As leaders of the House Subcommittee on Telecommunications and the Internet, we ask that you consider taking up an important telecom issue that has real impact on lower-income residents of the U.S. and the future of competition in mobile voice communications.

I’m referring to the short code issue now before the Federal Communications Commission in the form of a petition for declaratory ruling that refusing to provision a short code to a customer is unjust and unreasonable discrimination, and violates the law.

This issue is important because short codes are what make it possible in the U.S. for companies to send SMS – text messages – to individuals.

Today, mobile operators still have the ability to act as Big Brother gatekeepers even after a company has received a dedicated or shared short code from the Common Short Code Administration (CSCA), and submitted a specification of traffic flow and commands to each carrier for approval of the process of OPT-IN and OPT-OUT to make sure the recipients really do wish to receive the SMS.

In other words if Verizon, AT&T, Alltel or T-Mobile don’t like what’s in certain SMS, they have the ability to block the message from going through to the consumer.

The FCC petition filed in December by public interest groups Public Knowledge, Free Press and Mobile Commons, cited Verizon’s rejection of NARAL Pro-Choice America’s text messages to its supporters as a prime example of carriers interference with political speech.

Violating American’s sacred First Amendment rights is downright dumb. And Verizon quickly stopped blocking NARAL’s SMS as soon as The New York Times shed some light on what Verizon was up to.

But what may be a better case for why regulation is needed is the U.S. carriers’ refusal to accept SMS from Rebtel, which is also cited in the petition as an example of how Verizon Wireless, T-Mobile and Alltel have taken advantage of a perceived regulatory hole to discriminate against competitors.

For example, Verizon – the self-proclaimed “most profitable wireless company in the U.S.” –prevents its customers from sending SMS to themselves from the Rebtel web site because they contain local U.S. phone numbers Verizon customers can use to call friends and family abroad for just pennies per minute instead of the rip-off rates charged by Verizon. Many of these rates escalate beyond $1 per minute, with profit margins that rival the oil companies.

At a hearing last Monday on network neutrality and network management, FCC Chairman Kevin J. Martin said, “The time has come for a specific enforceable principle of nondiscrimination.”

We think Mr. Martin is right and should now apply that same position to the short code issue, and stop the arbitrary blocking of consumer access to certain services.

We also think it’s the FCC’s job to figure out where you draw the line between unreasonable discrimination and reasonable, fair business practices.

And, if we really live in a country of free enterprise, we think it’s high time to let the customer – the people – decide what information they choose to receive by SMS, and not have it dictated by the big mobile operators.

We hope you agree with us on this issue and closely monitor the FCC proceeding. And would the FCC believe that it lacks authority to correct these wrongs, we encourage you to introduce legislation that makes clear that the FCC should prevent wireless carriers from unreasonably discriminating against businesses using short codes to interact with their customers.

Sincerely,

Rebtel (the people’s global communication company)

That probably sounds a bit odd coming from Rebtel these days. But yesterday Verizon and AT&T rolled out new plans that give U.S. customers unlimited airtime minutes for a flat fee of $100. And flat fee plans are music to our ears even if the carrier continues to block its customer SMS.

Unlimited airtime minutes means anyone who subscribes to one of these plans now has the ability to make unlimited free international calls to 39 countries around the world using Rebtel’s Smart Call system.

But even if they’re not willing to jump through the few hoops that make the international portion of call free, they can still take advantage of our super low-cost rates for calling any phone, anywhere in the world.

And eventually, we hope that Verizon will come to its senses and stop preventing its customers from sending standard SMS text messages to themselves and their friends if they contain local phone numbers issued by Rebtel.

Late last week I spoke with Robert Poe, a reporter for VoIP-News and DailyWireless about this issue. As any good reporter should do, Robert contacted Verizon after our call. Verizon (no surprise) denies that it is blocking SMS that their customers try to send to themselves or that their friends try to send to them from the Rebtel web site.

Robert declined Rebtel’s help to test our claims, which will make his findings all the more powerful when they come out. In the mean time, with the kind help of my comrade Fredrik Henning, I thought I’d take a minute to shed some light the mechanics of this problem and why Verizon is not telling the truth.

