Friday 17 July 2009

German SMS market in crisis

Hello and Happy Friday! In a week when AIME publishes its 12 step programme for termination providers (TP) to mitigate the punitive impact of PPP’s mad regulation that seeks to punish the carrier of a dodgy service rather than the service itself (and charges them for the pleasure of policing this policy), news reaches us that, for all the turmoil in the UK market, we must all spare a thought for our German counterparts: they are having a really torrid time.

Late last month a dodgy SMS chat service run by a company called MintNet got picked up by the regulator for purporting to connect users to real people’s mobile numbers for saucy chat, when really it was putting them through to an agent at the end of a PRS number. OK, not very nice, but pretty basic stuff.

However, the scam has unleashed a deluge of regulatory stick waving and, in turn, a massive underwear-browning among service providers, TPs and network operators about what they can and can’t do with SMS chat in Germany. As a consequence, the German SMS chat market has pretty much collapsed overnight.

German regulators and the government have introduced drastic new regulations overnight, which compel service providers to categorically state not only the price of services, but also whether they are being connected to a real person or an agent. While this takes some of the mystery/fantasy out of the process for the punters, the real issue is that ads for these services will have to physically be bigger than before, costing a lot more money. And this the industry can ill afford.

While this is bad news for the chat sector, the vortex that this seemingly minor incident has created is sucking in everything from TV voting to voice chat services. The industry has got the willies across the board as to what they have to state regarding services, charges, minimum charges and so on. As a consequence mobile is being forced out of the interactive TV space and other services are under growing pressure. And all this at a time when economic woe is mounting.

Companies have already started going to the wall and the industry, through its union FST, is lobbying the government – both at a state and a federal level – to at least give it some time before introducing more regulation: at least until things pick up. Network operators are behind them, but with federal elections coming up in September, there is every chance that this will become a political football.

Here in the UK we have had our fair share of regulatory issues – heck, you STILL can’t use SMS voting on TV (for now) – but could the UK market face similar issues to what is happening in Germany?

Things seem reasonably stable in the UK regulatory environment currently. AIME has its 12 point guidelines which has attracted some industry buy in already and the MEF has set up a series of regulatory workshops to help the industry help PPP develop its next code of conduct. So far, so stable.

My worry, though, is that as times get hard and Quangos such as Ofcom and PPP seek to justify their existence they will increase regulatory pressure. And the only place this can go is into things that it currently doesn’t regulate – that new fangled Internet thing. Perhaps we are facing our winter of discontent along with the Germans? Anyway, more on this in the coming weeks and look out for an in depth piece in the next issue of Telemedia magazine out in September.

From next week, these weekly missives you have been receiving will be posted on our website as a blog, so check that out from next week at www.telemedia-news.com. Have a good summer!

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