Mobile Phone Industry Tries to Clean Up Its Act

Groups are hoping to regulate the way companies sell content, such as ringtones.

Stephen Lawson, IDG News Service

Two U.S.-based mobile industry groups are trying to rein in a Wild West market for cell-phone downloads, publishing a set of "best practices" for selling content such as ringtones, daily messages, and screen backgrounds.

Some mobile phone users have lashed out against advertising and sales methods for mobile content sold via text messages, saying they ended up subscribed to ongoing services without knowing it. Earlier this year, a consumer who used VeriSign's Jamster content download service sued the company for alleged fraud and false advertising.

Earlier this week, the Mobile Marketing Association (MMA) and Cellular Telecommunications and Internet Association (CTIA) laid down guidelines they said were written by a committee that represented the five biggest U.S. mobile operators as well as content providers and aggregators.

The groups created the document so carriers would have a consistent set of rules for evaluating how potential partners do business, says Soren Schafft, vice president of products and operations at The Mobile Media Co., a content aggregator in Oslo, Norway, who was on the committee.

"It says you're not allowed to provide services to people who don't want those services. And there's a set of methods for getting people to understand what the terms are and to agree to those terms," Schafft says.

Voluntary Guidelines

The voluntary guidelines cover several topics, including the following:

subscribers have a right to privacy, and a service needs to have a publicly available privacy policy

companies have to get subscribers' approval before sending them commercial text messages or other content

ads and promotions have to clearly state all terms of the program, including pricing and whether it is a subscription service

a service can't be called "free" if there are charges for "a reasonable level of participation"

he service needs to have "opt-in" mechanisms that require the customer to do something such as send a specific text message

users have to be told how to "opt out" when they sign up and later be able to find information on the "opt-out" procedure

The rules should make it easier for content providers to do business, according to Schafft. Up until now, each carrier has had its own guidelines for how content providers on its network should treat customers, he says.

"To be compliant with all the various standards was extremely difficult, and the standards were changing all the time, and it wasn't always clear what would be in compliance with one carrier or another," Schafft says.

The success of the program will depend on the backing of mobile operators, according to Albert Lin, an analyst at American Technology Research. They present the charges for these services on the monthly phone bill or take it out of prepaid accounts, so they have the greatest motivation to make sure customers don't feel cheated.

"If a customer calls and complains about a transaction, that transaction becomes a money loser," Lin says. He believes most carriers will use the guidelines, though it may take six months of implementation before consumers notice any changes.

On the other hand, by enforcing the guidelines, carriers could cool down the growth of certain ongoing programs, such as joke-of-the-day and daily weather report services. Forcing content providers to inform prospective subscribers of the real cost of their services could scare off some consumers, he says.

But whereas some content providers just want to make it easy for subscribers to sign up spontaneously, carriers are interested in the long-term health of the mobile data business, says Lin. This is the first meaningful step in the right direction, in his view.

"They need something that is enduring and is a healthy, growing market for new services," Lin says.