Sprint standards and penalties

Sprint has elaborated a number of standards that content providers must comply with or face penalties. The standards go beyond the guidelines released by the MMA today and are described in full detail below:

1. Compliance with the Consumer Best Practices Guidelines, as set forth by the Mobile Marketing Assocation. The guide can be downloaded here
2. Compliance with any rules or requirements set forth by Sprint from time to time regarding campaign guidelines. Check the Quios white paper for list of rules and requirements.
3. De-activated phone numbers must be removed from all your services within 24 hour of receipt.
4. Messages destined to invalid or blocked Sprint phone numbers shall comprise no more than 25% of all messages delivered per month.
5. Billable events destined to invalid or blocked Sprint phone numbers shall comprise no more than 25% of all billable events delivered per month.
   

Re. 4 and 5, Quios customers are in good shape because we do a number look up on every phone number we receive to avoid sending any invalid messages or billing events to the carriers.

Sprint may enforce the following penalties if you do not meet the standards outlined above:

1. Sprint, in its sole discretion, may terminate a campaign that is determined to be in non-compliance.
2. Sprint may recover any 'reasonable and documented out-of-pocket costs' to a maximum amount for any single breach or series of related breaches equal to the lesser of (a) 20% of the amount owed to the content provider in that month or (b) USD $30,000 for the initial breach, USD $50,000 in the event of a second breach of the same Sprint standard, or USD $100,000, in the event of a third breach of the same Sprint standard. These amounts may be set off from any fees or revenue share owed to you.

MMA Releases update to Consumer Best Practices Guideline

The Mobile Marketing Association (MMA) today released an update to the Consumer Best Practices Guide. The guide provides content providers with specific guidelines on how to set up and manage mobile campaigns.

Here are the key changes:

• Use of 'free' terminology in advertising and promotion
• Marketing to children
• Processing of carrier deactivation files and management of spending cap limits
• Viral marketing

The most recent version of the guidelines can be downloaded here.

Cingular and Credit Card Billing

Cingular has released a new edition of their 'customer experience' policy document. The biggest change pertains to alternative (ie. non-premium SMS) forms of payment. With immediate effect, Cingular will no longer accept short code campaigns that use non-premium SMS based forms of payment (credit card, Paypal, etc.).

Cingular used to allow non-premium SMS forms of payment as long as premium SMS was promoted as the 'primary' form of payment.

New campaigns that include alternative payment methods will be rejected. All existing campaigns need to comply ASAP with the new policy to avoid any danger of short code termination.

Carriers and disconnected numbers

The relationship between people, mobile numbers, and carriers is not static. Actually, it's surprisingly dynamic. People change phone numbers when they move. Or they get suspended for non-payment or other reasons. Or they keep the number, but change carriers (also called 'churn'). When numbers get de-activated, carriers typically re-assign them to other customers within 1-3 months.

It is quite important for content providers to understand the fluid nature of number allocation and assignment, especially if the content provider is offering subscription services. If these changes are not implemented diligently, content providers risk billing the wrong people. This will lead to angry customer support calls, and to carriers shutting down the content provider's short codes.

Here's some carrier specific information regarding handling of number changes:

- Verizon : posts number changes on a daily basis. These include de-activations, suspensions, modifications, and blocking. A de-activation means that the number has been cancelled. A suspension means that the number is temporarily not available. A modification means that the number has changed, and blocking means that the number is not authorized to receive any premium billed transactions.

- Sprint, Cingular, and Dobson : post number changes on a weekly basis. Only provide de-activation information.

- Other carriers currently don't provide any number change information.

When receiving DEACT, or SUSPENSION notices, customers need to opt-out all numbers from all campaigns and stop sending any messages to these numbers. If one of these numbers makes a new opt-in request at a later date, the request can be honored.
When receiving MODIFY notices, customers need to change the subscribers phone number but can leave the subscriber opted-in. (Verizon only)
When receiving BLOCK notices, customers need to block the subscriber from engaging in any premium SMS transaction, even when the customer requests it. BLOCKed phone numbers become UNBLOCKED as soon as they show up on a DEACT feed. (Verizon only)

For Quios customers using the Quios Permission Management System (QPMS), no further action is required. Quios will handle all feeds and take the proper action without any intervention from the content provider. Customers who don't use QPMS will have to download the feeds from the Quios FTP site and implement the proper action. Failure to do so will lead to termination of the shortcode/campaign by the carriers.

