September 17, 2004
By Riva Richmond
The Wall Street Journal
SEVERAL WEEKS after Lori Crispi got a new cellphone, trivia questions sent by a firm selling mobile services began popping up on her screen, accompanied by an annoying beep.
At first, Ms. Crispi, assistant to the head of a Colorado Springs, Colorado, real-estate brokerage firm, received five or six a day. Within three weeks, she was getting 15 to 20. And that's not all: She had to pay for the ads. Her cellphone company, T-Mobile USA Inc., charged her for every text message she received.
The spam was "beginning at 5 a.m., which is really unpleasant if you're not usually up that early," says Cathy Wickerd, the firm's bookkeeper, whom Ms. Crispi enlisted to get T-Mobile, a unit of Deutsche Telekom AG, to stop the onslaught and credit the firm's account. Although the bill amounted to only about $9 (7.30 euros), Ms. Wickerd was determined to get relief. After some elbow grease, including a complaint to the Federal Communications Commission, she succeeded.
The FCC considers experiences like Ms. Crispi's a warning. Now that text messaging is catching on in the U.S., the risk is rising that spam could one day flood cellphones, much as it has personal computers. The FCC -- along with wireless carriers, consumer advocates and marketers -- worries that unrestrained commercial messaging could spark a consumer backlash that would kill the mobile medium.
"Users are going to scream bloody murder" if the spamming picks up, says Alan Mosher, director of research at Probe Group LLC, a Cedar Knolls, New Jersey, telecom-focused research firm. That's particularly true, he says, since most consumers will be charged for receiving these messages. "If all of a sudden the consumer's handset is clogged up with unwanted messages, they'll just stop using it."
That's why the FCC, with the blessing of marketers and the wireless industry, last month issued rules prohibiting companies from sending commercial messages to wireless devices without the user's permission. But many say that the rules don't necessarily remove the risk to the industry: If the PC experience is any guide, legitimate marketers will comply with the law -- and fraudulent and unscrupulous ones won't.
Regulators, marketers and industry insiders look at other countries and worry. Wireless spam has run rampant in Japan in particular, where text messaging is more popular than e-mail. NTT DoCoMo Inc., Japan's largest cellphone provider, now stops an average of 960 million pieces of spam each day, or more than 80% of all messages, from reaching its 46 million subscribers.
Cellphone spam in the U.S. is still small, but there are signs it's rising. According to a June survey by research firm Yankee Group, 20% of U.S. mobile-phone users have received an advertisement or a commercial message, up from 13% a year ago.
"It's not a huge problem yet, but everyone's concerned about nipping the problem in the bud before it becomes unmanageable, as it has become with our PCs," says Susan Grant, vice president for public policy at the National Consumers League, a Washington, D.C., consumer-advocacy group.
"This is the last bastion that we are all trying to protect," says K. Dane Snowden, chief of the consumer and governmental affairs bureau at the FCC. "We're trying to watch the trends world-wide and trying to get ahead of them to protect the American consumer."
The good news: The wireless world has a number of advantages over e-mail when it comes to controlling spam.
For one thing, it's much easier to simply block spam from reaching the consumer. Carriers say filtering is easier in the wireless environment because, unlike the Internet, their networks are closed systems over which they exert near-dictatorial control. "Once something is knocking at the door of our network, we can let it in or not," says Jeffrey Nelson, a spokesman for Verizon Wireless, owned by Verizon Communications Inc. and Vodafone Group PLC. "On the land line, the messages just travel. There isn't a gate, if you will."
For example, carriers can impose message-volume limits on SMS senders, which counteracts the automated mass blasts spammers must do to send messages economically. Carriers received a green light from the FCC to block unwanted commercial messages, and they have used that go-ahead and their gatekeeper power to exert considerable control over marketing campaigns that target their customers.
The FCC has set a high bar for mobile marketing. Under its "opt-in" plan, senders must gain consent from consumers -- using, for example, a phone solicitation -- before sending their first message. Compare that with the "opt-out" plan Congress set for e-mail marketing with last year's CAN-SPAM Act: Senders can contact consumers without permission as long as they give recipients a way to be removed from the mailing list. Congress told the FCC to set tougher rules for cellphone marketing because most consumers would be charged to receive their diet of spam.
The tougher rules also come before market practices have become firmly entrenched. This kind of early rule making can be effective. For instance, the FCC forbade telemarketer calls to cellphones in 1991, before the devices were widespread. The practice never took off.
