NYT: Text Messaging "Virtually No Cost" to Carriers
Hear the scorn of a million parents cry out in righteous anger: despite recently increasing basic text messaging rates from ten cents to twenty across the board, NYT reveals that Carriers pay roughly nothing.
The meat of the NYT article:
Perhaps the costs for the wireless portion at either end are high — spectrum is finite, after all, and carriers pay dearly for the rights to use it. But text messages are not just tiny; they are also free riders, tucked into what’s called a control channel, space reserved for operation of the wireless network.
That’s why a message is so limited in length: it must not exceed the length of the message used for internal communication between tower and handset to set up a call. The channel uses space whether or not a text message is inserted.
So, if text messaging is piggybacking on signals that get used anyway, why the hell do we pay for it? How many tweens have been grounded based on corporate greed? How many sidekicks shunned in the name of the almighty dollar? And how did they get the chutzpah to increase the going rate for a text message despite its complete lack of skin off of their back? Makes me (and my blackberry) kind of angry. Down with the Cellular Bourgeoisie! The Revolution will not be fit into 160 characters! Or, would a flash mob be more appropriate in this case?
[NYT]
Pic:[Jgodsey]
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Comments:
People continue to pay for text messaging because they believe it is worth the price. Corporate greed? Corporate greed pays the bills for millions of Americans (and beyond).
What do you want, the government to come in and mandate that services can be priced at X% more than they cost?
Many of you are wondering what's wrong with my pants, well they started running short on materials right before they got to the knees so don't give me any stuff!
this isnt new. its just a beeper with letters. anyone remember what a beeper is. man those were cool.
I'll re-enable texting on my phone when they make it free and charge me a decent rate despite the fact I'm using 2 years worth of rollover minutes instead of any new ones each month.
When I can get that for $30 or under (after fees, taxes and crap) I'll be happy.
So we have the best way to get new subscribers for a new GSM based network provider:
FREE TEXT MESSAGING!
@GildaKorn: That's not how market capitalism is supposed to work. One major carrier pricing SMS fairly (and possibly making up the lost revenue with higher rates on voice and data service) could draw in millions of subscribers from the other carriers, so why hasn't this happened? Unaffiliated carriers concurrently pricing a service vastly above cost smells like illegal collusion, particularly when they all jacked the rate up from 10 to 20 cents in response to... what?
My new provider (Fido) includes unlimted text messaging in their $25 a month plan. Not bad I guess.
Absolutely it's corporate greed. Don't give me a sad story of how are the phone companies supposed to pay for maintaining infrastructure, salaries, etc. When something costs nothing and they up the price, then it's greed. It's that damn simple. The demand for texting is so high and that's the reason they get away with it. The public are all sheep anyways and don't have the cahones to stand up and do something about it so things will never change.
Txt messages are so damn expensive now I can't afford to feed my dog and last I heard he is out stealing bones from stores.
@Oranges w/ Cheese: Try t-mobile-to-go. I switched over back in June and still have about $4 left from my original $100 card. My usage is about 100-200 minutes/month, 40-60 sms/month. Their rates are $0.10/min to talk, $0.10 to send text, $0.05 to receive text, $0.25 to send/receive multimedia messages.
This is exactly why I love the consumerist: daily examples of corporate greed and how to fight back. A problem I experienced a long time ago was that I didn't have a texting plan(Cingular at the time). Every text was 10 cents. The text craze had just started and knowing that I didn't have a plan I never sent a text, however I would receive several a day and get charged for it. This would come to around $40 a month! So, instead of paying $40, I pay $2 a month for unlimited texts, and now I can send texts all I want. It seems so simple. However, the hidden problem is that when I send a text I pay for it and the person receiving the text pays for it. So, 40 cents per text sent adds up to a lot of money for nothing to these greedy jerks.
Heh. I've pretty much had it with cell phones. Texting drives me nuts! Especially the fees. THE FEES! Even with a plan that allows unlimited texting, I find that my cell phone bill is ridiculous. We don't use them much, not even to text. The whole thing is a waste of money, but the convenience is a good thing. Especially with kids. I already knew that those pricks (cell phone companies) were making a killing off of nothin'. But seeing it in black and white really chaps my ass. HA!
Conclusion: Cell phones are the $#@%*&! devil. Good day...
lol
you make it sound like some kind of travesty.
they want money, so they charge for their services as a conpany.
you want money, so you charge for your services as an individual.
dont pretend like greed is this horrible vice that evil, brainwashing corporations posess that must be stopped.
if for one think my $15/mo is reasonable for unlimited texting, especially during months i text a lot
@nerdychaz:
A.) this article doesn't tell you how to fight back.
