How our love of texting is an evil scheme by American Idol and AT&T

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american idol and at&T scheme to stick you with heavy texting feesIn 2008, American Idol viewers voted 78 million times via text messages. In 2003, the inaugural year for AT&T sponsorship (when they were pitching mlife) only 7. 5 million text message votes were sent. This explosion is transforming how we view texting, who does it and how much we’re willing to pay.

At the end of each American Idol, host Ryan Seacrest tells viewers to call in to vote or AT&T users can text their vote. Week after week, contestant after contestant, AT&T is getting their name associated with texting to the biggest audience in television. And the whole scheme was born of frustration.

AT&T (the old AT&T) had run 30-second ads along side other carriers in the season 1 of American Idol. The spots didn’t work for AT&T. Vote-by-texting was becoming popular in Europe, so the idea was pitched to AT&T who took hold as a way to introduce texting to a large audience but also to get customers using other pricier phone features like email and web browsing. In the first year, 1/3 of the texters were texting virgins and inspired another 25% of texters to increase their texting buy. Today, AT&T sells ringtones, has online chats.

“The sponsorship was a strike of genius on AT&T’s part,” said Roger Entner, wireless analyst for IAG Research. “The messaging revenue they get from the show is almost pure profit. The cost of servicing a text message is a tiny fraction of a cent, and they’re charging what? Fifteen cents a message?” From here.

As AT&T has continued its sponsorship of the show, texting has grown up as did the plans that support them. Many users now have unlimited texting plans and you’ve got to figure that many of the customers opt for unlimited texting based on the knowledge that when American Idol rolls around, they can vote for their favorite as much as they can.

In the early days, AT&T got back a lot of their sponsorship money quickly as early texting plans exposed customers to $0.15 per text costs, estimates put their return on the first year’s sponsorship at $750,000. Today, that influx is likely scaled back as customers plan for voting when they select plans.

The evil part. “Muh ha huh ha”

Is the return reducing? If texting fees were keep constant, the answer might be yes. But that is not the case, in fact, per text fees have doubled since 2005. Why? Simple: carriers can.

In September,US Senator Herb Kohl (D-WI) sent a letter to the heads of Verizon, AT&T, Sprint, and T-Mobile in order to understand why per-message costs have risen from about 10¢ back in 2005 to 20¢ today. Kohl’s letter called the industry-wide text messaging rate increase “particularly alarming” because it seemed there was no technical justification for it.

Ars Technica goes on to explain that SMS and MMS can put stresses on a network particularly when the service gets bogged down. But is it costing the carriers twice as much?

There probably is no telling. But, stay tuned for a special edition of my “Who’s on Crack” post tomorrow, titled “Texting on Crack: your guide to stick it to the man” where I’ll uncover ways to get you out from under the man’s thumb and take some control of your SMS/MMS texting fees. It is sure to piss off many in the telecom industry.

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