Premium SMS rule risks millions of telco revenue: Telsyte

"Hundreds of millions" of revenue at stake through premium SMS barring

Impending changes to the rules governing premium SMS services have the potential to significantly impact revenues of Australian telcos and their service partners, according to one analyst firm.

The changes, brought by the Australian Communications and Media Authority (ACMA) and kicking in on 1 July, will require mobile carriage service providers to implement the ability to bar premium SMS or MMS services at a customer’s request.

The rule would likely help consumers who have inadvertently opted in to a premium service, but it would also likely have a negative impact on telco revenues, according to research director and principal analyst at Telstyte, Warren Chaisatien.

“There are hundreds of millions of dollars at stake for telcos and their partners as a result of this new ACMA rule,” Chaisatien said.

According to Chaisatien, the premium SMS market was worth about $250 million in 2009 and represented about 10 per cent of the total telco-based SMS revenue in Australia.

Premium SMS services have not grown at a rapid rate, largely due to the maturity of the Australian market, Chaisatien said. The profitability of the sector, however, has increased substantially.

“Premium SMSes, on average, have been 55 cents for about a decade now, but it has become increasingly less costly for telcos to deliver them, so they have become a real cash cow for the carriers,” he said.

ACMA is also proposing to introduce further protections for consumers via ‘Do Not Contract’ and ‘Do Not Bill’ rules.

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