To be able to send SMS to people in U.S. from a system platform, not person to person, a short code number is required to identify the sender of the messages. Therefore every provider of messaging services has to apply for a dedicated or shared short code (a 5-6 digit number) from the Common Short Code Administration (CSCA), which Rebtel had done and received.

The reason for this bureaucracy is that the U.S. market applies interconnect charges differently than other countries. In the U.S. mobile recipients pay for incoming SMS. In contrast, people in Europe do not pay for incoming SMS because the operators in Europe are being paid by the originating operators to cover the cost of delivering the SMS to the recipient.

Rebtel wants its customers to be able to send SMS to their friends that are mobile subscribers in U.S. mobile networks. Rebtel wishes only to send SMS on behalf of the users, and not perform any unsolicited bulk messaging (a.k.a. SPAM or advertising).

So, despite what Verizon spokesman Jeffrey Nelson tells the press, every SMS sent from Rebtel’s system is sent on behalf of the users who have requested that Rebtel send SMS to their friends or to themselves.

But it doesn’t end here. To get a short code implemented in a U.S. mobile operators network a specification of traffic flow and commands has to be submitted to each operator for approval of the process of OPT-IN and OPT-OUT, insuring that the recipients really do wish to get charged for receiving SMS.

Rebtel provided its specification of this process and got it approved by some operators, but not all, namely, Verizon.

So the bottom line is we’ve played by the rules. Our specification follows all requirements to get a short code approved with regards to OPT-IN and OPT-OUT. Yet, Verizon refuses to approve it. What’s that about? Why is this allowed?

We think it’s now time for the industry to stand up to this bullying.

We think the CTIA the trade association “dedicated to expanding the wireless frontier needs to reprimand Verizon and demand they play by the rules.

And if that doesn’t work, then we think it really is time for the FCC to do something about Verizon and its blatant anti-competitive abuse of power.

Skeptical?  You bet!  But we’re in good company.

Verizon is talking openness out of one side of its mouth while the other side is shutting down Rebtel’s application for a harmless short code campaign that would allow customers to set up new local numbers for global contacts with one quick SMS. 

Verizon has been putting on the PR push to position itself as all open and friendly just in time for the January auction of the “C-Block” of 700MHz radio spectrum.   

It’s a good story. In a recent BusinessWeek interview, Verizon CEO Lowell McAdam announced that as part of Verizon’s new “any app, any device” future, his company would support Android, Google’s open mobile operating system.  He goes on to say that this change is far from a sudden course correction — that he’s been trying to figure out how to make Verizon open for a year.  Yet it was only just a couple of months ago that Rebtel’s application for a short code campaign was summarily dismissed.

Short codes are those five-digit numbers that connect you to someone or something instead of dialing an entire phone number.  You may have used a short code to vote for your favorite American Idol, for example.  Rebtel wants these short codes to give customers a fast and easy way to create new local numbers for calling abroad instead of having to first dial a Rebtel operator or use the Rebtel web site.  

But to get short codes you have to apply to each carrier for a campaign, which Rebtel did through its U.S. service provider. 

Sprint said, yes.  AT&T said it might approve our campaign, but only with a bunch of changes, which we’re working on.  And Verizon, Alltel and T-Mobil all said, no. 

According to Adam Liptalk’s story in the New York Times, experts say private companies like Verizon probably have the legal right to decide which messages to carry — that the laws forbidding carriers from interfering with voice transmissions on ordinary phone lines do not apply to text messages. 

Rebtel, however, believes this is a Net Neutrality issue – whether carriers or Internet service providers should have a voice in the content they deliver to customers. And, in our opinion, the Verizon rejection of Rebtel’s short code campaign is nothing short of an anti-competitive abuse of power, much like their rejection of Nara Pro-Choice America’s short code campaign was interference with political speech and activism. 

Just like with Nara, we want Verizon to reverse its decision on Rebtel.  Why can everyone from Burger King to Barak Obama use short codes but not Rebtel customers?

And, given his opinion piece in the Wall Street Journal, I would think Walt Mossberg should be a loud supporter of this cause. 

Regardless, talking the talk is all well and good, but if Verizon really believes in openness we think it’s high time it walks the walk, too.