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OMG Did U C What U R Paying 4 Texting? 721

Posted by CmdrTaco
from the stop-texting-me-dammit dept.
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."
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OMG Did U C What U R Paying 4 Texting?

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  • Some data 4 U (Score:4, Informative)

    by suso (153703) * on Wednesday July 02, 2008 @09:36AM (#24029231) Homepage Journal

    I was recently reading about the whole George Vaccaro [blogspot.com] fiasco and did some calculations on how much the cost of transfer is over a T1 line vs. what companies like Verizon charge for data transfer. Its astonishing that people put up with this:

    • Cost of a T1 line: $600 (Verizon's cost would be less and they probably have higher capacity lines in many places.)
    • Monthly bandwidth capacity of a T1: 40,687,488,000 Kilobytes (86,400 sec. * 30.41 avg days * 197 KB/sec)
    • Cost per KB over a T1 line: 60,000 cents / 40,687,488,000 KB = 0.0001159190 cents per KB = $0.000001159190 (for all those Verizon reps out there)
    • Verizon's charge per KB to the customer: $0.02
    • Verizon's markup on data transfer: x 17,253!!!!!
    • Screwing generation Y & Z: Priceless

    Why do people put up with this? Some people might say I'm comparing apples to oranges, but Apples dont' cost 17,000 times more than oranges. There should be a class action suit over this.

    • Whoops, sorry (Score:4, Informative)

      by suso (153703) * on Wednesday July 02, 2008 @09:39AM (#24029277) Homepage Journal

      The 40,687,488,000 should actually be 517,602.528.0 I made a mistake the first time I did this and corrected the prices, but didn't correct the rest of the comment. The rest of it is right.

      • Re:Whoops, sorry (Score:4, Interesting)

        by afidel (530433) on Wednesday July 02, 2008 @09:42AM (#24029317)
        Doesn't matter since $600 is way high for a T1, in most places I can get one with transport and local loop charges for more like ~$450/month.
      • Sigh (Score:5, Funny)

        by suso (153703) * on Wednesday July 02, 2008 @09:44AM (#24029339) Homepage Journal

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

    • by WingedHorse (1308431) on Wednesday July 02, 2008 @09:41AM (#24029297)

      Why do people put up with this?

      Because we can.

      • by ciscoguy01 (635963) on Wednesday July 02, 2008 @11:52AM (#24031919)
        These type of mid-contract price increases are good for consumers, if they know and take action.
        Cellular carriers give out free or subsidized phones as a method of keeping their customers signed up for long contracts. They keep a stranglehold on the equipment to further that.
        However, by law when a carrier makes a material change mid-contract their customers, *all* their customers get a get out of contract free 30 day window. It's a great deal and you should exercise your rights when a carrier changes *anything* whether the change affects you or not.

        http://wirelesscontractsinfo.blogspot.com/2008/02/cancel-your-wireless-contract-without.html [blogspot.com]
        From Sprint Nextel contract:
        We will provide you notice of material changes, and may provide you notice of non-material changes, in a manner consistent with this Agreement (see "Providing Notice To Each Other Under The Agreement" section). If a change we make to the Agreement is material and has a material adverse effect on Services under your Term Commitment, you may terminate each line of Service materially affected without incurring an Early Termination Fee only if you: (a) call us within 30 days after the effective date of the change; and (b) specifically advise us that you wish to cancel Services because of a material change to the Agreement that we have made. If you do not cancel Service within 30 days of the change, an Early Termination Fee will apply if you terminate Services before the end of any applicable Term Commitment.

        So now that you know you are gaining important new rights that you didn't have before they raised the text message rates you can take advantage of that. You don't have to stop using the service, you can probably just cancel the agreement, though they may deny that. If they do just hang up and call back, it costs cellular carriers over $400 to acquire a customer, they don't want to lose you even month to month though they may deny that. So you're now month to month and can threaten to leave unless they give you another free phone. Heh.
        FWIW I have done this. There was much gnashing of teeth at the cell carrier. Uh-oh. A customer who has actually read the contract!

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      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.

