The End of the Era of Classic VAS Services in the United States
Value-Added Services (VAS) are additional mobile services such as paid content subscriptions (ringtones, wallpapers, games, horoscopes, SMS newsletters, etc.) that were popular in the era of feature phones. In the mid-2000s, such services also existed in the United States: for example, users could order a ringtone via SMS or subscribe to daily news, with the fee charged directly to their mobile phone account. However, by the early 2010s this model began to decline sharply. The culmination was a historic decision by operators: in 2013, all major U.S. mobile carriers (AT&T, Sprint, T-Mobile, and Verizon) announced that they were discontinuing support for Premium SMS subscriptions at the request of regulators. This meant a complete abandonment of traditional VAS billing via short codes, aimed at stopping the practice of “cramming” — the fraudulent imposition of paid subscriptions without the subscriber’s consent, which generated billions of dollars a year in unauthorized charges. The decision by U.S. operators effectively put an end to the era of classic VAS: this step became a turning point for the entire mobile content industry. The United States became the first market where Premium SMS services were almost completely shut down at the initiative of the authorities, as earlier attempts to eradicate fraud had failed to solve the problem.
The consequences were not long in coming: a decade ago, the global market for mobile content via Premium SMS reached tens of billions of dollars per year, and this model was long considered fundamental to mobile commerce. But in the United States, by 2013 consumer trust in such services had been undermined, and regulators chose to completely shut down the Premium SMS channel to protect users. As a result, the businesses of many mobile content providers (games, entertainment, voting services, etc.), previously dependent on direct carrier billing, were forced either to exit the market or to look for new monetization channels.
Everything Inside Apple, Google, and Amazon: The Shift to Ecosystems
One of the main reasons for the disappearance of classic VAS services was the emergence of smartphones and applications, which radically changed the way content is delivered. With the release of the iPhone and the launch of the Apple App Store and Google Play, the role of mobile operators in content distribution sharply declined. Whereas previously the mobile operator controlled the “portal” with ringtones and SMS services, users now receive content directly through the Apple, Google, or Amazon ecosystems on their devices. Mobile applications displaced traditional VAS by offering a richer and more convenient experience: instead of sending an SMS to a short code to download a game, users simply download an app from an official store.
Content and services moved inside the App Store and Google Play, where they are managed by technology giants. These platforms also provided a new payment mechanism: linked bank cards, digital wallets (Apple Pay, Google Pay), and so on. In effect, Apple, Google, and Amazon themselves became aggregators of mobile services, displacing models based on direct carrier billing. Experts noted that app stores filled the VAS billing niche by offering a far more transparent and controllable ecosystem for content payments. As a result, operators consciously stepped away from the role of a “bank,” retaining instead the role of a connectivity provider: logically, it was time for operators to leave the world of banking services and focus on the world of connectivity. In other words, instead of promoting paid content themselves, operators now provide communication channels, while content monetization occurs through OTT platforms — third-party services operating over the network.
It is important to emphasize that consumers themselves preferred the new approach. The cost of services through classic VAS turned out to be much higher than through applications. For example, downloading a song or ringtone is cheaper and easier via a music app paid for with a bank card than by sending a paid SMS to a short code. Operators charged high commissions, whereas the commissions of the App Store/Google Play or payment systems are significantly lower. As a result, for U.S. users, applications became a more economical and convenient way to obtain content, displacing expensive operator subscriptions. In addition, smartphone apps are simply more convenient and functional: instead of entering codes and sending SMS messages, it is enough to tap a couple of buttons in an app. All of this accelerated the audience’s departure from old VAS models.
Direct Carrier Billing: Only a Payment Method in the New Reality
Direct Carrier Billing (DCB) is a payment system in which the purchase of a digital product or service is charged to the mobile phone account. In the era of classic VAS, DCB was the basis of monetization: all subscriptions were effectively charged to the phone balance. After the shutdown of Premium SMS in the United States, DCB did not disappear entirely, but its role changed. It is now used only as one of the payment methods within official digital platforms, rather than directly between the subscriber and a third-party content provider.
An example is Google Play: for many years, Android users could link their carrier account to pay for apps and subscriptions in the Play Store. However, even this option has gradually been phased out. By 2024, the last major operators had discontinued support for carrier billing in Google Play. As of the end of 2024, among U.S. nationwide operators, DCB support remained only with small companies, and even that was scheduled to be disabled in 2025. In other words, in the United States, direct charging to a mobile phone account for content payments has virtually ceased to be used. Apple has never activated carrier billing in the United States at all — no U.S. carrier is supported for Apple ID payments or purchases in the App Store/iTunes. This is explained by the fact that for the U.S. market such a function is simply not in demand (unlike countries with low banking accessibility, where Apple and Google, on the contrary, actively implement DCB).
Today, Direct Carrier Billing in the United States has survived only in limited scenarios. Operators may offer to add a subscription payment to the mobile bill (for example, some allow subscriptions to streaming services such as Netflix or Apple Music to be paid through the carrier bill, combining them into a single invoice). But even in these cases, this is not about “gray” content providers, but about official partnerships between operators and major services. The main role of DCB now is to facilitate payments within legal ecosystems. Outside of the App Store and Play Store, such paid subscriptions from independent providers no longer exist — U.S. operators simply do not allow them because of past problems with fraud and regulation.
Why the VAS Model Became Obsolete in the United States: Banks and Regulation
The reasons for the transformation of the VAS market in the United States come down to two key factors: a developed banking infrastructure (and, as a result, changes in user preferences) and strict government regulation of content and payments.
A developed banking system makes the use of DCB redundant. If in developing countries VAS and DCB are in demand as a means of financial inclusion, for American consumers it is easier to link a credit card or PayPal account to a smartphone. Most prefer to pay by other methods — hence the low demand for DCB. In addition, content services themselves have found ways to reach users without operators: direct payments through apps and online. As a result, old VAS services became redundant.
The U.S. telecommunications market is characterized by strict control over the imposition of paid services. Authorities received thousands of complaints about unexpected subscription charges. Lawsuits were brought against operators and content providers. The authorities concluded that completely shutting down the Premium SMS channel was safer than trying to filter out all “fraudsters.” High consumer protection requirements effectively pushed the old model out of the U.S. market. Moreover, even bona fide players faced difficulties: strict rules, mandatory refunds, and so on complicated the launch of new services. Instead of questionable additional revenue, operators chose subscriber loyalty and a focus on core connectivity services.
What Replaced It: App Economy, Applications, Micro-Subscriptions, and Streaming
The disappearance of old VAS did not mean the end of mobile content monetization — on the contrary, there was a shift to a new model, the “App Economy.” New forms of monetization include:
- In-app purchases and official stores. Users pay directly in the Apple App Store, Google Play, and Amazon for apps, games, in-game items, music, and video.
- Subscription services and streaming. Users subscribe to video streaming platforms, music services, or apps. For a fixed monthly fee, they gain access to a content catalog.
- Micropayments and micro-subscriptions within apps. Mobile games and applications have implemented systems of microtransactions — bonuses, VIP access, weekly subscriptions.
- Content through official channels with oversight. Official platforms have taken on the role of moderation: age ratings, descriptions, security, and transparency for users.
The VAS market in the United States has transformed into an “App Economy” model, where value is created by applications and online services, and monetization is carried out through direct user payments to official platforms. Classic VAS subscriptions have almost completely disappeared. Their niche has been filled by apps, subscription services, and streaming, which provide users with a richer experience and greater transparency. Operators, in turn, now focus on connectivity and infrastructure rather than on selling content.
