Why Are Text Messages Marked Up 7314%?

Verizon and other cellphone companies mark up the cost of text messages by at least 7314% when compared to their rates for data transfer services.

Verizon’s max text message size is 160 characters. At 7 bits per character, that’s 1120 bits or 140 bytes. Without a text messaging plan, those 140 bytes run you $.15 (fifteen cents), according to Verizon’s website.

Compare that to the rate for data transfer (like when you would use your cellphone as modem). That rate is $.015 (one point five cents) every 1024 bytes.

That’s $.015 per data kilobyte versus $1.09 per text message kilobyte. In other words, a markup of 7314%. Other cellphone companies charge comparable rates.

Bytes are bytes. What makes a text-message byte so much more valuable than a straightup data byte?

Verizon didn’t return our requests for comment. — BEN POPKEN

(Photo: shadowplay)

Comments

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  1. Kornkob says:

    That answer is exactly the same as most other markup questions:

    People will pay a huge markup for anything convienent.

  2. xkaluv says:

    Though it may seem unfair, fair market value is what people are willing to pay for a service or product. I think people are willing to pay more because of the simplicity, and the cell phone companies are capitalizing.

  3. cynon says:

    Cuz like, most 14 year olds don’t like, use data packages. Duh!

    Barring that, it’s just another way to get more money out of people.

  4. FLConsumer says:

    “Because they can.”

    Let’s be honest. The most frequent users of text messages tend to be the under 18 crowd, with no sense of responsibility and often no common sense. Why waste $0.10 for little more than a sentence when you can call them for less?

  5. Spider Jerusalem says:

    I like the British model, where texts are 3p each, and nearly every plan is Pay As You Go.

    There has to be a market in there somewhere for phone services like the ones attached to that firefly phone to also include a text messaging packet for an extra $5 a month.

    • dpeters11 says:

      And I believe it’s outgoing only. The Brits are known for not charging for things not under your control like incoming calls or texts.

  6. Amiga_500 says:

    One work “Teenagers”. Teenagers drive what is trendy in technology, and they have parents that will pay for it.

  7. mantari says:

    They charge on what you think the service is worth, not how much it costs them. Seen one of the energy drink 4-packs in a grocery story? $6 or so? Yeah. Costs little more to make than any other drink. You’re paying extra because you WILL pay extra for a drink that’ll give you energy.

  8. Starfury says:

    I’m 40 and don’t use text messages at all. Much easier to call the person or e-mail them.

    • Grungo says:

      I’m 95, and I don’t use phones or email at all. Telegram is much more convenient.

    • snazzycarrot says:

      I am 51 and I much prefer text to phone. I like the semi-real-time aspect of it. I can carry on a text conversation over an extended period of time without having to devote my attention exclusively to it, I can think about what I want to say, and my ear doesn’t get all red and sore. Email is another thing completely.

      • whogots is "not computer knowledgeable" says:

        This. SMS (like its predecessor, interactive paging) is less socially demanding and intrusive than phone calls. If I just need to ask whether to pick up milk, text makes sense.

    • framitz says:

      I’m 60 and started using text about a year ago. Very convenient for short messages.
      My family uses texting much more than voice between us.
      With our $25 pay as you go plan text and web are unlimited, so it saves lots of minutes.

  9. doormat says:

    If congress is worried about bank fees grossly exceeding what they actually cost the bank, why not go after text messages too? If a text message is really worth 0.2 cents, why do we get charged 10c?

  10. missdona says:

    Sprint just offered me unlimited for $8/mo. with my new plan- or 500 free a month.

    I’m over 30- if I do 20 a month it’s a lot.

  11. TPIRman says:

    For argument’s sake, you could say that data bytes are purchased in bulk. When you use a data package, you are agreeing to “buy” more bytes — by a few orders of magnitude — than with the text-messaging plan. I realize it’s an imperfect comparison, but it’s one element to consider.

    The post poses a good question, though. Is there any possible infrastructural reason a cellphone company could offer to justify the chasm between the two rates? Even my half-spurious “buying in bulk” notion wouldn’t account for a 5,000% markup.

