Sisyph.us - Erik's personal blogs

Text messaging is a core part of the Foneshow experience. Text message notification of new programming and leveraging that as a menuing system is key to how Foneshow works and is better than our competitors (it's also where we have our patents). To use the short code system in the US the cellular carriers insist that you have to adhere to some very specific rules about sending messages as far as verifying users and not sending unsolicited texts. We spend a lot of time and energy jumping through hoops that the cellular carriers put up to protect their subscribers from SMS spam.

So yesterday when I read that AT&T sent unsolicited text messages to a "significant number" of it's 75 million mobile subscribers reminding them that American Idol (a show that AT&T sponsors) I was pretty surprised. The previous Idol voters who got texts I understand, I'm sure that in the fine print of Idol voting you opted in for those. But AT&T also sent Idol texts to "heavy texters" who had never participated in American Idol. That is simply spam.

AT&T claims the fact that they don't charge for the text and that you can then opt out means it's not spam. That's bullshit.

If we we started sending unsolicited texts to users who had not opted in they'd shut us down so fast it would make your head spin.

Google is launching a gTalk client for the iPhone. While that's terrific, some of the reaction to it is over the top. Some in the digerati to proclaim the death of texting via SMS is nigh.

They are wrong.

There are 3,000,000,000 cell phones in use.

There are 6,000,000 iPhones in use.

The iPhone is 0.2% of the cell phone market. If I want to text someone who doesn't have an iPhone (99.8% of the market) I have to use traditional SMS. But that's not the real problem. The real problem is that I don't know what kind of cell phones my contacts carry. That uncertainty will prevent me from trying to reach them via that channel.

Being ubiquitous is powerful. Working on every device is imperative.

Rhetorical question: If Google launched a web app that only ran on MacBook Air computers with solid state drives would that be a good business move for them?

We've been doing some testing and Foneshow works great on the iPhone!

Here you see the notification SMS's in the iPhone SMS client. The iPhone threads conversations (just like the Treo) so the Foneshow SMS "conversation" becomes a menu of your freshest available programming. It's kind of like bloglines for podcasts (on your phone).

Notice the dynamically allocated phone numbers which allow the user to access an individual piece of programming. You can also clearly see the advertisements within the notification messages (these ads are provided by 4info.net, our messaging partner. If you want to advertise on Foneshow text messages let us know and we'll put you in touch with the right people at 4info).

While we're pleased that Foneshow works great on the iPhone, we are unsurprised. We designed Foneshow to work well on essentially any cell phone.

Here's how Foneshow looks on a Nokia 2128i. Now admittedly, Foneshow looks sexier on the iPhone (but really, everything looks sexier on the iPhone). But the functionality is all there. The SMS archive acts as a menu. Dialing a number embedded in a SMS just requires the user to hit the send key.

Most importantly, the Nokia 2128i is typical of the kind of cell phone that US cellular carriers give away. This one is one of our test/demo units. It cost us $9 with a one year plan. It would have been free if we had opted for a 2 year plan. These inexpensive cell phones make up a major part of the 220 million cell phones in the US. If you want to make a mass market product you have to be able to reach a big audience.

So what phones don't work with Foneshow? Our testing has found very few.

Nic's Mom's StarTAC (circa 1997) does not have text messaging, so it doesn't work (of course it's an analog phone, my guess is it won't even make phone calls pretty soon).

We also recently discovered that T-Mobile prepaid does not accept text messages from short codes. Regular T-Mo accounts work just fine. There is a work around for the T-Mo prepaid problem using the T-Mo email gateway. It's not an elegant solution and we're hoping T-Mo changes their prepaid short code policy.

Lots of folks are talking about Twitter opening their SMS messaging API.

Let's leave the economic issues alone for a moment.

The Mobile Marketing Association (MMA) has a set of guidelines (pdf) about acceptable uses of Common Short Codes. Does not Twitter risk losing their CSC if some random person using their API promotes drug use, pornography or hate speech (or any of the other things MMA or the carriers find unacceptable)?

What am I not understanding here?

The online world is abuzz about Obvious Corp's Twitter product. It's a fun service but I wonder about the business model. Who makes money on Twitter?

Let's follow the money. Suppose I have 50 followers. When I update my status, 50 SMS messages get sent out.

Each of my 50 followers pay between .$10 and $.15 per message to their cellular provider. Even if they've bought an "unlimited" message package ($20/month for 2500 messages) and they max it out (but don't go over), they're paying 0.8 cents/message each. Let's say on average they're paying $.05/message. So for every update I make on Twitter my followers are paying their cellular carriers $2.50.

Obvious is in all likelihood paying about $.02 per message terminated via their short code (this is an assumption). So the carriers earn another $1 from Obvious Inc.

Twitter messages are limited to 140 characters, I'm guessing the eventual business model is advertising and Obvious plans to use the remaining 20 characters (less addressing info) as their ad inventory.

So what do we have...

The cellular carriers are getting filthy rich. For every little update I make to my status on Twitter the cellular carriers get paid $3.50. The carrier costs for this are really low (I'd estimate well under $.05)

Obvious needs to be able to sell their ad inventory for more than the cost of terminating the SMS'es. So Obvious needs to sell out their inventory at a $20 CPM to break even. Obvious has some demographic data, but no real time geographic data on my followers. Do they parse my messages for context and content (a la gmail)? That could greatly increase the CPM they could command.

If the carriers were smart, they would waive the message termination fees they charge Obvious. Sure, it's great for them to get paid on both ends, but it really behooves them to foster the adoption of opt in, push, subscription services that use SMS.

Jason Devitt had a great post a while back on the economics of SMS.