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Analysis: Text message services fear new fees after recent FCC vote

A recent spat between Verizon Communications Inc. and a messaging service used by schools and teachers has highlighted a new fee being imposed on these services.

The dispute erupted after the educational startup Remind — a communications platform that offers both free and paid services to school districts, teachers, students, parents and others — threatened to stop delivering text messages to Verizon customers due to a new upcoming fee from the telco. In a blog post, Remind said the $0.0025-per-message fee would increase the service's costs of supporting text messaging for Verizon Wireless customers by 11x, making it prohibitively expensive to deliver messages to the more than 7 million Verizon customers who use Remind.

While it chastised Remind for using the school communities as "pawns" in the negotiations, Verizon responded by saying it would not charge the fee for Remind's free text message service for K-12 schools. Under new terms currently being negotiated, customers of Remind's paid services, however, would have the fee applied.

In an interview, Remind CEO Brian Grey said he is optimistic the two sides will ultimately work out a deal, though there is still work to be done to figure out what is covered by K-12, as Remind's customers include preschools, daycares, churches, sports teams and youth organizations.

"That frankly would be a challenge for us to delineate between subsets of our free users, but we're taking what they said and trying to get to an agreement that would allow us to continue to provide that service to all of our free users," Grey said.

The broader concern for Grey is that there are signs the fees from Verizon are just the beginning. Similar fees from other wireless carriers are expected to follow, especially in the wake of a December 2018 vote from the U.S. Federal Communications Commission that lessened the regulator's authority over text messaging services.

SNL Image
Remind messaging screenshot
Source: Remind

"We are bracing for this to perhaps become an industrywide situation," Grey said.

According to Verizon, the fees are necessary to offset the cost of the carrier's new enhanced text messaging platform. With more and more businesses using text messages to send flight updates, appointment reminders and even coupon notifications, Verizon recently finished rolling out a dedicated network for commercial long code Short Message Service delivery. As part of that, the telco built in spam and fraud protections, and it said the new fee helps to pay for those improvements.

Yet Harold Feld, senior vice president at the public interest group Public Knowledge, said the timing of Verizon's new fee is concerning. It comes roughly one month after the FCC's December 2018 vote to classify text messages as a Title I information service under the Communications Act, rather than as a Title II telecommunications service. The FCC has far more authority to regulate Title II services.

The three Republican commissioners who supported the measure said the lighter-touch Title I classification gives carriers the flexibility they need to limit spam text messages. The lone dissenting Democrat on the commission at the time, however, warned the Title I classification gives carriers the power to block or censor text messages.

"Most people in looking at this focused on the blocking question — giving carriers the freedom to block and censor content," Feld said in an interview. What often got overlooked in the debate, according to Feld, was that Title II regulations also require "the rates and practices of the carriers to be just and reasonable."

This is an important protection, Feld said. "The commission doesn't do things like rate regulation anymore, but they do require certain things, like you can't just make up random fees and start charging to them because you want to," he said.

According to Remind's CEO, any agreement with Verizon in the current dispute will be especially significant, as it will set a precedent if and when other carriers decide to impose similar new fees.

"We're hopeful the Verizon solution would be one that could expand to other carriers," Grey said.

An AT&T Inc. spokesman said he was not aware of any potential new fees at this time, while Sprint Corp. and T-Mobile US Inc. did not immediately respond to requests for comment.