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Verizon to charge for message termination

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As Europe braces itself for mobile telephony without termination rates, Verizon is to start charging companies for delivering messages to its customers, while continuing to charge those customers for receiving them.

Verizon has notified its OpenMarket partners, in a letter reproduced by RCR Wireless, that from 1 November they'll have to cough up three cents for every message delivered to a mobile subscriber, compared to the fraction of a cent they might be paying now.

In Europe punters don't pay to receive text messages or phone calls, but in the USA contracts specify an allowance of voice minutes and text messages, with deductions made for both outgoing and incoming communications. This has meant that services such as Twitter could happily bounce SMS messages out to hundreds, or thousands, of twits with the recipients paying for the service they received.

In Europe, on the other hand, Twitter has had to suspend its SMS notifications as the cost of sending the messages breaks their business model - a situation that could quickly spread across the pond to Verizon customers.

The operator is making some exemptions, including non-profit organisations - though Web 2.0 companies that hope to make a profit one day will have to pay up. If the change spreads then it's going to seriously knock the business plans for 4INFO (SMS searching), and ChaCha (SMS questions answered) as well as companies distributing content over SMS such as Cellfire(discount coupons).

Such services survive in Europe through the use of premium-rate messaging and other billing mechanisms, but American companies haven't had to resort to such things - at least not yet.</p

Verizon contends that the charge is just to cover their costs, but the scale of the increase is unprecedented and follows big rises in the cost of text messaging over the last few years. This is a way to further bump up the revenue coming in without putting bigger numbers on customers' bills - though it's hard to imagine all the existing text-based services will survive under such a regime. ®

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