    I’m guessing there’s no tangible justification. I think Kornkob got it right when he said that we’re paying for convenience.

  12. ShortbusKid says:

    I can’t speak for Verizon and how their network utilizes SMS, but Cingular’s network transmits SMS over the voice network, not the data network. So it’s not exactly an Apples and Oranges comparison.

    • Hydian says:

      This is correct. However, SMS is also sent best effort, so it does not take bandwidth away from other services. It is quite literally money for nothing for the carriers as SMS is simply using otherwise idle airtime.

      Note that I don’t fault them for it. My only issue with SMS pricing is the charging on both ends (both incoming and outgoing.) I can choose to not take a random call, but I cannot choose to not receive a random text message.

    • nonsane says:

      But, It is Apples an Oranges – Apple makes phones, Orange is a network you can put them on ;)

  13. tvh2k says:

    @ShortbusKid: I think you meant “it’s not exactly an Apples and Apples comparison.”

  14. Flymaster says:

    I agree with ShortbusKid. It’s two entirely separate technologies, one involving interaction with other providers and companies, the other involving entirely in-house resources.

    I’m not saying that text messages, data services, or voice plans are reasonably, rationally, or fairly priced, but this is a pretty stupid basis for complaint.

  15. tubby17 says:

    I agree that Verizon or other providers can charge what they want, however overpriced it is. My beef is that on my 800 peak minutes/month plan, my flat monthly fee is, say, $60.00. If I use only 400 minutes in a given month and send 1 text message, my bill is $60.10 (excluding taxes).

    Wouldn’t it be nice if I could trade a few of those unused voice minutes for other services (even if it was 10 voice minutes per text message, or whatever)?

  16. Pelagius says:

    This kind of extortionary business model is why the US is constantly 5 years behind the rest of the industrialized world (and some of the developing world) when it comes to mobile technology. I’d gotten into the habit of texting while in Asia, and my first bill after returning to the US of A was a huge shock.

    Sooner or later someone will figure it out and start undercutting the competition, assuming there’s any competition left and we’re not all customers of AT&TVerizonBellSouthCingularCorp

    • axiomatic says:

      DING DING DING!!! We have a winner. I agree 100% that this ridiculous mark up is pure EXTORTION.

      It’s us dumb users not complaining about this that allows it to stay this high too.

  17. He says:

    I use text messages a lot. It’s easier in noisy environments (bars,server rooms) and a million times easier to check than the voicemail. I never exceed 5 bucks a month worth even with the rate increases, so it wouldn’t be thrifty to either get a data plan and use im or buy the 500 message/$5 plan. It’s a scam, but overall cost-wise it is a better option for me and probably many other people.

  18. YodaYid says:

    Just to play Devil’s Advocate, I believe that SMS goes over a special channel which adds to the cost. The internet is a “dumb” network which allows all kinds of data traffic. The phone system is “smart” which means special accommodations are needed for different kinds of services. If net neutrality is overturned, a lot of internet services will start looking like SMS.

    • Mark702 says:

      What you just said is factually wrong and makes no technical sense. Please find another article more to your knowledge level.

  19. JohnMc says:

    Hang tight users of cell phones! The landscape is going to change drastically by 3/4Q of this year. Pronouncements by Sprint is that they will have a 4G data package for appropriate phone sets. The neat thing is the data transfer side of their offer will be flat rate at 112kbps. There is also a proposal before the FCC to break open the phone sets so third parties can offer sofware and services on the CPE.

    Now lets say it all happens. Skype,Xten, Belkin develop software to run VoIP over the data channel @ 56kbps. I still have another 56kbps for data. The effective rates? .01-.02c/min assuming that you used the device only half the time of the allocated time allowed. That’s vs the .03-.05 consumers get today.

    If it happens the world of wireless is going to change drastically. For example if Nokia came out with a wireless version of the N770 the rush for phone upgrades die and I just software updates.

  20. ExtraCheese says:

    SMS is not a simple packet data transaction.

    I don’t think there is much reason to go into the technical differences, let’s just say that I can receive an SMS from anyone at any time, but I could never host even the most simple web site from my phone. The technology just doesn’t work that way.

