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SMS competitions surely took off over the last two years, especially in South Africa. Premium rated SMS is used to run these competitions.

What is premium rated SMS and how do SMS competitions work?

The networks make available a premium number normally consisting of say 5 numbers (also known as a short code) - let´s use 12345 as an example. The company sponsoring the SMS competition makes available a prize of some sort - say R 20,000-00 cash. The Sponsor then advertise the competition through normal media channels for example radio, television etc.

Subscribers enter the SMS competition by sending a SMS (this could be and answer to a question asked) to the premium number or short code 12345. Each SMS is charged at a pre-determined rate as agreed upon between the sponsor and the network. Let´s say R 3-00 per SMS. Upon sending the SMS to the premium number, the participant´s mobile bill is charged at the stipulated rate.

With the networks controlling subscriber billing (monthly subscriptions or prepaid SMS), they have the ability to bill the subscribers the R 3-00 cost per SMS sent to the dedicated premium number or short code 12345. The Sponsor and mobile network share revenue based on the terms and conditions stipulated by the network.

The Sponsor then could decide if they want to donate part of their revenue share earned to charities or set off their advertising costs against the revenue earned.

There are many success storied based on premium rated SMS. Most in South Africa are aware of the SABC1 and People´s Bank Winikhaya competition where entrants enter the competition sending a SMS to a premium number charged at R 7-50 per SMS to stand a chance to win a house which they could buy or build.

According to published news (August 16, 2005 Biz-community), the promotion contributed 7 million Rand to the SA Children´s Charity Trust after running for 22 months and resulted in 21 ordinary citizens obtaining a home of their own. (A web site is available where winners of the houses are listed - please see the links on this page)

As this article is the second part of three series looking at SMS scams, the forum in question where customers posted their concerns, indicated that the general public were not aware of the costs of the SMS when SMS competitions are run. Looking at the advertisement on television the price per SMS is stated but the time lapsed between display and moving on to other adverts is very short and might be strenuous to those with bad eyesight as the print is quite fine.

According to terms and conditions from one of the networks offering premium rated SMS competitions, premium rated advertising should comply to the following standards (might vary based from network to network but point is we are aware that these terms apply)

• All advertising that contains premium rated service ("PRS") numbers should display the total cost of the service. If a number of SMSs will be sent forth and backward, the total cost needs to be displayed upfront as well as the cost per SMS.
• The cost of the premium rated SMS should be displayed in a font size no less than 30% of the font size of the premium rated SMS number that is advertised and be in close proximity or adjacent to the advertised premium rated SMS number so that the cost is clearly visible without searching for the cost.
• All advertised SMS costs must include VAT.
• The penalty of not adhering to these guidelines will either be suspension of the relevant bind that contain this service and will affect other services on the same bind and or retention of revenues.
• All subscription services has to have a unsubscribe option and has to be a non-premium rated charge number i.e. standard rate.

Issues at stake that we should question:

1. Is it the responsibility of the network or the mobile phone user to confirm the cost of a SMS competition before entering premium rated competitions?
2. Are premium rated SMS competitions good or bad, especially if it does make a contribution to lesser privileged communities or charities?
3. Where do we draw the line or determine whether a competition is good to take part in and whether not??? Isn´t it the customer´s responsibility to make sure that they understand the terms before entering a competition?
4. In stead of just stating that the cost of SMS should be displayed