What is a premium rate SMS service? Any service that requires a user to SMS a word or keyword to a short code such as 35010 is called a premium rate SMS service.
These services are commonly used to provide information to niche user groups, for interactive TV, promotional competitions, and purchasing ringtones, pictures, videos and games.
Premium rate SMS services generate significant revenue for media companies and content providers, creating new business opportunities. In some cases the entire revenue model of a TV programme revolves around premium rate SMS.
Headaches for network operators
The problem is that these services can be accessed by anyone of any age, which is great for surfers needing weather forecasts and day traders depending on financial information, but problematic when it comes to services providing adult content.
Mobile technology has advanced to enable the transmission of colour pictures and soon most mobile phones will be able to download video clips. This enables users to download content with relative anonymity, spurring proliferation of adult content.
Juniper Research in the US predicts the global market for adult mobile phone content will reach $1 billion this year and that mobile gambling services will generate $19 billion by 2009.
Although not prevalent in SA, subscription premium rate SMS services have caused several network operators many headaches overseas.
Scams associated with premium rate SMS services have attracted negative media attention in several countries.
Scams typically involve hoaxes that prompt users to send a premium rate text message to win prize money, which is never awarded. Other scams involve hiding the cost of the premium rate SMS which could be as high as R30 per SMS entry.
Problems for parents
Many parents have found themselves on the verge of bankruptcy because of their children`s excessive expenditure on mobile content.
Pieter Streicher, MD, Celerity Systems.
The biggest users of premium rate services are teenagers and many parents have found themselves on the verge of bankruptcy because of their children`s excessive expenditure on mobile content.
Content providers are also known to encourage children to join premium rate subscription SMS services for a number of new ringtones each month, for which they are billed. A problem arises when subscribers find it impossible to cancel their subscriptions.
Damage to the reputation of premium rate SMS services is intensified when minors run up excessive bills accessing adult content or online gambling services.
Taken collectively, these negative reports are threatening the future of premium rate SMS services because of opposition from governments and network operators.
Unlike Internet service providers, networks operators tend to be closely associated with content because they collect revenue on behalf of content providers.
Some network providers have threatened to shut down premium rate SMS services, rather than be associated with negative publicity.
What can be done?
Problems with new technologies are common and most prevalent at the beginning of the technology diffusion cycle due to the lack of regulation and control.
From a technical point of view, mobile phones can be more effectively regulated and controlled compared with any other telecommunications technology. Individual phones could be barred from accessing undesirable services.
Another solution involves setting up a central database of users that have opted in to receive adult content and verifying those users are adult users. This would help ensure adult content was not delivered to under age users.
For general subscription services, a universal and effective method of cancelling subscriptions could be enforced. Already in some countries, simply SMSing the word "stop" will terminate the subscription service.
Self-regulation is best
The best solution is to encourage consumers to report the misuse of premium rate SMS services and the industry itself to enforce suitable regulations and controls. If this is not done, outside parties like the government may step in, either imposing regulations or even banning premium rate SMS services altogether.
Fortunately, the process towards industry self-regulation has already begun in SA with the founding of the Wireless Application Service Providers Association (WASPA), which is finalising a code of conduct for premium rate SMS service.
WASPA has also set up a channel for consumer complaints. Consumers can lodge complaints with WASPA via e-mail at info@waspa.org.za or www.smscode.co.za.
User guidelines
* Premium rate services are charged at a much higher rate than a standard SMS, ranging from R1 to R30.
* The billing of premium rate SMS services occurs at the time content is requested, which means you will pay for the service even if you do not receive the content.
* Scammers often use spam to publicise their campaigns, so any unsolicited SMS or e-mail requesting you to send a premium rate SMS is likely to be a scam.
* In addition to the premium rate SMS service fee, you could be charged additional fees if downloading the content requires wireless application protocol use.
* Premium rate SMS service adverts must display all associated costs and provide contact details of the wireless application service provider (WASP) or the client.
* All premium rate SMS services are offered by WASPs in association with the network operators on behalf of their clients or directly as a mobile service.
* All WASPs must belong to WASPA.
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