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)
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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.
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.
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.
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 7.4x-11.1x that you were off in your calculation. And that’s almost exactly the unfair markup you’re complaining about. Go figure.
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?
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.
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!
@mopar_man: When I’m recieving, just one. And the noisy environment part applies most when receiving.
@reeg2:
Obviously, you’re not familiar with this story.
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.
@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.
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….
@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.
I know that in Korea, people barely pay anything for texting.
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.
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
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.
@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.
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.
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.
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
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….
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.
Cell Phone Companies: We’ll charge whatever we want, and you’ll pay it.
Consumers: (grumble grumble) Bitches.
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.
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.
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!
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.
This article should be revived from its almost 5 year old status … it’s still relevant.