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The largest processor in the U.S. cross-carrier short-message service (SMS) market is getting set to enter the market for premium content services, also known as MMS (multimedia services), just as wireless carriers are beginning to introduce new billing capabilities to handle the high-margin product. Chantilly, Va.-based InphoMatch Inc. has formed a new unit, called InphoMatch Interactive, to serve as a link between content providers and multiple mobile operators. InphoMatch already handles the conversion necessary to translate SMS sent from subscribers of one carrier to those served by another, processing almost 1 billion SMS per month, or 75% of all U.S.-based cross-carrier SMS volume. Now it sees the delivery of premium content–from ring tones to images to Java games to “American Idol”-style polling–to suit the formats of multiple carriers as a logical extension of this business. “This allows content providers to connect via us, and we deliver to the carriers,” says Greg Matranga, a spokesman for InphoMatch. “We don't anticipate we'll do the same high volume on content messages (with InphoMatch Interactive), but we'll receive a higher margin.” Whereas carriers charge anywhere from 4 cents to 8 cents per SMS, MMS might range from 25 cents to $5. Carriers bill subscribers and then pass on a portion of each transaction to services like InphoMatch and content providers. The market for such content has been exploding since 2001, when mobile operators in the U.S. began permitting content sellers to place charges on the operators' bills. Both transactions and dollar volume are growing at a rate of at least 20% month over month, says Qpass Inc., a Seattle-based company that sells premium-services billing software to mobile networks. Just in the past year, the company says, transactions are up 500% as more carriers recognize the opportunity in integrating third-party content into their billing systems. This may only be the start. “It's an evolving market,” says Matranga. “We really see it taking off after Jan. 1, 2005.” Mobile networks like being able to charge subscribers over the phone at the time of transaction, he says, and subscribers like the convenience of one-click service, avoiding the need to enter credit card data. Indeed, Qpass says direct billing of these transactions now far exceeds billing to credit cards. Verizon, AT&T Wireless, and T-Mobil are InphoMatch's largest customers. The 4-year-old company has just completed a $13.5 million round of funding, in part to finance the new MMS network.