B.) where the hell do you get unlimited texts for $2 a month?
I have unlimited texting (19.99 /month t-mo). I always justify it as worth it compared to texts being 10 cents each. 20.00 divided by 10 = 200 texts.
I send/receive approximately 8k-10k a month.
Whatever the actual cost is, I think I make good use for the money spent.
I wish they were more expensive so nobody ever sent another one again.
Yeah its ridiculous to charge money for text messages... but it's worse here in Canada... Two of our cell providers (Telus and Bell I believe) charge 5 cents for every text message RECEIVED... And obviously there isn't an option to not receive text messages, so really... I mean I don't even understand how people can acquiesce to such a plan... but oh wells, it's how the market tumbles I guess.
Since when does the production cost need to dictate the selling price?
If you'll pay for it, they'll sell it for whatever they can get. Tell me, if you owned a company, you wouldn't do the same....
Hmmm... 20 cents to send and 20 cents at the other end, too. You can send a postcard with a lot more than 160 characters for 27 cents. Sure it takes a day or 2 to get there, but slowing down never hurts.
Also, why do we pay for bottled water?
@STrRedWolf: That's probably the megaton announcement the phone companies are sitting on if cheap and reliable mobile VOIP over ubiquitous wifi/wimax and/or a poorer country move people away from the cellphone networks.
Based on the other comments, some companies do this already. Of course, the main problem is that it's expensive to set up cell phone towers and a major network, so the companies remain the huge telecoms from the past that all used to be Big Bell, and a few smaller companies that just buy access to one of the big companies' networks, saving some money by buying in bulk, and passing that savings on to consumers through better features or cheaper rates.
The open whitespace may change things, of course. And if Wimax does take off, and competition with DSL, other Wimax services in range and cable keep the price properly low, it won't take long before people become wise to the fact that they could just run Skype for cheap over those networks and bypass the phone companies for mobile service.
@panzerschreck1: Still, the problem is that the free market should be lowering the price of it, but there's only a few big cell phone companies that aren't exactly going for blood. There isn't a cell phone trust, but the rates are about the same between the companies, and they understand that consumers will either go with AT&T if they want an iPhone, or they will go with whatever service gets the best reception in their area. This is a de facto oligarchy.
Yeah, and....
Since when does how much a product costs to produce determine how much it sells for? Ever bought bottled water?
Sure, there's no additional cost to the phone company--the marginal cost to the phone company of most phone services is $0. Consider caller-id, 3-way calling, call forwarding, call block etc.... Why do people ever pay for those?
The one I like the best is I get a 1$ a month fee for dtmf service. I mean give me a break when has a feature been around long enough to not be an extra charge. Orig the fee was so they could pay for the equip upgrade but that was like 30 years ago WTF. Also texting is the most annoying invention in a long time.
This is all true. What isn't reported is that this setup channel is the same setup channel for emergency communications, or any at all, really, just that it's used to initiate calls.
So, if a carrier finds this channel is overloaded with SMS, *no* calls can go through (911 included). Obviously, they don't let the situation get that bad, so they will up more towers even though the call load isn't high enough to justify it. This is what gives carriers the excuse to charge for SMS. What doesn't make sense is charging so much for regular data...
I wish I could find the link, but several years someone calculated exactly how many messages per second were required to take down all GSM communications in NYC. It is a lot lower than you'd expect.
@GildaKorn: This is a common misconception, in actuality greed reduces profits and causes substantial operational inefficiencies. Compare and contrast Google (not greedy, ridiculously profitable) and Lehman Brothers (greedy, bankrupt). Greed causes a drive for short-term profits, preventing a company from investing for its future or adapting to changing market conditions. It's only been since the 1980s that greed has been considered part of good business, ans we see where this attitude has gotten us.
And really, it's hard to use an argument about the price being what consumers are willing to pay when we are talking about a business that is already subject to intense government scrutiny due to known anti-competitive practices. Remember how they broke Bell up into 7 companies? Well, you may not have noticed that they re-merged, Terminator 2-style, into three massive companies that have divided up the country. Two of these companies, AT&T and Verizon, are also major wireless companies. This is a trend I hope we'll see reverse under Obama's FCC. Verizon's recent attempt to charge $.03 to send SMS to Verizon subscribers is an example of the policies that these companies will implement if we are not constantly policing them.
