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What Carriers Don't Want You To Know About Texting
Posted by
timothy
on Sun Dec 28, 2008 09:21 AM
from the what-the-market-will-bear dept.
from the what-the-market-will-bear dept.
An anonymous reader writes "Randall Stross has just published a sobering article in The New York Times about how the four major US wireless carriers don't want anyone to know the actual cost structure of text message services to avoid public outrage over the doubling of a-la-carte per-message fees over the last three years. The truth is that text messages are 'stowaways' inside the control channel — bandwidth that is there whether it is used for texting or not — and 160 bytes per message is a tiny amount of data to store-and-forward over tower-to-tower landlines. In essence it costs carriers practically nothing to transmit even trillions of text messages. When text usage goes up, the carriers don't even have to install new infrastructure as long as it is proportional to voice usage. This makes me dream of the day when there is real competition in the wireless industry, not this gang-of-four oligopoly."
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Firehose:What Carriers Don't Want You to Know About Texting by Anonymous Coward
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Correlation (Score:5, Insightful)
The feckless youth I see texting in public do not appear to be the sort who employ reason or critical faculties. That's the kind of customer base dreams are made of.
Re:Correlation (Score:5, Insightful)
That's because their parents are the ones footing the bill... ouch.
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Re:INCORRECT Correlation (Score:5, Informative)
No, receiving calls/texts is free.
While there may be some price plans that allow for free incoming calls or free incoming text messages, the majority of US price plans charge airtime for incoming calls and charge the same for incoming text messages as outgoing - currently 20 cents per message.
You can also typically buy bundles of text messages, with say Verizon charging $5.00/month for 250 text messages (and other options as well)
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Re:Correlation (Score:5, Funny)
But when it costs around the same amount as a minute of telephone call, I can't help wondering if they would be better off just making a short call...
But that would be, like, totally lame! (or ghey, or whatever it is those whippersnappers are saying these days)
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Re:Correlation (Score:5, Interesting)
Better off financially? Almost certainly, particularly as text conversations are frequently longer than one message each way. But I don't think that's the point. Calls require an instant response and a lot of attention an you can't really multicast voice as effectively. Setting up even a 3-way call takes longer than writing a short text ("Pub tonight?") and sending it to half a dozen friends. Texts, like emails, can be responded to at your leisure. I prefer to receive texts than voice calls for that reason. A-la-carte texts can be absurdly expensive, but packages (available with many hundreds of texts per month if you're a heavy user) will hardly break the bank.
The bandwidth comment in TFS is curious - the bandwidth for voice is also there whether you use it or not as well. Mobile voice and landline networks work that way too - mostly fixed infrastructure costs for the operators, but a pay-per-use model for the consumer. It's nothing new. Increasingly commonly, broadband works like that as well.
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Re:Correlation (Score:5, Insightful)
Calling represents a loss of time - you have to be somewhere away from others(if you are polite), wait as the phone rings, wait as you go over formalities, finally say what you needed to say, and then hang up. That is all a pain in the ass to us whippersnappers. Not to mention the annoyance of not getting an answer and having to wait to leave voicemail...(which is quite similar to a text, other than that it takes longer to convey a message and if something is missed it has to be replayed..)
Texting is more polite. Although I know many over thirtys who disagree, many younger people often do not consider it impolite to receive and send text messages in public or with company (within reason, it can't distract you completely). Beyond that, sending a text does not heavily interrupt the day of you or your contact, unlike a phone call.
Essentially, texting gets the same job done faster and with less hassle.
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Re:Correlation (Score:5, Interesting)
I, like almost everyone else on Slashdot, think that text message rates are exorbitant, but I have no room to talk since I signed up for a plan. Yes, I'm a "feckless youth" like conureman says, but I pay out of my own pocket for my plan. I justify it to myself by saying that I'm paying for convenience, and I am.
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Re:Correlation (Score:5, Funny)
Or during an grammar test.