    One thing that they should do is make texting to people who are on the same carrier as you much cheaper.

  21. jrsmith says:

    It’s higher than that, actually. Verizon increased their SMS rate from 10 cents to 15 as of March 1st.

  22. renial says:

    While I have no doubt the cellular carriers want to charge as much as possible for each text message, there are technical differences that can account for some of the discrepancy. When your cell phone connects to the network, there are actually two (three for some data plans like EVDO) channels that it uses: the control channel and the voice (and data) channel. Your phone is always listening to the control channel, so that’s where text messages are sent. Beause everyone else’s phone is always listening to the control channel too (it’s shared among phones connected to a particular tower) the bits on that channel are a scarce resource. The data channel is only in use when you are actively using it, so it’s easier to share one data channel among many users.

    As a side note, because text messages and voice don’t use the same channel to communicate, it is sometimes possible to send a text message when it’s impossible to get a voice call through. EVDO works the same way: it uses a data-only channel to talk (hence the “DO”) and heavy call traffic won’t disrupt it. I had a friend use voice-over-IP-over-EVDO to place calls during the katrina/rita hurricane season when nothing else could get through.

  23. mopar_man says:

    a million times easier to check than the voicemail.

    Really? I call up Alltel’s voicemail, they request my password and it plays my message(s). I press 5 or 6 buttons when I call it. How many buttons are pushed on during a text message?

  24. Justinh6 says:

    In my experience, its the tool of college and highschool guys who don’t have enough gumption to actually call girls. Instead they text them.

    And they pay the premium price for such a service.

    Did you guys know that if you receive text messages from anyone, then you are charged a fee for simply receiving one?

    If you call your provider up, they will put a block on text messages, so you don’t end up with a string of 25 cent charges. If you don’t have a plan, its usually 25 cents with most carriers.

    Woof.

  25. meadowlarkb says:

    It used to be that texting was the cheap way to communicate. You’d save money by texting if you don’t need to call. It was also better than suffering intense ambient noise during a voice call. Furthermore it’s good for passing number, phone numbers addresses etc. You don’t have to rewind voicemail over and over to get the number written down, it’s right there.

    We’ll see if the new prices outweigh these benefits.

  26. scoobydoo says:

    If only things were this easy.

    The network for transmitting SMS messages is a terribly complicated one where pretty much everything is based on old(er) packed switched connections. Each provider invests millions in sms service centers, which in essence are just massive computer servers from companies like Comverse.

    Then you need a fairly complex system of billing integration with your existing systems.

    Then they need to work on interconnectivity with other providers (remember just a few years ago you couldn’t even send an SMS to someone on a different network). Of course, this interconnectivity gets more complicated when you also want to allow people to send messages abroad. You then get into clearinghosues for messaging and crossborder billing.

    So, while I agree that the price for a message is still totally insane and out of sync with reality, the technology behind SMS messaging most certainly is not the same as data services for the operator.

    But why stop complaining there? The cost of an incoming minute can be as high as 15 cents/min, what justifies THAT? What justifies the operator asking $35 just to let you become a customer (“activation” fee) when activiting your phone is totally automated for them. Mobile operators have to be the only service where you have to pay just to be allowed to pay more.

    Lets face it, mobile operators invested millions/billions in their networks, and they’ll do whatever they can to get a massive return on that investment.

  27. LAGirl says:

    too much teknikal stuff. my brain hurts now.

  28. I can’t believe nobody has asked if you mean 0.0000146484375 dollars, or 0.0000146484375 cents.

  29. laser says:

    I use text, but I use Blackberry messenger built into the BB. It uses the data connection and is unlimited. Only downfall is that the other user musy have it also, but most of the people I text do.

  30. jhembach says:

    By this argument, on most providers, everything is data anyways. According to that math, the data charges are nuts when you think about how many bits you can push across in voice (or even video calls) on a 3G network in 1 second.

    There’s actually nothing stopping you from using one of a number of 3rd party sms providers that have substantially lower rates (where you pay your provider’s regular data rate for 200bytes or so, plus are billed a few cents from the third party), but it’s inconvenient. There’s also nothing stopping you from sending e-mails using your data package to one of the many providers’ e-mail-to-sms gateways (mine is XXXXXXXXXX@fido.ca, for example and received messages are almost alays free).