Verizon and Tracfone

Verizon Wireless has ended its premium billing relationship with Tracfone. Tracfone is an independent provider of prepaid wireless services.

Hence Tracfone subscribers who use the Verizon Wireless network will no longer be able to access premium SMS services. Roughly 1 million Tracfone users are impacted. Content providers need to opt-out all Tracfone users, and prevent them from attempting any PSMS transaction.

Contact us for the list of Tracfone MDNs (phone numbers).

Virgin Mobile

Quios is pleased to announce that it has added Virgin Mobile to its list of supported carriers. Virgin Mobile counts more than 3 million subscribers and as an MVNO uses the Sprint network.

Virgin Mobile will support standard and premium rate text campaigns (no binary or content download campaigns for now). We expect Virgin to start accepting new campaigns as of August 1, 2006.

Quios offers the widest coverage of all aggregators in the market, connecting to 11 US carriers: Verizon, Cingular Orange, Cingular Blue, Sprint, Nextel, Boost, T-Mobile, Dobson/Cellular One, Alltel, US Cellular, and Virgin Mobile.

Contact us for more information.

Q1 2006 Subscriber numbers

The 10-Q quarterly reports to the SEC and press releases by various carriers offer a good insight in the latest subscriber numbers. We've aggregated the numbers below for your convenience.

According to the CTIA website, there are 213 million wireless subscribers in the US. Quios connects to over 93% of all wireless subscribers in the US.

Q1 2006 US Subscribers

Wireless Carrier	Subscribers	Market Share
Cingular	55,800,000	26.2%
Verizon Wireless	53,020,000	24.9%
Sprint/Nextel/Boost	48,900,000	23.0%
T-Mobile USA	22,700,000	10.6%
Alltel	10,800,000	5.1%
US Cellular	5,500,000	2.6%
Dobson/Cellular One	1,670,000	0.8%

Alltel Prepaid Customers

Alltel is implementing an enhancement to its billing platform that will prevent Alltel prepaid customers from being billed for premium SMS services. The tentative implementation date is May 8, 2006. This will lead to increased premium SMS failure rates from that day onwards. Alltel is working on a longer term solution to allow prepaid customers to purchase 3rd party content. It is anticipated that such solution will be released towards the end of this year.

At the same time, Alltel is increasing subscriber spending limits for 3rd party content to $35.00 per short code per user per month. Alltel is managing the enforcement of this spending cap. The previous limit was $25.00.

SMS Usage Continues to increase

Steve Largent, president and CEO of CTIA, released some new SMS and data statistics at last week's CTIA show in Vegas. In June of 2005, over 7 billion text messages were sent across carriers in the US. This is a 154% increase over the previous year. Also, over 50 billion text messages were sent in the last 6 months, which represents a 96% increase over the previous 6 months. At the end of 2005, over 208 million people own a cell phone, a penetration of around 70%. Finally, wireless data revenues reached a total of $8.5 billion in 2005, a 86% increase over the previous year.

6 digit US Short Codes available NOW

The Common Short Code (CSC) program continues to expand rapidly. Over the next couple of weeks, CTIA will start allowing the registration of 6 digit short codes. This will vastly increase the current pool of 600,000 5-digit short codes by adding 1,000,000 6-digit short codes.

UPDATE (6/1/06): 6 digit short codes are now available

MMA releases new Best Practices Guidelines

Today, the Mobile Marketing Association (MMA), of which Quios is an active member, released Version 2.0 of their Best Practices Guidelines. They can be downloaded here.

The Best Practices Guidelines have been established to provide a better wireless consumer experience by giving the consumer control over the communication to his/her cell phone and by ensuring that the consumer has been properly informed of all premium charges.

The new guidelines now include specific recommendations re. chat programs, very similar to the T-Mobile playbook requirements. It is expected that these recommendations will be enforced by all carriers. Furthermore, we expect that Verizon will soon start accepting chat programs again, provided they conform with the new MMA guidelines.

Success Billing Ratios (SBR)

Here's one of the industry's dirty little secrets. Not all Premium SMS transactions succeed. As a matter of fact, many will fail. Each failed message is lost revenue for the customer, and brings down significantly the average outpayment per message. The ability of a gateway provider to actively manage SBRs and minimize failure rates is therefore one of the most important criteria anyone should use in their selection of a gateway provider. It is significantly more important than the outpayment rates themselves.

