……

    So, when your ISP won’t give you more texts, in or out of contract, you know they are tighta£$€s

  2. Michael Iaccarino

    As an aggregator who has a relationship with T-Mobile, I wanted to comment on the information being reported. For our business, the new aggregator agreement is a net positive

  3. Let’s not forget, the Carriers, like T-Mobile, PAY NOTHING for the public bandwidth that Text is delivered over. Sure, they have some nominal infrastructure, but, it’s 90% plus profit on the deal. Carriers are already raping us.

    What we’re seeing is the emergence of sub-networks between compatible devices that bypass the Carriers. The day there’s an Android Text channel that integrates with iPhone, 50% of all Carrier’s text message traffic will disappear, along with their profits. I wouldn’t even be surprised if an Android/Twitter/iPhone venture specific to zero-cost text messaging evolves (of course, tied to an ad network). At some point, the fractured mobile eco-systems will converge when they determine it’s in their best interests.

    Customers will be better off, after years of being screwed by poor service, 2nd World technology and jacked up prices by the Carriers.

    Or, will Twitter just go public and buy T-Mobile?

  4. To be fair, carriers everywhere else on the planet charge people & businesses to send texts, not receive them.

    The US is a bit of an weird anomaly with this type of business model. It’s why companies like Twitter don’t generally send SMS to users for free.


  5. Verizon representative, “Excuse me Mr Evan Williams, we’re going to charge Twitter, .25c per message”

    Evan Williams, “No problems. We’ll not be sending texts on TMobile”.

    Twitter says to customers, “Due to charges on TMobile, you can no longer receive twitter updates on TMobile. Have a good relationship with your carrier. Good bye”.

    Yeah I’m sure that will work just fine.

    The reality is that the big boys including Twitter and Facebook will carve a side deal. I hear at the moment that those guys actually get PAID by the carriers in order to send messages by taking rev share off the charge to the consumers.


  6. COM_by_CRAIG

    Wow talking about price gouging! Let see if I got my math right. 2 bytes per character. 160 max character in a SMS. One text is 320bytes per 25 cents. For 1 megabyte (1,000,0000 bytes) that is 3125 SMS text. That comes to be $781.25/mb!!

    • Your result is incorrect by a factor of 100 because you did not continue reading after ” a quarter ” …

      the charge quoted in the article is “one quarter of one cent” !

      So that would be $7/mb.

      Pales in comparison to the 10 to 25 cents which wireless carriers charge for consumer text messages ( a ridiculously high charge ).

      But, look not just for all carriers — but ISPs as well — to figure out how to move surreptitiously to a charge-per-byte plan on all internet traffic. AT&T has already discontinued their ‘unlimited data’ plan for iPhone.

      Charging by the byte treats the Internet like it is a storage device, not a communications channel. And this could well be the unintended consequence which turns out to be the upshot of unclear-on-the-concept slogan-rattling of the “net neutral” campaign tied simplistically to “free speech”.

      Guess what ? It ain’t gonna be FREE.

  7. Given that customers already pay t-mobile to receive messages, I’ll be surprised if t-mobile customers don’t become negatively affected by this moe. T-mobile will have to make it in customers interests by, say, not charging customers for text messages sent by businesses paying t-mobile with this new plan. That’s good for customers.

    If a couple major companies such as twitter, Facebook mentioned in this article cease sending text their currently free messages to t-mobile customers, or start charging their t-mobile customers, it would make waves. Ut may not hurt t-mobile too much overall, though it make a portion of t-mobile customers extremely dissatisfied and feeling a bit disconnected.