    What it comes down to is convenience and willingness to pay. The service is wirth whatever people are willing to pay for it, basic supply and demand.

    Just my 2 cents…

  31. reeg2 says:

    @eastvillageidiot:
    because it says $.000. obviously not a percent.

  32. Kangarara says:

    It’s what the market will bear.

  33. JohnMc says:

    ExtraCheese,

    You assume wrongly that any future development in wireless would utilize SMS. When you have essentially ISDN rates speeds over a wireless data packet network you abandon SMS and go with any of the internet IM protocols to do the equivalent of text messaging.

  34. johnrover says:

    SMS messages are not IP based. Your cell phone data connection is. This is more obviously evident on higher end phones (like Blackberrys or Treos) where you have more configuration options.

    You are comparing apples and oranges, so your analogy does not hold.

    That said, I’m sure they are making insanely immense profits. But your math really doesn’t hold up.

  35. wesrubix says:

    Handful of people here are on the right track: SMS != straight data. (!= does not equal). But it is very close. And also very slow. The infrastructure is hardly expensive. SMS preceeded many, many services that depend on faster data, which means it works over trash net. SO what is SMS?

    short message service. similar to email, but uses more low level commands. AT commands. Super nerds know what those are.

    A little like TTY, a little like push email, and alphanum pager…

    Anyone hungry for deets just read: http://en.wikipedia.org/wiki/SMS

    Try it: if you send a text to your email, it comes from 123-456-7890@cingular.blahsomethinglikethat.com. Try it.

    It is a customer accepted markup. If everyone in a given market (say US) said nuts to TXT, then the prices would drop.

    As an important side note… SPRINT USERS watch out for CASUAL TXT. Aka… press 5 to page this person…

  36. brishenhawkins says:

    Well, I think the under 18 crowd needs a rep here.

    We like to use sms messages because

    -Our phone is always with us
    -Its the best way to contact someone in the middle of class
    -We aren’t always at our computer. If we were, we would use IM

  37. JimXugle says:

    how long until companies just provide a big fat internet tube to a mobile device and let the user make voip calls or use push-email?

  38. Metschick says:

    I’m a 28 year old Tmobile customer, and I have the 1000 texts thing in my plan for $10 a month. Two months ago, I received and sent 800 texts. Some days, I’ve sent and received anywhere from 30-70 texts. It’s just easier sometimes. Especially if I’m texting someone whom I know is adept at texting. Like I’ll never text my parents.

    Also, there’re lots of people I’d rather text back and forth than speak with. Like my annoying sister in law. I can get rid of her in a few texts, but if she catches me on the phone, forget it – I’m on the hook for at least 20 minutes of blather.

  39. shortarabguy says:

    mopar_man said: “Really? I call up Alltel’s voicemail, they request my password and it plays my message(s). I press 5 or 6 buttons when I call it. How many buttons are pushed on during a text message?”

    I press one. When I see my phone has a text message, I press the button which indicates that I would like to read the text message, then press it again to view that specific message( unless it’s not the most recent one, but that’s a given).
    When I call voicemail, on the other hand, assuming that I’m using my cell phone( which doesn’t require a login) I often have to deal with either
    a) bad reception
    b) unrecognizable diction
    c) bad ambient noise, or
    d) a myriad of all of the above. I also have to bother everyone around me by initiating a phone call. Viewing a text message is just faster and more polite, two qualities of which people need more these days…

    Oh, and before anyone else says that viewing a text message is dangerous while driving, it’s almost equally dangerous to use the phone while driving. That said, there are some huge benefits to using text messages, but the inequality involved here is just too great. The telecommunication companies have banked on our love of SMS and we’re just their prey. Very little to do now but hope that Google comes up with some revolutionary new thing which sticks it to them, haha…

  40. @spiderjerusalem: If 3p is a very rare price in the UK for a text message on Pay As You Go. When I was on Pay As You Go I was paying 10p, then 12p, and finally 15p (that’s about $.30!).