The average SBRs we have seen for 2005 are as follows:

Verizon Wireless: 93.4% (i.e. 93.4% of PSMS transactions succeed)
Cingular Orange: 72.3%
Cingular Blue: 60.7%
Tmobile: 54.1%
Nextel/Boost: 54.4%
Sprint: 55%
Alltel: 52%
Dobson: 69.8%

What explains these failure rates ? The reasons tend to be carrier specific, such as:
Cingular/Tmobile: Prepaid phones are not supported (Tracfones, or other). Hence all PSMS messages sent to prepaid subscribers will fail.
Nextel/Boost: Subscribers need to set up an eWallet with the carrier before they are allowed to receive Premium billed messages. Many subscribers don't do that.
Sprint: Sprint's outpayment statement now have a 'pending validation' clause, meaning that the carrier reserves the right to retroactively correct any mistakes in their outpayment statements. This is due to the fact that Sprint used to accept and pay out on MSISDNs that did not belong to their network.
Alltel/Dobson: If a subscriber complains to Alltel or Dobson customer support, they will automatically be blocked from receiving ANY Premium SMS messages

The biggest reason why PSMS messages fail (can account for up to 20% difference between success and failed messages) is because customers submit the wrong carrier information along with the Premium SMS message. Quios has solved this problem for its customers by looking up the carrier in its LNP (Local Number Portability) databases, hence ensuring that the message always gets delivered to the right carrier. As a result, the Quios SBRs are one of the best in the industry.

Summarizing:
SBRs are the single most important determinant of success and profitability of any PSMS campaign. Select a gateway provider based on its ability to manage SBR ratios. Ask your provider about their average SBRs. If they don't know, they probably don't manage it very well....

Verizon and Chat

Verizon has put a hold on all new chat programs pending the finalization of their new chat policies and guidelines on or around December 23rd. They feel that the current programs represent a significant risk for VZW from both a content standards and Best Practices perspective.

Update: As of March 16, 2006, all new chat programs continue to be on hold. No new guidelines have been published yet.

Cingular and Subscription billing

As mentioned before, Cingular is requiring all off-portal subscription programs to move to monthly billing, using Cingular's subscription program. Some aggregators appear to be reluctant to move to this new system, probably because of the significant technology changes required to be in compliance with Cingular's new infrastructure. However, as a Cingular representative recently pointed out: "We have 16 people that we pay $1,000,000 per year to monitor campaigns. Anyone not billing monthly for subscriptions will be caught and shut off". Better be safe than sorry !!

Verizon and binary content

Verizon is getting ready to allow off-portal download of multimedia content such as ringtones, wallpapers, games, etc. The first programs are scheduled to go live in April/May. Preliminary pricing points to a fixed outpayment percentage regardless of retail price, which is different from Verizon's regular outpayment schedule. This means that outpayments are going to be relatively more interesting for lower price points (<$1.99), and less interesting for higher price points.

Dobson, Alltel and chat

In addition to Verizon, it appears that Dobson has now also put a hold on new chat programs where as Alltel is following Tmobile by limiting the premium billing of chat services to 99c. As a result, it is increasingly difficult to launch cross-carrier chat services on new short codes. Here's a summary of the limitations by carrier for chat services:

• Verizon: on hold.
• Cingular: no limitations.
• Sprint: limited to 50c per message. Human content filtering required.
  
• Tmobile: limited to 99c per message
  
• Alltel: limited to 99c per message
• Dobson: on hold.
• Nextel/Boost: no limiations.
  

Sprint moves to new billing platform and allows binary content

As of January 31st, Sprint is moving all premium billing services to a new billing platform. There is no change for content providers. Consumers will no longer receive messages from short codes that have the price point appended to the code. All messages received by consumers, regardless of price point, will show up with the 5 digit short code and are fully reply-able.

Also, as of today, Sprint will allow binary content (ringtones, wallpapers, games) to be delivered to Sprint handsets and billed through Premium SMS. This means that binary content is now fully supported on Cingular, Tmobile, and Sprint, creating a market of 90 Mio subscribers. It is expected that Verizon will support binary content by the end of Q1 2006, further increasing the market size to over 135 Mio subscribers, or close to 70% of all mobile users in the US.