"If the FCC had chosen an opt-out framework, we could have expected a flood of spam on wireless devices," argues Chris Jay Hoofnagle, associate director of the Electronic Privacy Information Center. "If you can get ahead and set a legal norm that prohibits a certain marketing activity, chances are it will not take hold."
Meanwhile, marketers are making moves of their own to pre-empt spamming. They believe that consumer anger over spam has spoiled e-mail as a marketing medium, and they don't want that to happen again with text messaging.
"Spam is defined by the consumer," and usually just comes down to messages that consumers don't want, says Peter Fuller, executive director of the Mobile Marketing Association, or MMA, a Mountain View, California, group for carriers, advertisers, ad agencies and technology companies. "Brands must be careful about who they reach, when they reach them and the frequency of the messages."
The MMA has championed a strict code of conduct since 2000 for mobile marketers that it says has taken hold with big companies. The code mandates the opt-in principle, as well as requiring easy outs for consumers who wish to be removed from contact lists.
Verizon Wireless has already pursued several cases against spammers who have targeted its subscribers. And, as with PC spam, state attorneys general and agencies like the FCC and the Federal Trade Commission can take spammers to court.
In some cases, consumers themselves can sue -- depending on how the spam is sent. In its recent rule making, the FCC made a distinction between SMS messages, which travel from phone to phone, and e-mailed spam that reaches wireless devices via the Internet. SMS messages, the FCC said, fall under the Telecommunications Consumer Protection Act of 1991, which unlike CAN-SPAM allows consumers to sue marketers.
Why the distinction? The telecom act forbids telemarketers from using autodialer technology to make unsolicited calls to cellphones. The FCC concluded that SMS spamming is simply the latest iteration of that practice. Under the telecommunications act, consumers can win $500 per infraction, or triple that if they can prove the marketer was aware of the law. And consumers don't have to prove damages.
The problem: Spammers tend to favor spam e-mailed from PCs to cellphones, since they aren't charged a fee for sending the message. The FCC plans to create a list of e-mail domains used by wireless companies, which marketers won't be allowed to target for e-mail. But, again, legitimate marketers are likely to honor the list, while unscrupulous spammers may well use it to glean new targets. Stopping them could be the same hard slog it has been on the PC.
The Wall Street Journal
SEVERAL WEEKS after Lori Crispi got a new cellphone, trivia questions sent by a firm selling mobile services began popping up on her screen, accompanied by an annoying beep.
At first, Ms. Crispi, assistant to the head of a Colorado Springs, Colorado, real-estate brokerage firm, received five or six a day. Within three weeks, she was getting 15 to 20. And that's not all: She had to pay for the ads. Her cellphone company, T-Mobile USA Inc., charged her for every text message she received.
The spam was "beginning at 5 a.m., which is really unpleasant if you're not usually up that early," says Cathy Wickerd, the firm's bookkeeper, whom Ms. Crispi enlisted to get T-Mobile, a unit of Deutsche Telekom AG, to stop the onslaught and credit the firm's account. Although the bill amounted to only about $9 (7.30 euros), Ms. Wickerd was determined to get relief. After some elbow grease, including a complaint to the Federal Communications Commission, she succeeded.
The FCC considers experiences like Ms. Crispi's a warning. Now that text messaging is catching on in the U.S., the risk is rising that spam could one day flood cellphones, much as it has personal computers. The FCC -- along with wireless carriers, consumer advocates and marketers -- worries that unrestrained commercial messaging could spark a consumer backlash that would kill the mobile medium.
"Users are going to scream bloody murder" if the spamming picks up, says Alan Mosher, director of research at Probe Group LLC, a Cedar Knolls, New Jersey, telecom-focused research firm. That's particularly true, he says, since most consumers will be charged for receiving these messages. "If all of a sudden the consumer's handset is clogged up with unwanted messages, they'll just stop using it."
That's why the FCC, with the blessing of marketers and the wireless industry, last month issued rules prohibiting companies from sending commercial messages to wireless devices without the user's permission. But many say that the rules don't necessarily remove the risk to the industry: If the PC experience is any guide, legitimate marketers will comply with the law -- and fraudulent and unscrupulous ones won't.
Regulators, marketers and industry insiders look at other countries and worry. Wireless spam has run rampant in Japan in particular, where text messaging is more popular than e-mail. NTT DoCoMo Inc., Japan's largest cellphone provider, now stops an average of 960 million pieces of spam each day, or more than 80% of all messages, from reaching its 46 million subscribers.
