Verizon will launch a new messaging service that will change how the operator handles application-to-person messaging.
Details of the action remain vague, but executives at application development company Twilio discussed the pending change during their company’s quarterly conference call with investors.
“We continue to see things that could impact our gross margins like product, country and customer mix, network service provider fees, FX and more. An example of this is an expected change in Q1 2019 in our SMS messaging business through Verizon in the U.S.,” said Lee Kirkpatrick, Twilio’s CFO, according to a Seeking Alpha transcript of his remarks.
“Previously, Verizon has treated all P2P, or person to person and A2P or application to person, messaging the same. Starting in February, Verizon is planning on creating a new service offering, which will add a quarter of the penny fee per message to all businesses with A2P SMS messaging use cases. This type of thing has happened before. It carries at a similar fee of short term messages a while back. Our short term business continues to grow rapidly and we expect the same in SMS as well, given its effectiveness as a channel,” Kirkpatrick said, adding that the company plans to pass that new surcharge on to its customers.
Kirkpatrick said the action wouldn’t affect Twilio’s “gross profit dollars” but would affect its gross margin.
Verizon officials declined to comment on the statements by Twilio’s CFO.
Twilio offers services to application developers that allow them to purchase wholesale access to wireless operators’ data and messaging networks. For example, Uber uses the company’s services to send text messages to customers who use the ride-hailing service.
It’s unclear what type of messaging service Verizon might be planning, but it could involve RCS services. Although RCS-based messaging promises to add pictures and text messages to operators’ standard SMS services—like WhatsApp and Apple’s iMessage already do—the technology also promises to allow businesses to market to potential customers through rich media. Indeed, it is that advertising function of RCS that has recently generated support for RCS among companies ranging from Samsung to Zipwhip.
Sprint and Google earlier this year highlighted advertisers including 1-800 Contacts, 1-800-Flowers.com, Booking.com, SnapTravel and Subway, among others, that have conducted advertising efforts using RCS technology.