    Most subscription services offer a number of free SMS per month though, usually between 500 and 1000, so for a lot of people it’s not really noticeable.

    I’m 25 and am always texting. In general the UK are quite a heavy user of SMS.

  41. Nestor66 says:

    Texts use a different channel to transmit then ordinary data so that might be one reason for the cost difference. Also the US is about 5 years behind the rest of the world when it comes to mobile communication. If you think that texts are the domain of kids less then 14 you’re in for a shock. I’m in Ireland, a land of 4 million people. We sent about 4 Billion text messages last year. Premium rate texts, informational texts etc. etc. You’ll get around to them eventually.

  42. linxeh says:

    @wesrubix – SMS is not sent using AT commands. Many mobile phones allow you to communicate with them using the standard Hayes commands (or AT commands as you put it) – but this is not how the phone actually sends SMS messages and nor is it part of the process a typical SMS will go through.

    SMS Messages are typically sent in the same way that the phone sets up a call – over the control channel which is separate from the voice data. For CDMA phones then ANSI41 defines how this works (see http://www.cdg.org/technology/roaming/Technology/ansi41.as… for example) and with GSM it is defined in MAP, part of SS7 – http://www.protocols.com/pbook/ss7.htm#MAP

    SMS messages started off free (in the UK at least where the craze seems to have started), and were limited to within network (it was intended as a way for engineers to communicate with each other). Once it became popular, the networks opened up access to allow cross network delivery. Of course, as soon as this happened they twigged they could start making money and introduced charges per text message.

    As for the overpricing – that is just market dynamics. People are prepared to pay extortionate amounts, so the networks will charge.

  43. linxeh says:

    @JimXugle:

    Big fat internet tube to a mobile device… isn’t that the definition of 3G – http://eurotechnology.com/3G/ – which already popular in the UK, but almost ubiquitous in Japan and parts of Asia. Take a look at the phones for sale in South Korea if you want a glimpse at what the Western markets might see in a few years time.

  44. Stockholder says:

    Hey, let me give you a fact of life. The company isn’t in business to make you happy, it’s in business to make me, the stockholder and owner, money. We do that by providing you services at the highest cost you’re willing to pay. I, the stockholder and owner, do not make money by giving away services at cost and have no god-given edict that demands I bend over backwards and kiss your ass for every 15 cents you give me. If you don’t like it, form your own company that you own and offer the services for free to the whole planet and lose all of your wealth if you want in the process.

  45. mystes says:

    Isn’t the argument that text massages are legitimately more expensive sort of dubious in light of the fact that you can send them for free by email? This page has the addresses: http://www.tech-recipes.com/rx/939/sms_email_cingular_next

    In fact, you’d probably be better off getting a sms-email-sending j2me program for your phone and using that to take advantage of the data rates.

  46. MikeyMan says:

    Today it starts to pop up quite a few alternatives to the expensive SMS. I have seen a number of services offering instant messaging from the phone, e.g, Radarspot, which is charged as data traffic.

    It will be really interesting to see how the telcos answers to these threats. Will they give up their cash cow, the SMS, and develop similar messaging solutions, or simply lower the prices, or will they ignore the threat and hope for the best?

  47. quizzoid says:

    And why does a large soda at the movie theater cost $3.50? Because it’s not just WHAT is being delivered that matters, but also WHERE and WHEN. Same reason that a bottle of “imported” beer costs $3.50 in the bar, and probably a third of that at the grocery store.

    Also, SMS messages are typically delivered to mobile phones via the paging channel. The paging channel is a limited slice of the radio spectrum that is used so that the cell towers and the phones can talk to each other – the “control” channel, if you will. The capacity of the paging channel must be shared by all the phones (whether being used to make a call or not) in any given sector. So it’s a very limited and valuable resource.

    The amount of paging channel capacity that is consumed by delivery of an SMS message is much higher than that used by a data session, if measuring the amount of capacity consumed versus the number of bytes that is delivered to the mobile phone.

  48. jaredharley says:

    With T-Mobile, we get charged for incoming as well as outgoing. I haven’t used the texting service enough to make it worth adding a plan to my account (i.e., I spend less than $5/month on texts). I don’t text people very often, but I do have lots of incoming texts – appointment reminders (courtesy of Google Calendar), certain emails (courtesy of GMail filters), etc.

