OMG Did U C What U R Paying 4 Texting?

theodp writes "If you thought gas prices were rising too quickly, writes CNET's Marguerite Reardon, check out what's been happening to text messaging. Since 2005, rates to send and receive text messages on all four major carrier networks have doubled from 10 cents to 20 cents per message. If the same pricing was applied on a per-byte basis to a single MP3 song download, it would set you back almost $24,000 according to one estimate. So why are carriers gouging their customers so? Because they can, concludes Reardon."

Is this really an issue?

Most people who are serious about texting have unlimited plans, at least in the U.S. I'm not sure how much they cost but say $5/month on top of your regular contract, even 100 text messages is 5 cents a piece.

Re:Is this really an issue?

If text messaging were really this expensive, then the unlimited plans would be like $500 per month instead of $5-15 per month.

Texting vs. Hubble

A professor at my university was recently asked by a British TV program to calculate the cost of retrieving data from the HST, and it came out quite a lot cheaper than sending text messages.

Re:Texting vs. Hubble

A professor at my university was recently asked by a British TV program to calculate the cost of retrieving data from the HST, and it came out quite a lot cheaper than sending text messages.

From the physorg article [physorg.com]:

Dr Bannister estimated the cost of the data from Hubble could vary between £8.85 and £85 per MB- much cheaper than the £374.49 per MB cost of transmitting one MB of text.

Green Text!

Maybe these prices will help drive the American consumer away from their opulent sport utility text messages to something a little more environmentally sustainable.

You'd think one of the wireless carriers would be able to differentiate themselves in the market and make a killing off selling 10 cent text messages. (That is, people would change to their service when possible because they're half the price of anyone else, and 10 cents for a text message is still a huge profit.) Do I just not understand the market dynamics, or could this be a case of price fixing?

free

I just emailed Sprint asking for free text messaging and got it. I have done this for about 10 extra things on my account for free. I have 500 free text messages a month and never used half

Same as gas...

So why are carriers gouging their customers so? Because they can, concludes Reardon.

Pretty much the same as gas...

Just to compare

In Norway, NOK0.59 is a pretty average price to pay, which corresponds to about $0.012 using todays rates. Furthermore, many companies give you 100+ free messages per month. With my own usage pattern, I keep my cellphone for free (No monthly charge, 120 mins of calling and 90 sms for free per month). Stiff competition does wonders :) If companies in Norway can do this, I'm sure it would be possible in the states too, as long as the consumers keep up the pressure.

Obivously

If the same pricing was applied on a per-byte basis to a single MP3 song download, it would set you back almost $24,000 according to one estimate.

      Looks like we're not downloading MP3's from the same place... Even if my price goes up 2000%, I will still pay exactly $0.00 for my MP3's.

Basic economics

Price is the intersection of supply and demand curves. The US carriers charge what they do because people are willing to pay those prices. If you don't like the pricing, don't text. If enough people vote the same way with their fingers, prices will drop.

Not when you have oligopolies

You started the economics discussion, so here comes ECON 102.

There are only a small number of wireless carriers. Therefore an oligopoly exists. The demand curve for oligopolies is "kinked." This means above a certain point customers will rapidly stop buying, but below this point buyers will not start purchasing in drastically greater numbers. This means that the oligopoly will set a price point right at the kink in the graph.

What does this mean?

1) A section of the populace feels txts are necessary, and demand is inelastic. This is the lower half of the demand curve. This means a change in price does affect demand significantly.
2) An increase in population of that subset of people changes the demand curve, and moves the kink in the graph higher on the price axis. A price increase ensues. The oligopolies charge exactly the price they can get away with because market dominance allows them all to effectively charge the same prices easily. One carrier changes, the rest change to follow.
3) To stop this pattern, you don't have users reduce demand, you have to break the oligopoly, because lack of competition means that prices don't follow standard supply and demand.

Web via txt?

I wonder what the feasability is of getting two mobile phones, each with unlimited text accounts, hook one up to your home PC and the other to your laptop. Now for the tricky part; write custom software that would enable you to use the text messaging system as a communication system between the two computers.

So with such a setup you can do rudimentary webbrowsing (without images) / emailing etc., your laptop sends an url via the mobile to the mobile at your home, which the PC there picks up, retrieves the webpage & sends it back in txt message "packets" and your laptop retreives and combines back into a web page, with all the txt messages encrypted so the carriers can't directly snoop on your browsing/emails.

Mobile Monopolies

Telcos can charge you 4-10-30-50 cents for a text message that costs them hundredths, thousandths of a cent to carry because they monopolize the network. If your phone could login to any radio network to which it can eletromagnetically connect, depending on which services and prices it provides, then the networks would compete for those connections.

Instead, you're locked in. If you want to switch in realtime, you have to pay prohibitive "roaming" fees that are arbitrary and extremely high - higher than even the ripoffs from the primary network. Switching your primary network requires "porting" your phone number, days or weeks of bureacratic "processing", and sometimes can't port, and breaks your old primary network's contract at great expense.

These constraints are all made-up for telcos to retain their old monopoly status with their existing customers. The exact same truths that forced open the wired networks are still true for the wireless networks, but the telcos have lobbied to make that much more expandable market into an "exception".

