Verizon Eyes Benefits of Text-Messaging Trial Balloon

There are good reasons people and companies send up “trial balloons.”

It is a good way to gauge potential reaction to new proposals. So Verizon (News - Alert) Wireless has floated the idea of a three-cent-per-text message fee for commercial customers of its text message capability. The floated number represented a huge change in rates, which today tend to average at less than one cent per message.

 

There was predictable opposition. So now Verizon says “specific information in one proposal, which would impose a small per-message fee on for-profit content aggregators for commercial messages, has been mistakenly characterized as a final decision to implement.”

 

“We have not increased the per-message cost to aggregators since our messaging service began in 2003, and we have never envisioned a cost to consumers or content companies, but rather on content aggregators themselves,” Verizon Wireless says. Verizon now says the “three-cent” figure was part of internal business discussions and “in no way should have been released to the public and represented as a final document.”

 

Now Verizon will be able to set a new and increased fee, but not at three cents a message, gaining new revenue but mollifying commercial customers to some extent. People will be happier when the actual price increases are not “three cents, effective immediately.” But fees will climb.

 

Trial balloons are useful.

 

Those price increases may come under more scrutiny during these tough economic times.

 

But, as TMCnet reported today, it’s possible that some telecom services, such as so-called “bundled” services that may include Internet, cable and telephone connections, won’t be affected by this financial crisis.

 

One case in point: Lazard Capital Markets analyst Daniel Amir, who follows semiconductor companies, thinks a slowdown in IPTV (News - Alert) growth in Europe and the United States could affect semiconductor shipments. Lower semiconductor shipments would be the result of firms such as AT&T (News - Alert) or Verizon missing new customer acquisition targets because of economic stringency.

 

AT&T, for example, is in danger of missing its annual projection of one million subscribers, he argues. Instead of adding 40,000 subscribers a week by the end of the year, the company might reach only 30,000 a week rates.

 

It’s a reasonable thesis, well in keeping with the conventional wisdom. But there actually is little evidence that consumers drop their video or voice services in times of economic toughness. Though there is more evidence that they might downgrade some services, historically, neither cable growth nor use of wired phone service has been short-circuited during slow-growth periods. Sure, people pull in their spending, but households traditionally have deemed video entertainment to be a “lifeline” service of sorts, and have taken the same view of their phone service.