  49. Apreche says:

    Just let me install a Jabber client on my phone please.

  50. tschepsit says:

    Disclaimer: I’m speaking from the perspective of CDMA 1x & 1xev-do (Verizon/Sprint/Alltel/US Cellular), since that’s the technology that I deal with for a living. I can’t really speak to whether this also applies to GSM/UMTS (T-Mobile/AT&T).

    JohnMc has the right idea, but the overhead cost to set up a data connection in order to send a short text message isn’t really worth it. That’s why SMS already goes over a shared channel. Newer technologies still have a built-in mechanism to transmit very short sets of data over the common channels.

    Basically, when you use a data plan, you’re typically using a common channel to set up a connection and then using a dedicated channel to transmit a large quantity of data, so each byte that you transmit has a relatively small associated cost in terms of common channel usage & dedicated channel signalling. For an SMS, it’s usually all on the common channel, thus the higher cost/byte. Even if you were to use a dedicated channel for SMS, the message itself is so short that there would be a very high cost/byte for common channel usage (to set up the connection) and dedicated channel signalling.

  51. virgilstar says:

    JohnMc – I’m intrigued by your info on a 4G set from sprint. Is this related to EV-DO Revision A (RevA)? Anyways, 112kbps is quite frankly ridiculous in this day and age. On a bad day even regular EVDO on my verizon treo gets upwards of 350.

    What annoys me is that I have an unlimited data plan from vzw (actually unlimited = 5GB/mo, but that’s another story), and they STILL charge extra for SMS!

    Regarding Jabber (comment by Apreche) – just get a windows mobile smartphone with an unlimited data plan, and run skype on it. A lot of people do that.

  52. brenda23 says:

    In fact, it is very expensive to maintain SMS. This is one of the reasons we are moving to IMS. When that happens, text messaging may not only be a lot cheaper, but may actually be included at normal data rates. Until then, the cost of maintaining an SMS network will keep SMS prices high.

  53. scientifics says:

    when compared with the fact that text messages, etc cost the fone co. the furthest thing next to nothing without actually being nothing, the mark-up seems substantially higher.

  54. cypherpunks says:

    My impression is that there’s also a significant amount of per-transaction overhead (authenticating, billing, etc). I don’t know if 15c is a fair price, but streaming data isn’t the same as a packet.

    Your math is wrong in a lot of ways. Sending TCP/IP data, the bandwidth includes overhead (negotiating TCP connections, packet headers, acknowledgment packets, etc.). I’d also guess they do use 8 bits per character. In addition to data, we need the phone number we’re sending to. That’s another 10% or so. Let’s add the 2-3x inflation for acknowledgments and similar packets. Now, let’s add 2x (this is probably much higher) for authentication on the phone network. We add 12.5% for your stupid 7 bit assumption (even if they only allow 7 bit chars, they almost certainly transmit in 8 bit). Let’s factor in a 50% discount for buying in bulk.

    We’ve hit a factor of 7.4×-11.1x that you were off in your calculation. And that’s almost exactly the unfair markup you’re complaining about. Go figure.

  55. mariod505 says:

    Doesn’t the increase in SMS costs nullify the cell phone contract? Can’t we call (Cingular in my case) and get out of this contract since they significantly raised the price of their contract?

  56. Bortsch says:

    Not a new user, but as it seems Gawker won’t return my forgotten password anytime soon… Anyway, I think this is a wrong comparison in lots of levels. It starts out with the fact that the two main assumptions are wrong, being: it’s not only 140 bytes as the text is only part of the content being sent; and most significant, it’s not sent the way you’d send some info using TCP/IP. SMSs are sent through the control channel and pass through a completely different structure from the data network. Just take a look at your phone when receiving SMS – if you’re connected to the data network, the connection will be interrupted to receive the message. In other words, roughly speaking, SMS is not the same as email, as you assumed, it seems. A completely different structure has to be set in place. Which justifies a different pricing, mind you. Now, not that I think I could be paying somewhat less.