Note that this problem is more true in the US than in Europe and elsewhere. Foreign countries don't have as much contractual monopoly, but do have some residual technical fragmentation that is more of a basis for lockin, even though there's somewhat less lockin. But since their formerly more separate states (AKA "countries") had separate telcos that compete with each other, there's still some effort to keep whatever lockin they can, though there's less of it.

The US Congress should fix the laws to apply "universal access" to the radio networks as well as to the wired networks (including the Internet). Make these lockin contracts illegal, so they become the exception (merely to purchase rates even lower than the open market produces after competition, to pass along to consumers the savings telcos get from lower "churn" rates). We're a loooong way away from that kind of Congressional alliance with consumers instead of telcos. But we can get there, just as we got there with landlines after many years of fighting.

We just have to start by making the problem of telco monopoly privilege the conventional wisdom. 300M Americans whining about paying too much with no choice usually eventually has an effect.

Good gravy!

Thank god no one texts me duplicate Slashdot stories!

Try this on...

Texting prices in .dk: ~5 cents and falling. Yay free market economy! The US should try it one day.

Re:Some data 4 U

Why do people put up with this?

Because we can.

Re:Some data 4 U

There should be a class action suit over this.

Why? No-one is forced to spend their money on text messages. Truth is the networks charge what they do because people are willing to pay it. People simply don't care about the bytes to dollar/euro/pound; ratio. For example, the last four messages I received from my brother contained a total of about 25 characters, 8 of which were exclamation marks.

If usage drops, then prices will follow, but that doesn't look like happening soon.

Re:Some data 4 U

No-one is forced to spend their money on text messages.

Not 100% true. If you have Cingular/ATT disable text messaging on your phone, they don't promise that you won't receive any text messages. And I'm not talking about ATT's own free text-spam, but rather texts from people you don't know that you still get charged for. I wouldn't be surprised if other carriers do that too.

Re:Some data 4 U

I wouldn't be surprised if other carriers do that too.

I am on T-Mobile, and there is no way to opt out of receiving text messages. Each one I get costs me $0.15, whether it's from someone I know, a text sent to the wrong number, or simply just a spam text, which I get fairly frequently.

Re:Some data 4 U

i have an AT&T phone - i don't have a text message plan because i have the data plan and juse AIM/ICQ on my phone...

i get charged 25cents for each incoming text message - there is no way for me to disable incoming text messsages...

that is bull shit - i don't want them - but they don't have a way of disabeling them coming in - and yet they will happly charge me for incoming...

if they are going to charge on a per message basis - the sender should play flat out, oh wait they do... then why the hell am i paying to recive?

right now at AT&T the rate (if you don't have a messagling plan) is 35cents to send and 25cents recive..

that is 60 cents per message..

are they trying to tell me that they are so damn bad at delivering small bits of data accross the cell network that it costs them more than the oh so inefficent us postal office does to send a first class letter physicly accross the country (42cents)

the phone compaines are full of shit.. as soon as there is a better way - I.e. a company that doesn't screw everyone over .. i will be more than happy to switch

Re:Some data 4 U

If you don't think text messages are worth 15 or 20 cents each, then don't use them. (Yes, you can get your cell carrier to disable texting to your phone, you just have to yell at them for a while until they give you to a supervisor who can actually do it.)

I don't mind that the market will bear such high prices; what I mind is that there seems to be no competition on the part of the cell companies. Why would the price of SMS go UP when the cost of everything else related to cellphones has gone down? Compared to a few years ago, you can get more minutes, more features, better phones, etc. for the same or better prices... except SMS. Hell, I have unlimited web browsing on my cellphone, and it's $6 a month; unlimited SMS is $15 a month.

Sigh

517,602,528. There must be something infectious about Verizon and getting your decimal points in the wrong place.

Re:Some data 4 U

Okay, now remember that you need a cell tower in every area you want coverage. Now remember that you need to wire up all of those cell towers. Comparing the cost of a single T1 to that is insane.

Not really - most of the towers are not owned by the cell company but by one of a couple of twoer companies who lease antenna space; so you'd need to add in lease costs.

I'd argue they are fixed costs rather than variable so they should not be considered when calculating the cost of sending the n+1 txt msg; and while the bandwidth cost is probably more of a fixed cost as well I'd say that since it limits carrying capacity more than the antenna (as far as I know)it's not a bad estimation of the marginal cost associated with a txt msg or other data transfer.

Re:I've never text'd

Furthermore, get off my lawn!

Re:You know what the problem is? Capitalism.

Free markets require perfect knowledge. And without that, the invisible hand doesn't work.

I suppose getting everyone to acquire perfect knowledge is going to be pretty tough. So my interpretation of your post is that as an anarchist you propose that somebody should regulate the market. Is that right? I couldn't agree more.

We will need some of us anarchists to join hands and form a regulatory board or such. Naturally the board would not be able to regulate anything unless it can regulate itself and so we will need some sort of hierarchy. Also, the board would need a mandate to regulate anything at all, let alone the market. So we could maybe try to get other people (who are not in the board) to consent to our plan. We could either buy guns and make them agree or we could ask them to pick their favorite among a bunch of us anarchist that are going to be the members of the regulatory body. Either way, it is going to work out easily.

Every sunday we could burn books to emphasize that we are anarchists, so that no one confuses our regulatory board with dictatorship or democracy (depending on how we got the mandate). You know, symbolism and all that!