At 09:46 AM 9/27/02 -0400, you wrote:
>In some ways premium SMS is similar to the 900 lines, at least in terms that
>it uses IVR/Service Bureaus and premium rate numbers for billing and
>Basically, its just another method of distribution - and in the process it
>revived the 0900 industry in much of Europe (which, like in the US, had the
>taint of porn).
>As far as the US goes, no one except porn and psychics are delivered these
>days via 900, AT&T and MCI got out of the business and there's a 60%
>chargeback rate, so in the short term, I would not look to this as a decent
>billing and payment method (frankly, if the telcos won't bill for it, it is
>not going to be very successful).
Given chargebacks of 60%, it begs the question why are they so
high and why don't we see a chargeback rate like 1% or 2% or even 5% that
are seen for credit card charges for similar services?
And if the 60% chargeback rate is true (I have no reason not to doubt you),
it is truly shocking! No wonder AT&T and MCI have gotten out. Without even
knowing the details of that, I would bet my life that the blame most likely
with some meddling Federal group making some stupid law that would make
legitimately incurred charges so easily disputed.
In fact, I've noticed on my phone bill it basically says that even if you
refuse to pay
your 900 bills (even if you knowingly and willfully incurred those charges)
that you are
in no danger of having your phone line yanked out. How dandy.
It is quite common fare in the US (even for credit cards) that many people
will willingly and knowingly use a for-fee service and then shamelessly
dispute that charge later and not pay. The way to stop that is
for the billing service to ensure that they have strong protections
against the repudiation of these charges. Sometimes, much easier
said than done, especially if it isn't a physical swipe of a credit card
with a signed receipt. I've seen some instances in the adult world where
they use techniques of "public embarrassment" to get deadbeats to pay up.
That is, they follow up with a big, shiny, invoice for the service right to
door -- for all your neighbors to see.
But having said all that, if we can strengthen non-repudiation protections
then 900 services would still be very viable and could also be extended
to the mobile space. Examples of that could be the usage of pin numbers
(which everyone is familiar with using) and even biometrics (starting with
voice stamps) to approve a transaction, which is found within the investment
>Now, in terms of profits from mobile content, I have to disagree with your
>analysis simply because there's not the volume to support the Japanese
>model, and moreover, because telcos are extending the same type of inane
>pricing (e.g., all you can eat, flat rate) that is applied for voice, which
>sets a bad precedent for the content provider as it limits there ability to
>set fair rates for their content.
Yes, the precedent sets for content providers is very bad.
>And, while I understand your arguments regarding Japanese production and
>development of new products, frankly, this is an argument that the content
>providers, who many want to do this, are being told to keep prices lower
>than the market may dictate by the telcos in the US to spur initial
>First, where the telcos should use the Japanese model of product launch is
>for handsets, not actual content. They should put out decent phones for $99
>with full enabling of color services, high-speed, etc. After all, its a
>terminal just like a PS2, and at the end of the day, should be as low as
>possible to ensure the entry of as many users as possible into the market
>for mobile content.
>Unfortunately, this is not the case, at least for the phones that will
>actually drive the market.. This means a phone with a color screen, memory,
>downloadable ringtones and high-speed access. These phones are not
>subsidized enough at present (starting right now at about $199) to jump
>start the market.
I will disagree with you slightly here. While subsidizing the handset
prices to jumpstart the market would be nice, I wonder if it really takes
a color screen and high speed access to make content work -- ie., collect
money from customers for content? I don't think so.
My experience on PCs in the early 1980's with textual input games like Zork
("Kill dwarf" --> "kill dwarf with what?" --> "Kill dwarf with ax") even with
plain-text email games today (Mad-lib kind of stuff, etc.) shows that people
can be entertained without a lot of technology. I have a friend working on
some very cool projects like that that are making the most of existing
technology/infrastructure/handsets. Some of the most popular games
are the simplest -- Pong, Tetris, etc.
