Why the $1.5M Verizon Wireless Settlement Will NOT Have an Affect on the Mobile Industry

There has been a lot of press around Florida Attorney General Bill McCollum’s announcement on June 24 of a $1.5 million settlement with Verizon Wireless and Alltel over “free” ringtone offers. I feel that a lot of the opinions on how the industry will be affected by the ruling are very much over blown. According to Adam Solomon’s article in the Mobile Marketer Daily, the “settlements require the wireless carriers to contractually cause its content providers and advertisers to adhere to certain requirements.” Solomon is correct in his assessment that Verizon and Alltel will hold the Aggregators who connect to them contractually responsible for their marketing practices, but this has been in place for quite some time already. Verizon has actually been a leader in this area, going so far as to require content providers to submit every web URL on which they advertise to Verizon for regular auditing.

Solomon continues to state that Verizon is prohibited to use "the terms ‘free,’ ‘complimentary,’ ‘no charge,’ ‘without charge,’ or any other term that reasonably causes a consumer to believe that he or she may receive something of value entirely or in part without a requirement of compensation, unless the initial advertisement (sponsored links, organic links, email subject lines, banner ads and pop-ups) that reaches the consumer clearly and conspicuously states that the free item will be received pursuant to the consumer’s authorization of billing for a paid subscription."

The MMA guidelines have been adopted by all major carriers as the foundation by which mobile campaigns are reviewed and approved. Page 26 of the MMA best practices guidelines, available at http://www.mmaglobal.com/bestpractices.pdf addresses this very issue point blank under the section “Use of ‘Free’ and ‘Bonus’ Terminology". These guidelines were just released on July 1st, but the predecessors to the current release contained the exact same wording. In fact the MMA guidelines go one step further then the Verizon ruling, stating that a program cannot be promoted as “free” when premium fees are associated with the program.

Solomon touches on several other items in his article such as font requirements for web based call to actions and the requirement that pricing on the web page must not require scrolling to view. But the fact is that these regulations have all been in place for some. If the regulations are not addressed specifically by the MMA guidelines they will be covered under carrier specific regulations from one or more of the major carriers. Since it is not profitable to run a mobile campaign that does not include all major carriers, content providers are already abiding by these regulations. In most circumstances the regulations that are in place today are as stringent or more stringent then the requirements placed on Verizon and Alltel by the Florida court ruling.

The bottom line is that this is old news. The vast majority of the misleading billing which led to these lawsuits occurred back in 2005-2006 when there was little regulation in the industry, but the mobile world has changed drastically since then. Carriers have always held the members of the mobile value chain who operate beneath them contractually responsible for the messages they deliver through the carrier platform, but today the guidelines around what are acceptable marketing practices have gotten far stricter and all major carriers audit programs on a regular basis to ensure that the regulations are adhered to. I’m sorry Adam Solomon, but I must respectfully disagree with your statement that “the Verizon Wireless settlement will likely have a significant effect on the marketing of mobile content” as the effects have already occurred.

Cri Boratenski
Co-Founder, Mobile Compass LLC.
http://www.mobilecompassinc.com/