Free to End User (FTEU)

phone-smAn Option Long Overdue for marketers

One of the biggest differences between email and text/SMS messaging are fees associated with the latter, both on the consumer as well as the marketer. This is wholly unique to SMS as a communication vehicle as a consumer is charged for every single message that is both sent and received. Some carriers have somewhat softened this stance by offering unlimited text messaging for a flat rate but the vast majority of mobile consumers do not have such plans.

This represents a big problem for marketers as they have no idea who on their list has an SMS plan and who doesn’t. Sending campaigns to those who don’t can lead to a lot of angry messages. While any good mobile marketer will have a clear opt-out process (normally STOP followed by the keyword being used), consumers without an SMS unlimited plan are still being charged for the messages and this can open the marketer up to potential liability. Enter the concept of Free to End User messaging.

Free to End User (FTEU) has been long discussed in mobile marketing circles as a necessary component to help spur growth and adoption of SMS campaigns. However, carrier adoption has been slow to non-existent. Currently, only AT&T/Cingular and Verizon have agreed to this, and there’s no guarantee the other carriers will follow suit.

The biggest stumbling block appears to be the billing component. Carrier billing models tend to be very complex and the idea of modifying such system isn’t very palatable to the carriers. This is somewhat ironic because these billing models were initially modified so that mobile marketing and content providers could offer their customers the option of having charges go directly to their cell phone bill. The carriers, in turn, pay out the providers, while of course taking a cut of the action. However, this has applied only to what is known as “premium” SMS (meaning a per message or subscription fee to receive those messages/content.)

FTEU essentially is this process in reverse, where first the marketer pays the carrier a per message fee and then these are sent to the consumer, free of charge. This adds a new layer to carrier billing systems because they must flag such messages so as not to bill the consumer, regardless of their text messaging plan. This, understandably, has slowed down the process to get FTEU up and running within most of the big carriers.

Still, it is somewhat surprising carriers haven’t fully embraced FTEU yet given how lucrative text messaging has become to their bottom lines. Creating a true FTEU model will help push more companies into mobile marketing and increase overall SMS volume in the long run. One of the main reasons the Asian and European markets have such more advanced mobile marketing efforts happening now is because the carriers realized that it was in their best interest to push as much messaging traffic as possible by making rates as affordable as possible.

The U.S. carriers have essentially done the opposite, including the recent increases by AT&T and Verizon to $.15 per message for those over their plan or not on a plan at all. Since mobile marketing is still very much limited compared to other marketing mediums, this hasn’t led to significant problems. Yet, as more companies start to delve into mobile campaign and consumers start to receive many potential messages per day, this will become a serious issue.

What the carriers don’t seem to realize is such measures could eventually lead to much less SMS traffic (and therefore lost revenue) as many marketers will have no choice but to shy away from text campaigns for fear of repercussions from their subscribers. This will also stunt potential growth in newer areas of SMS messaging, such as emergency alerts, appointment notices and other transactional forms of communication that might not necessarily involve a true opt-in process. For example, financial institutions, anxious to cut down on paper costs, would like to send billing notices/past due warnings via text message. However, without FTEU in place, sending even one message (regardless of intent) that the consumer has to pay for could lead to trouble for the company, including potential law suits.

The bottom line is that FTEU is long overdue and becoming increasingly important to help ensure that SMS messaging continues to flourish. It’s not enough to have only a couple of carriers offering FTEU to U.S. businesses. It needs to be a comprehensive and broad reaching option for mobile marketers. The net result will mean more business for both sides and help bring mobile marketing in maturity.

What do you think about FTEU as a marketer? Is this something you want as an option? We’d love to get your feedback as mobileStorm tries to offer this as an option for our clients.

Steve Chipman


3 Responses

  1. anonymous says:

    FTEU is a good development. However, as a marketer, picking up the FTEU costs and bundling that into the overall direct marketing and or consumer marketing campaign (emergency messaging, past due notices, etc.) makes it cost prohibitive.

    SMS marketing which is free to the end user (i.e., costs picked up by the marketer) is in fact costlier than direct mail and a plain vanilla phone call.

    Adopting SMS marketing remains a distant product development in our plans as a marketer. US mobile carriers should take cue from Asian and European counterparts to make incoming SMS free to the consumer (end user)

  2. COO says:

    Curious why you think it's more cost prohibitive than say, a bulk postage mailing of notices? Text messaging costs keep going down while postage keeps going up so I guess I disagree that a FTEU program would be that expensive.

    I agree with you though that the U.S. carriers should look to Asia and Europe in terms of how to properly handle SMS with its subscribers. However, right now the carriers see text messaging as too lucrative for them to essentially give away. Perhaps this will change in the future but FTEU is the only real alternative for marketers in the near term.

  3. anonymous says:

    At current rates – FTEU via Cingular/ATT is around 16c. FTEU via Verizon is around 9c.

    For a Marketer – Add to the above setup charges, short code charges, other charges. This would roughly put FTEU pricing close to 18-20cents per message + margin.

    Compare this to a VoIP call where per minute rates are a little less than $1 per min.

    A 160 character (max size of SMS) sent as a voice message would be around 15-20s (approx. 20c). An email would be much cheaper than both the above options.

    That said I'd like to find out who is doing FTEU today in US? or is it still an untested but interesting development that we continue to watch.

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