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Re:Correlation (Score:5, Interesting)
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Isn't exactly news (Score:5, Insightful)
This makes me dream... (Score:5, Funny)
Re:This makes me dream... (Score:5, Interesting)
I'm still looking forward to the day when I'm only charged for what I send, not what I receive. I have two phones on my account, one for me and one for my fiancee, and before I added a texting package any time one of us texted the other my account was charged twice. Once for the sent message, again when it was received. I honestly believe the cell companies do this to force you into a texting package.
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Re:This makes me dream... (Score:5, Interesting)
Just recently I had to battle with an AT&T rep to get 18 text messages on my phone and 18 on my wifes phone credited back. They came from an unknown source and they all had two letters in them that was pointless. After talking to the rep for 10 mins or so he finally consented and gave us credit for them. I forgot to mention that I don't have a texting plan so each message received, that I didn't want or ask for, was going to cost me .35 each!
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SMS messages where an afterthought (Score:5, Insightful)
As a service that the operators could milk their customers with. It was only when it started getting popular that they heard the cha-ching sounds and start charging outrageous fees.
Goodness gracious me (Score:5, Funny)
Next you'll be telling me that when you buy Coca-Cola, you're mostly just getting sugar and water!
Re:Goodness gracious me (Score:5, Informative)
High-fructose corn syrup. You've often gotta pay more for Coke if you want it with sugar.
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Re:Goodness gracious me (Score:5, Insightful)
World prices for sugar is about 1/5 that of sugar costs inside the USA.
HFCS is less expensive in the US than sugar.
The artificial prices of sugar and the artificial price of corn leads the USA to use corn for sweeteners and corn to make ethanol.
The solution is to stop propping up the US sugar companies. If C&H cannot compete on the world market, then let them fail. Why should the population of the US prop up an industry which has had many many decades to compete on the world market.
Parent
This just in... (Score:5, Funny)
Addictive behavior (texting) + Monopolistic cellular rule over addictive technology = obscene rates.
Even Larry Ellison is sitting back looking at his cellular bill going "Holy shit. And I thought I ripped people off."
I'm in Japan for six months... (Score:5, Interesting)
In Japan there's this magic concept. The $30 plan actually costs $30! Go figure! A brand new cell phone is also free with no contact. And you can watch TV for free on your cellphone. But, don't let the Americans know or they'll want decent service too! ...oops!
Maybe they want to phase it out. (Score:5, Insightful)
SMS is just a special case of very low-bandwidth data traffic, which should be superseded by email or jabber anyway.
-jcr
data/voice usage balancing (Score:5, Interesting)
as long as it is proportional to voice usage
That's the reason for the pricing model. SMS has to be priced high enough to make sure its use doesn't grow faster than voice.
The telcos want to balance the profit they make from the use of both channels, voice and signaling, while being backward compatible and not having the expense of updating the protocol to use the data channel(s).
Re:Um what? (Score:5, Informative)
And people wonder why I don't text...
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Re:Um what? (Score:5, Interesting)
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Re:Failed economics class (Score:5, Insightful)
No, apparently you failed economics.
If there is sufficient competition in the market profits will be driven to zero and the price of the service will approach the *actual* cost of providing it (which is close to zero, apparently). The fact that text messages cost 1000s of times more than they should indicates that there is insufficient competition in the industry, excessive barriers to entry into the market, etc.
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Re:Failed economics class (Score:5, Informative)
Not really. In classical economic theory: the market price can be one of the following:
1. Essentially the cost of making the product (firm's economic profits are 0). This arises in the model of perfect competition only.
2. Each consumer pays the highest price this person can afford. This arises only in the model of monopoly with a perfect price discrimination.
3. Everyone pays a single price, but the price is set by the single producer for the purpose of maximizing this producers profits. This is the model of monopoly with no price discrimination.
4. Anything in between. Various models of oligopoly will render the equilibrium prices that are anything in between (1) and (3). There is no single model of oligopoly. So, each setting has to be analyzed separately (usually with the tools of game theory) based on the relevant assumptions.
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