In the early 1990s, the U.S. government gave Network Solutions a monopoly to maintain a database of Internet domain names.
At the time, mainly government agencies, the military and educational institutions cared about having a Web site. A single entity to register and keep track of all URLs kept things in order. It seemed fine at first.
But by 1995, the Internet was exploding in popularity and Network Solutions was raking in the cash. During this period, registering a domain cost $70 for two years, then $35 per year thereafter.
Finally, in 1998, enough was enough, and Network Solutions’ sanctioned monopoly was revoked and competing companies were allowed to register domain names. The result has been a drop of around 300 percent in domain pricing – to about $10 per year – and the Web has been rolling along ever since. We even made it past Y2K without disaster.
Around this same time, mobile phones were becoming ubiquitous and companies, especially media companies, were reaching consumers through SMS.
Cross-carrier provisioning did not come along immediately, but in 2003, the CTIA – The Wireless Association, which is the trade body for the nation’s wireless carriers including AT&T, Verizon Wireless, T-Mobile and Sprint, launched the U.S. Short Code Administration to issue five-digit short codes.
For those new to short codes, by way of example, when a television voting show asks the viewers to “Text VOTE to 12345,” the word “vote” is the keyword and “12345” is the short code.
Now, more than seven years later, there is still only one way to obtain a short code: via the U.S. Common Short Code Administration, owned by the CTIA.
The CTIA pays about $10 per year to own their USShortCodes.com URL. So how much do they charge customers to lease a short code? $500 a month. Not per year, per month. If you want to pick your own code rather than have a bunch of randomly generated numbers, the price goes up to $1,000 a month. These prices are set by the CTIA. And on top of that, these short codes must be leased for a minimum of three months at a time.
The CTIA could own their Web site for 1,200 years before paying the fee on a single year for a vanity code. Seems pretty out of whack. One thousand two hundred years! It was that many years ago when the Chinese accidentally discovered gunpowder. Twelve hundred years from now, we will probably all be living as immortal machine intelligences swirling through Saturn’s atmosphere.
So how are short code prices justified?
Is it to maintain an organized database? There are hundreds of millions of Internet URLs that have been cruising along fine, without having to charge customers such exorbitant fees.
Is it because five- and six-digit codes have a finite number of variations? Maybe so, but why hoard? There are currently hundreds of thousands of combinations that remain unused.
Is it to keep the SMS platform from becoming like the Web, with endless squatters and polluted real estate? Fair enough, but let us say the price was $500 a year instead of $500 a month. Why would squatters or opportunists shell out that kind of money when they are not even allowed to resell the codes?
There must be a balance to all things and short code prices are too expensive for most budgets.
Right now, there’s only one way to get a short code in the United States, and that smacks of monopoly. Reasonable pricing would allow legitimate business-to-consumer interactions to grow at a rapid pace, and revenues for the CTIA and other parties would likely be much higher as a result.
So until the CTIA either drops prices drastically, or competition is allowed into the picture, how can cross-carrier SMS truly take off to the mass-scale platform it has the potential to be?
This article can also be viewed at Mobile Commerce Daily.