Cellphone spam in the U.S. is still small, but there are signs it's rising. According to a June survey by research firm Yankee Group, 20% of U.S. mobile-phone users have received an advertisement or a commercial message, up from 13% a year ago.
"It's not a huge problem yet, but everyone's concerned about nipping the problem in the bud before it becomes unmanageable, as it has become with our PCs," says Susan Grant, vice president for public policy at the National Consumers League, a Washington, D.C., consumer-advocacy group.
"This is the last bastion that we are all trying to protect," says K. Dane Snowden, chief of the consumer and governmental affairs bureau at the FCC. "We're trying to watch the trends world-wide and trying to get ahead of them to protect the American consumer."
The good news: The wireless world has a number of advantages over e-mail when it comes to controlling spam.
For one thing, it's much easier to simply block spam from reaching the consumer. Carriers say filtering is easier in the wireless environment because, unlike the Internet, their networks are closed systems over which they exert near-dictatorial control. "Once something is knocking at the door of our network, we can let it in or not," says Jeffrey Nelson, a spokesman for Verizon Wireless, owned by Verizon Communications Inc. and Vodafone Group PLC. "On the land line, the messages just travel. There isn't a gate, if you will."
For example, carriers can impose message-volume limits on SMS senders, which counteracts the automated mass blasts spammers must do to send messages economically. Carriers received a green light from the FCC to block unwanted commercial messages, and they have used that go-ahead and their gatekeeper power to exert considerable control over marketing campaigns that target their customers.
The FCC has set a high bar for mobile marketing. Under its "opt-in" plan, senders must gain consent from consumers -- using, for example, a phone solicitation -- before sending their first message. Compare that with the "opt-out" plan Congress set for e-mail marketing with last year's CAN-SPAM Act: Senders can contact consumers without permission as long as they give recipients a way to be removed from the mailing list. Congress told the FCC to set tougher rules for cellphone marketing because most consumers would be charged to receive their diet of spam.
The tougher rules also come before market practices have become firmly entrenched. This kind of early rule making can be effective. For instance, the FCC forbade telemarketer calls to cellphones in 1991, before the devices were widespread. The practice never took off.
"If the FCC had chosen an opt-out framework, we could have expected a flood of spam on wireless devices," argues Chris Jay Hoofnagle, associate director of the Electronic Privacy Information Center. "If you can get ahead and set a legal norm that prohibits a certain marketing activity, chances are it will not take hold."
Meanwhile, marketers are making moves of their own to pre-empt spamming. They believe that consumer anger over spam has spoiled e-mail as a marketing medium, and they don't want that to happen again with text messaging.
"Spam is defined by the consumer," and usually just comes down to messages that consumers don't want, says Peter Fuller, executive director of the Mobile Marketing Association, or MMA, a Mountain View, California, group for carriers, advertisers, ad agencies and technology companies. "Brands must be careful about who they reach, when they reach them and the frequency of the messages."
The MMA has championed a strict code of conduct since 2000 for mobile marketers that it says has taken hold with big companies. The code mandates the opt-in principle, as well as requiring easy outs for consumers who wish to be removed from contact lists.
Verizon Wireless has already pursued several cases against spammers who have targeted its subscribers. And, as with PC spam, state attorneys general and agencies like the FCC and the Federal Trade Commission can take spammers to court.
In some cases, consumers themselves can sue -- depending on how the spam is sent. In its recent rule making, the FCC made a distinction between SMS messages, which travel from phone to phone, and e-mailed spam that reaches wireless devices via the Internet. SMS messages, the FCC said, fall under the Telecommunications Consumer Protection Act of 1991, which unlike CAN-SPAM allows consumers to sue marketers.
Why the distinction? The telecom act forbids telemarketers from using autodialer technology to make unsolicited calls to cellphones. The FCC concluded that SMS spamming is simply the latest iteration of that practice. Under the telecommunications act, consumers can win $500 per infraction, or triple that if they can prove the marketer was aware of the law. And consumers don't have to prove damages.
The problem: Spammers tend to favor spam e-mailed from PCs to cellphones, since they aren't charged a fee for sending the message. The FCC plans to create a list of e-mail domains used by wireless companies, which marketers won't be allowed to target for e-mail. But, again, legitimate marketers are likely to honor the list, while unscrupulous spammers may well use it to glean new targets. Stopping them could be the same hard slog it has been on the PC.
