EuroCrunch

A window on European internet & mobile startups and venture capital

Tuesday, December 05, 2006

 

Recipient-paid text messages and mobile innovation

European mobile telecom carriers do not charge the recipient of a text message (SMS), but only the sender. They also charge an interconnection fee for internet-originated messages.

In the US, the message charge is usually split in half between sender (10 cents) and recipient (10 cents) and a fair number of active texters opt for a flat rate of about $5/month to get unlimited text messages. Since somebody is paying to receive a message, carriers do not charge any interconnection fee for internet-originated messages and have all incentives to keep the doors open to incoming messages. All American mobile carriers provide reliable SMTP gateways free of charge. In other words you can text say any Verizon phone sending a simple e-mail message to number@vtext.com. The recipient will pay for that message.

Even though this pricing policy has raised some discussions, I believe that the possibility to send text messages for free has spurred a number of startups to explore a variety of mobility services at a very low cost. I'm thinking about DodgeBall (acquired in 2005 by Google) and more recently Zemble, Pinger and other mobile application providers that could enter the mobile market simply developing an email application without incurring any interconnection costs.


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