Virgin Mobile FTW!
Sure, the phones are cheap pieces of crap, but I caqn hear the other guy, and they can hear me. I can put 20 bucks on my phone and not have to add any more cash for 90 days just by using their Sugar Mama thing for bonus minutes.
Over the last year I've spent about $70 on cell phone service.
Which is why I'd take a data plan over a texting plan any day, even if it costs me just a bit more... make 'em work for their money!
@kaptainkk: Would somebody please explain what the actual cost for a minute of cell phone time isnow compared to what it was? If you dont want a text charge DONT USE IT. Its a simple concept. All carriers have unlimited texting and many package plans. If you or your brat cant control their texting why is that bad for them.
@insertname: Most US plans charge the same rate for both incoming and outgoing messages - I pay 20 cents per message received to AT&T, including spam (unless it's sent by AT&T themselves)
@LincolnNimrod: It seems you equate pricing ... fairly as being on even standing with taking a loss on. That is definatly no way to run any business. There is very much a concept in service business that if a competator is raising prices, when you would also like to raise them, then there is no better time for you to raise yours. This requires no collusion except for that of the policy makers within a given company. No, I'm not saying that illicit collusion doesn't happen, just that in this case I don't see any reason to suspect it. If you read the Ars Technica piece that taking_this_easy posted, it is clear that there definatly is a cost involved with providing this service, and an impact when it becomes burdened. Especially with an annual increase of 32% in use.
Sock puppet disclaimer: I work for one of the larger companies involved with this topic in a non-policy capacity.
Don't you see? They raised the prices so that you will say "Hey, I may as well pay $20 extra for the unlimited plan!" Then they have tons of people paying for it, and inevitably not using it. Then there are the rest, who get totally hooked on texting when it doesn't cost extra, and will pay that extra $20 for the rest of their lives.
People also pay $2.00 for fountain drinks that cost like 9 cents so that they can get a double cheeseburger for $1. This happens all the time.
As long as people keep paying for the text messages, I don't see a problem with the market dictating the price of the messages. I'm sure if they cost $1.00 each, people would stop texting.
They continue to pay it because they have a choice of pay it or don't get it.
There are no other options because of tacit collusion.
Markets are common. Free ones are rare.
Well, if only people (including the NYT reporter and "Computer Science Professor") would Google "SMSC" before complaining about no-cost infrastructure...
The SS7 control channel capacity is limited - if you have a lot of people texting in close proximity (say, at the airport) that gets overloaded and expensive hardware must be brought in to cope with that load.
Also, your text messages are not sent handset to handset. Ever noticed how you get a bunch of messages when you turn your cell phone on after a flight? There is a big high-capacity, fully redundant system called SMSC that receives, stores, and transmits your messages, makes sure they reach their destination, at the same time creating billing and other records. These systems cost millions of $ and support tens and hundreds of thousands messages per hour.
I'm in the wrong business, people tell me banking is a rip off but to be paid for zero work... is just... genius!
This is a big part of the reason that I hate cell phones and cell service. I consider myself a "high-tech person",with a lot of toys, but I just have a prepaid phone and I average ~$10/month for service. I would love to have an iPhone or something equivalent, but I can't justify the monthly fee. Especially with the high text messaging and data plan costs. I can't stand when cell providers advertise so & so phone for half price or whatever and the required monthly fee stays the same, they might as well say total two year cost reduced by 5%.
personally, i hate talking on the phone and would much rather pay a set fee of $19.95 a month for unlimited texting, and then pay by the minute for my phone calls. As it stands I pay $40 for calls I never make, and $19.95 for unlimited texting (I invariably go over the highest set limit AT&T offers) and my bill ends up at $80 a month, which is just stupid.
I remember before on Sprint, maybe like 6 years ago, I could use AIM to talk to people on it for the cost of minutes, not some extra data plan. Wish they'd just revert back to that, especially with my roll over minutes being over 6000 already >.>
Sex doesn't cost anything to provide either. Why should prostitutes be able to charge $300/hr?
answer: because people will pay it. Accuse hookers of corporate greed too.
@dangermike: I just switched to ATT's gophone because I had ATT before and I can call *most* of the people I talk to on a regular basis for "free". Granted I have to pay $1 a day to use my phone, so it isn't really free unless I talk for 10 minutes or more that day.
@khiltd: AMEN!
Maybe children would learn to use the english language instead of this amalgamation of letters they think are words.
cu l8r AUGH!
and The Revolution will not be televised