  57. hals says:

    The markup on data transfer over voice bits is even higher. Note that voice on cellphones is encoded at 2.4 to 8 kbps (typically 4 or 8 kbps). So 500 minutes of monthly peak talk time corresponds to 500 min * 60 (sec/min) * 4 kbps / 8 (bits/byte) = 15,000 kbytes transmitted for about $40, or $0.0026 per kbyte, with nights and weekends typically free!

  58. He says:

    @mopar_man: When I’m recieving, just one. And the noisy environment part applies most when receiving.

  59. @reeg2:

    Obviously, you’re not familiar with this story.

  60. BoonDock says:

    Most other countries (Australia I know for a fact) allow free, or near free, text messaging. So what gives with the US?

    I think this is a prime example of how all cell phone provides are blatant thieves. These companies have successfully targeted a demographic consisting of trendy, pretentious, boneheads who think that a service is worthwhile and supremely necessary simply because you have to pay for it.

    The fact that text messaging is being marked up to the point of absurdity is in itself asinine.

    • z4ce says:

      @BoonDock you don’t know where you are talking about. As an American with cell phone accounts in both countries, the US has cheaper text plans. And at least the US account doesn’t have some insane system where you buy $500 worth of credit for $50 and to compare everything you have to convert “cell phone credit per plan” to actual currency.

  61. fluxtatic says:

    Doesn’t Stockholder point out the very asshole-ness of capitalism? It’s like this: a corporation is something like a zombie. That is, it creates a legally living entity that has no purpose in life other than generating profits. Not helping their customers (that are their very breath of life), not contributing to society. Profits. As long as their are customers willing to grit their teeth and pay $.15 for a text, there is no reason for them to change, unless it is to see if they can get away with $.20 or $.25 or….

  62. scoobydoo says:

    @BoonDock: That is total BS. I just checked each website for the most popular Oz providers, and not a single one of them offers free text messaging. SMS messages cost on average $0.25. There are NO free unlimited text messages on Vodafone, Three, Optus OR Telstra so I don’t know what you based your “fact” on. If anything SMS messaging in Oz is more expensive than it is over here.

  63. asherchang says:

    I know that in Korea, people barely pay anything for texting.

  64. Celeus says:

    JimXugle, a phone with a fast IP connection and VoIP? How about the google switch/phone: http://www.engadget.com/2007/03/15/google-exec-confirms-ph

    Add in 3G/4G network (e.g. WiMax/802.16/WCDMA) connectivity (such as where Clearwire is headed) mixed with WiFi hotspots and you have exactly what your talking about, and within a year or two.

    Too bad IPv6 has so many huge deployment challenges, it’s integrated mobile-ip and ipsec would make this sort of app much more reasonable to engineer, and easier for the end-user.

  65. con800 says:

    All the technical excuses aside, Cricket Wireless has unlimited text, MMS, local/long distance, etc. for $50. How do they manage if the major carriers can’t?
    They are a bit ghetto and you have to buy a “Cricket” phone (although most CDMA phones can be used on the network, I’m using a moto Q.)And your not bound by “pay or we’ll bust your kneecaps” type contracts either. I was on Cingular- horrible signal, dropped calls and close to $100.00 a month for the $69.00 plan. Not anymore :)

  66. WSUCanuck says:

    Why has no one referenced “The Boondocks” and its take on Text MEssaging.


    @ Shortarabguy: “I press one. When I see my phone has a text message, I press the button which indicates that I would like to read the text message, then press it again to view that specific message( unless it’s not the most recent one, but that’s a given).”

    You pressed three buttons, evidently. You pressed the same button three times. You also forgot how many button presses it takes to send out a text message. If your cell phone gets crappy reception, you shouldn’t be using that company in the first place.

  67. BoonDock says:

    @scoobydoo: The ‘fact’ that I based my statement on is a family member who lives in Perth and gets extremely cheap text messaging services as part of his monthly plan. Granted I’m getting this info second hand, but it’s far from total BS.

