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Cingular Cripples SMS Application Development in US

by fishnyc22    Jul 11, 2006, 12:57 PM

I am a developer/entrepreneur working on a unique SMS application for US markets. My team and I have jumped though hoops to retrofit our application to fit the ridiculous stronghold carriers have on SMS in the US. While it is almost impossible to run an interesting and profitable SMS business that requires user interactivity via SMS short codes, (unless you are Google or some other conglomerate)... with this new development...it just got more difficult.

Cingular just announced that they will no longer allow alternative payment mechanism (credit card, etc) for any sms based program. This means that companies that want to run a legitimate SMS service where users opt-in, receive text messages and are able to reply via a short code will not be able to bill these users via credit card on their own sites (with the companies still paying 3+ cents each to the carriers for sending and 1+ cents to receive via that short code). They will have to use Premium billing where the user is charged via their phone bill. You might think that this is more convenient for the developing companies...however, Cingular takes almost 50% of the revenue for premium billing and STILL changes you to send and receive messages though your short code. When all is said and done, a profit margin that was once respectable is cut to mere pennies.

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