>And, it is this lack of decent handsets that does not allow content
>providers to realize the potential of mobile content at volume pricing.
>So, to then say that content providers are to subsidize the market by
>sticking to lower pricing is quite unattractive for the content providers
>In Japan, the model works because DoCoMo built out the mass market for
>mobile content by subsidizing handsets and standardizing pricing.
>The telcos in the US are all over the map on this one, and frankly, like
>DoCoMo, KDDDI and J-Phone, they need to hire hardcore content people to
>develop a platform, pricing and services that are built from a content
>provider prospective, not a telco prospective.
I agree with you on hardcore content people. One of my friends is a hardcore
content person and it's amazing how much the telcos just don't get it.
They think every deal has to be some complex, $50 million Dreamworks
kind of deal with content built around Brad Pitt or someone like that. It
have to be that way. Also, because this industry has been very staid and
you find very few marketing savvy people who understand traditional
marketing strategies and tactics.
>No telco is good at content, they are engineers, technology experts, and
>frankly, the only time they have been successful with content has been when
>they have allowed the content providers to define the market. Both in
>Europe and Japan, and I sincerely it will be the same case in the US.
Sadly (as a consumer), that is what I'm seeing now. But, the good news
is (as an entrepreneur) that opens up lots of opportunity for the
that can get good content out or hookup with telco dispute the telco's
to content. I guess it would be the equivalent of Fairchild Camera getting
into semiconductors (at least the lithography process would make sense).
>Now, in terms of 900 services in the US I couldn't disagree with you more
>strongly. From the IVRs to the consumers to the FCC to the content
>providers, and content provider worth their salt will not use 900 for
>Firstly, the FCC is on record stating that users can retroactively refuse
>payment for any 900 charges, causing a 60% chargeback rate, something no one
>wants... And causing remaining 900 providers to charge at least $1 per call,
>making profit margins slim for most services.
I hate to get into politics here, but everything is about politics. I
frankly can't stand
the FCC, the FTC, and the rest of these alphabet soup bureaucratic. It's so
typical that the biggest charges on my phone bill are
and those are the things that are actually illegal in the US since only
can tax and the latest tax (aka the Al Gore tax) was not authorized by
But it doesn't matter to these agencies, they won't let you repudiate the
I tried and they were deadset to turn off my phone! Can anyone say "double
But that's life and these pikers aren't going away, in fact the more their
world crumbles around them (the USPS, too) the more desperate they get to be
"needed". So it's probably just as well for smart entrepreneurs to work
and leave them to rot.
A workaround would be to use a non-900 number in conjunction with a
accessed by a pin or triggered (and associated) by the number dialed from
could be opened and replenished with a credit card, check or a card bought
a 7-11 with
How would you see that being accepted (payment via non-900 number and
that is not billed to your phone bill)?
>Moreover, the two biggest and most reliable providers, AT&T and MCI left the
>game as a result.
>And, of course, you can factor these elements into a business model and
>still be profitable, but any mass market content provider will shy away from
>900 services not only due to chargebacks, but just as importantly, due to
>negative market perception of the 900 services in general and the damage
>that these may cause their brand.
>Look into the 900 scene in the US and you will see that my analysis is
>backed up quite well.
I do believe you there. And if 900 numbers do have that completely unsavory
image, then the companies that value their brand equity aren't going to
tarnish it for some marginal revenue at this point.
>For the mobile content provider, 900 is a last resort, and until the factors
>mentioned above change significantly, you'll find that 900 will not be used
>as a delivery mechanism as it is in Europe.
>In absolute terms, of course you can use 900 to circumvent the telcos to
>some degree, but from the content provider's perspective, it just doesn't
>work as well as you assume.
Thanks for all of your excellent insight and documented facts.
A U D I E N C E T R A X
Monetize your Media (tm)
Received on Sun Sep 29 06:28:26 2002