  68. markwm says:

    There have been several good points made in the thread so far as to why the fee is what it is (ie., cost of the structure in place to handle it, market will bear, etc.) However another thing to consider (and part of the reason the US is “5 years behind” the rest of the world), is that part of the blame falls on us, the consumer. Despite how expensive you may think your last phone was, if you bought it with a contract or upgrade option, it didn’t cost you anything near what it cost the provider. In the US, phones are heavily subsidized. That’s why you get locked into 1 or 2 year contracts, and why they charge for, or charge more for, features that other countries may give for free or a lot less.
    If the US market were to fall in line with the rest of the world, a lot of pricing might change, but would your typical consumer be willing to spend 2 or 3 times the current price for a phone? If that were how the system had been set up initially, possibly, but now that they’re used to getting a “$50″ phone (nevermind the phone is actually a $150 phone), there would be a revolt if they were told they have to spend more. In fact, there would be scads of articles posted right here about the evils of the wireless industry and how it’s gouging people by charging more for phones than it did previously.
    Just something to think about.

  69. Cleverrr says:

    You are all on the right track here, unbeknown to you guys we have SMS text systems here in Europe that already work via GPRS. One is the company http://www.10ptext.co.uk, they are offering super cheap SMS texting aimed at travellers and holidaty makers.
    Another program is called Blitzplanet, http://www.blitzplanet.com offers four ways of sending messages directly from your handset. Messages must be sent via GPRS, so only GPRS capable phones and appropriate service plans qualify; but in the end users can save up to 80% on their charges. It’ll cost about 0.10 pence per SMS message, while UK wireless companies charge
    an average of 0.35p for SMS text to and from the UK through their servers. The SMS message arrives identically in the recipient’s phone inbox.

  70. John Higginbotham says:

    its called price setting and collusion. these things are the names for bad ethical decisions within the framework of capitalism, and is against pure capitalism. if this pisses you off, ask your congressmen for laws prohibiting it. Oversight comittees

  71. Queazan says:

    If I recall correctly, text messages are also just sent in packets on the C&C communications channel on a cell device, not in the actual data band. They just replace (or addend) control packets that are being sent anyways. So when you factor in that they’re just filling in empty space in a communication that would be transmitted whether or not you send the text message, you really do have to wonder about the actual cost for transmission….

  72. z4ce says:

    Just to add in what other people have been saying.. SMS != IP. Its over a common channel (that means if you want to add SMS capacity, you have to add more towers). It uses special, expensive dedicated hardware. I was personally part of SMS upgrade for a large US carrier that was multi-million dollar, of which due to the explosive growth of SMS has been completely replaced twice now.

  73. huey9k says:

    Cell Phone Companies: We’ll charge whatever we want, and you’ll pay it.

    Consumers: (grumble grumble) Bitches.

  74. ZPrime says:

    Some of the reason SMS is priced higher is because it isn’t delivered the same way as normal data. SMS traffic is sent over the “signalling channel” over the air, which is relatively bandwidth-limited compared to the standard data channels.

    Due to this, even if there is a data service outage, SMS should still go through.

    The pricing is still absolutely outrageous though.

  75. Jimmy37 says:

    WHY? BECAUSE THEY CAN.

    Caveat Emptor – Buyer beware. But in this political climate, people want their stuff to be handed to them. They want to be told what to do. Americans have forgotten what it means to be an American. They’ve stopped voting with their dollars and whine to their politicians instead.

  76. the_Jenkins says:

    Yet another reason I dropped my cellphone service a few months back. I’m using Textfree with Voice through my iPod and couldn’t be happier. Sure, I can’t talk unless I’m in a wifi spot, however, wifi is everywhere! I only have internet at my house now and I have phone at work. No need to ever pay for phone service again! :D

  77. Salty Johnson says:

    I just checked my Verizon account and one person on our plan has sent and/or received 1,364 SMS messages SINCE THE BEGINNING OF THIS CYCLE TEN DAYS AGO. She has an HTC Thunderbolt, and I bet 90% of the people she’s constantly texting have Android or iOS devices as well. GET FREAKING GOOGLE TALK AND SAVE YOURSELF THAT $10/MO FOR UNLIMITED TEXTING.

  78. KMan13 still wants a Pontiac G8 says:

    This article should be revived from its almost 5 year old status … it’s still relevant.