Tue Jan 6, 2009 2:43PM EST
See Comments (25)
Remember when you used to pay a dime for a text message... or maybe even a nickel? And now you likely pay 20 cents a pop, coming and going. Everyone complains about text prices (unless you're on volume, per-month plan), but in the end we always assume it's part of the cost of doing business... that carriers have had to raise prices because their costs have been increasing. How else after all to explain 100 percent price inflation in the last three years?
Perplexed, Wisconsin Senator Herb Kohl looked into the matter, polling the four major U.S. wireless carriers about their text message pricing policies. The result? Quite the runaround, stonewalling, and misdirection. And there's no surprise why carriers don't want to talk much about the issue: Text messages don't cost much to transmit.
How little do text messages really cost? The truth is that they're so tiny -- 160 characters is the usual max -- they functionally cost nothing at all. Yes, carriers need to invest in hardware and infrastructure to deal with the messages, but all of that was put in place long ago (and well before the price hikes began in earnest). As a point of reference, today a $100 hard drive can store about a billion text messages. Transmission costs are even less than that and decrease with scale. According to one computer science prof who's studied the matter: "Operating costs are relatively insensitive to volume. It doesn’t cost the carrier much more to transmit a hundred million messages than a million."
The very best part of this discussion comes at the end of the New York Times piece that blows the lid off one of the biggest scams going in the telecom space: "Once one understands that a text message travels wirelessly as a stowaway within a control channel, one sees the carriers’ pricing plans in an entirely new light. The most profitable plan for the carriers will be the one that collects the most revenue from the customer: unlimited messaging, for which AT&T and Sprint charge $20 a month and T-Mobile, $15. [Verizon doesn't have an a la carte text plan, but it's essentially $20 extra for unlimited messaging, too.]
"Customers with unlimited plans, like diners bringing a healthy appetite to an all-you-can-eat cafeteria, might think they’re getting the best out of the arrangement. But the carriers, unlike the cafeteria owners, can provide unlimited quantities of 'food' at virtually no cost to themselves -- so long as it is served in bite-sized portions."
What's next? The price-fixing lawsuits which allege that the carriers are illegally colluding to set messaging prices artificially high. 20 such suits have already been filed around the country.
Join in the discussion. Here you'll see the comments in the order they were posted.
ola
where is my refund? Wait, this transmission is free right?
The author conveniently leaves out the 20-30 SMSCs required to run a robust messaging environment. A carrier grade Logica/CMG SMSC is going to run $2-3M per device. Then of course the several billion dollars it takes to rollout a cellular network, without which there would not be any messaging taking place. Don't forget the inter-carrier transit fees that are charged to move messages between AT&T and Verizon, et.al. But yeah, once you ignore all the infrastructure costs, sending something over a control channel is pretty cheap.
What and interfere with unlimited business freedom? After all, thanks to a long-standing, widely-known legal swindle they have stolen all the same rights as us individuals but they are MUCH bigger and have a lot more money to throw their weight around politically. Eventually (very soon now), staying on this path they will control EVERYTHING. I consider this crime to be the foundation of much of what is screwing up our country and world. It's so sad that this is all our economy has left for making money: charging way more for the same things and swindling people with complex scams like the mortgage / financial black comedy.
Text messages are so expensive because people is dumb and pay for them, there is no way that a text message cost more money to the carrier than a phone call.
Hello
Uh, how long did it take to figure this out? Really? I just wonder how many idiots actually thought that a simple burst transmission that would be measured in mere bits (not megs or gigs) could possibly be so costly. My wife and I stopped texting a few years back, because we knew we were being ripped off.
If I remember correctly, about 6 or 7 years ago, weren't text messages free?
wait...so a company is charging more for a service then its cost???
1 Posted by marpater@prodigy.net on Thu Sep 3, 2009 7:09PM EDT Report Abuse
Go figure, I imagine if the powers to be did the same investigation into a broad number of services provided to the unsuspecting Joe public, we would find out that this is not the only example of extreme capitalism. Maybe health care and insurances would be a good one to look into next!