Critics Contend Spam Could Eat Into Growth Of Wireless Messaging

A Hurdle For Mobile Industry Short text advertisements could start popping up on more U.S. cell phones

RUA YRLS USR? If that makes sense to you, you probably know about text messages, short notes sent via mobile phones. (Translation: Are you a wireless user?) Text messaging, popular in Japan and Europe, is just catching on in the U.S. But its growth here is in danger of being stunted before it takes off. Some say it's threatened by wireless spam. They say spam could scare away messaging customers, as well as mobile phone users in general. That would further slow the growth of an industry already struggling with flat sales. Some companies are using wireless text messaging to send unsolicited ads, or spam, to mobile phone users. And unwitting recipients end up paying the cost of the unwanted messages, says Rodney Joffe, president of Tempe, Ariz.-based CenterGate Research Group LLC. CenterGate is an incubator, a firm that nurtures tech start-ups. Joffe, who earlier founded Web hosting company Genuity Inc., says a year ago he got spam on his mobile phone for the first time. Text messaging is a service that some carriers offer and that most cell phones can handle. People send text messages to mobile phones using a technology called short message service, or SMS. Joffe says he knows of a Mesa, Ariz., company that's spammed more than 170,000 cell phone users in certain U.S. area codes. Sues Mortgage Firm He's suing that company, Acacia National Mortgage Corp., in small claims court. He says he plans to file a class-action lawsuit too. Joffe says he's spent about $ 30,000 on legal fees in his bid to see that wireless spam doesn't ruin text messaging. To date, 19 states have anti-spam laws. This legal area touches on free speech and privacy, so the laws are framed to prohibit "deceiving" subject labels and the like. But the laws haven't stopped e-mail spam. Up to 30% of the 30 million e-mails sent each day on the America Online network are spam, says Joffe. "When spam first started in 1994, we never realized what the long-term effect would be," said Joffe. "We never stepped up and squashed it. I'm determined not to make the same mistake again" with wireless spam. Joffe isn't alone. Anti-spam groups have popped up in the last few years. They include the Coalition Against Unsolicited Commercial E-Mail, or Cauce, and SpamCon. "We oppose unsolicited wireless e-mail advertisements just as strongly as we do unsolicited wireline e-mail advertisements," said John Mozena, vice president of Cauce. "If the phone is constantly beeping because people are getting spammed, then users are going to be much less likely to pick it up." There's a problem with wireless spam not found with wireline spam, says Joffe. Users more directly foot the bill for wireless text messages. Carriers usually charge a flat rate for a certain number of messages per month, and then add fees for more messages. With wireline service, users usually get regular e-mail as part of their monthly Internet access fee. It's a flat fee no matter if users get one or 1,000 e-mails. Wireless provider Sprint PCS charges $ 1.99 for a total of 30 messages. After 30, it charges 25 cents for each message sent or received, says California Assemblyman Tim Leslie, R-Roseville. In December, he proposed the Text Messaging Privacy Act. It aims to outlaw wireless spam in California. "If we act quickly and smart, we can eliminate a problem before it gets a foothold," said Leslie. Law On The Books Joffe says the "cost shifting" effect of wireless spam, where users must pay for messages they never agreed to receive, already is outlawed under the federal Telephone Consumer Protection Act. The act, he says, makes it illegal for companies to push any advertising bills to consumers. They can be fined, he says. The question is whether the court agrees with Joffe. The 10-year-old act has never been applied to wireless spam. Doug Callahan, an Acacia manager, says the company is counter-suing Joffe, claiming his suit is frivolous. He says Acacia continues to send text messages to a "limited degree. "Our opinion and the opinion of all the attorneys we've dealt with is that wireless messaging is not covered under current laws, period," said Callahan. It's no different, he says, than when a consumer gets unsolicited mail or phone calls at home. He concedes that at times the messages might be inconvenient for cell phone users, but says the practice is not illegal. Callahan did say that after Acacia was approached by Verizon Communications Inc. on spam complaints in Colorado, it stopped sending text messages there. He also says few people use their quota of text messages, and so never see extra charges. Federal Bill In Works It's true that if only one company sent wireless spam, it might not be a problem, says Mozena. But he says problems will arise if many companies start following Acacia's tactics. "Spam, of all types, does cost people money - and it costs people money that shouldn't have to be paid," said Mozena. In addition to Leslie's bill, a federal anti-wireless spam bill is pending. H.R. 113, authored by New Jersey Rep. Rush Holt, D-Hopewell Township, would make such spam illegal in all states. The Wireless Telephone Spam Protection Act is making its way through the House Energy and Commerce Committee. Leslie says H.R. 113 would supersede his bill, an event he'd welcome. "A federal law would be preferable," he said. Carriers, says Leslie, support anti-spam bills. That's because they stand to make money from text messaging. He says 110 million phones that can handle text messages are expected to be in use in the U.S. before 2004. Carriers, he says, don't want to lose customers who cancel wireless service after receiving too many messages such as: 4U! A GR8 OFR. (Translation: For you, a great offer.)

November 18, 2004