      • Re:Some data 4 U (Score:5, Informative)

        by Registered Coward v2 (447531) on Wednesday July 02, 2008 @10:07AM (#24029689)


        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:Some data 4 U (Score:5, Insightful)

      by rugatero (1292060) on Wednesday July 02, 2008 @09:47AM (#24029391)

      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 (Score:5, Insightful)

        by Rob the Bold (788862) on Wednesday July 02, 2008 @10:05AM (#24029669)

        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 (Score:5, Interesting)

          by christopherfinke (608750) <chris@efinke.com> on Wednesday July 02, 2008 @10:16AM (#24029847) Homepage Journal

          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 (Score:5, Interesting)

            by Orange Crush (934731) * on Wednesday July 02, 2008 @10:46AM (#24030453)

            If you don't want to pay for text messages, don't send any, then call the customer service rep. T-mobile will credit you the inbound charges in most cases (if you're polite about it and explain you never use text messaging so all that you received was unsolicited).

            Still a hassle, but I've heard a rumor that T-mobile will begin allowing customers to opt-out of text messages starting in August when they bump the rates to $0.20.

            It's still ridiculously overpriced. This is what happens when the FCC and FTC don't do their jobs and let the companies merge and merge and merge until we're left with oligarchies rather than true competition. I think it should be illegal for phone companies to charge for the first couple minutes of an inbound call and ANY inbound texts.

            Right now, they're just milking SMS for all they can because they know its days are numbered. The first phone on the market (i.e. one of the open platforms coming out) that treats text messages as ordinary data and eliminates the phone company's ability to charge outrageous per-message rates will kill this little "profit center" dead.

          • Re:Some data 4 U (Score:5, Interesting)

            by c0p0n (770852) <copong@g m a i l . com> on Wednesday July 02, 2008 @10:56AM (#24030673)
            Wait a minute. Do you pay when you receive text messages!? Do you also pay for receiving calls? What if you don't even answer? Why are you expected to pay for other person's decision of messaging with you? Is that even legal!?
            • by ahecht (567934) on Wednesday July 02, 2008 @11:32AM (#24031503) Homepage

              In the calling-party-pays system, the person paying for calling the cell phone is NOT a customer of the cell phone company. Therefore the cell companies have NO incentive to provide competative rates for incoming calls. If you have to call someone, you aren't going to not call just because they are using company-x.

              In the mobile-party-pays system, the person paying is the cell phone owner, who IS a customer of the cell phone company and can shop around or choose a different plan to get better rates. The cell phone companies have a huge incentive to offer competative minute plans since people tend to shop around when buying a phone. Also, because there is no difference in calling a cell phone, this system allows people to abandon their landline phone and use a cell phone only -- no need for two separate bills.

              In the US most people have a plan that provides more than enough "free" minutes so that they never get a per minute charge. What is the charge to call a cell phone in a calling-party-pays country? The equivalent of $0.15/minute? On my mobile-party-pays plan I have NEVER come close to going over my allocated minutes, so the marginal cost per minute is $0.00/minute.

              • by Cyberax (705495) on Wednesday July 02, 2008 @12:00PM (#24032063)

                Wrong!

                I live in Ukraine where ALL incoming calls are free by law. So cell companies HAVE to compete on outgoing call rates. And the do compete - I see a lot of advertisements like: "0.1 cent for all calls!".

                Also, the stupid '300 minute a month' plans are also US specific. Most plans here are of debit 'pay-as-you-go' type. For example, I pay about $20 a _year_ because I just don't talk much other the phone.

          • Re: (Score:3, Informative)

            by LordKronos (470910)

            I am on T-Mobile, and there is no way to opt out of receiving text messages.

            I'm on tmobile prepaid. At one point I thought the same thing as you, but earlier this year I had some problems with text messages and found out that (at least for prepaid) you CAN disable text messages. Of course, I just spent 15 minutes looking for where on the website it was and I can't find it (one of their phone reps walked me through the process). But it's there in that mess, somewhere. It was a bit primitive, but you could se

        • Re:Some data 4 U (Score:5, Insightful)

          by Thiez (1281866) on Wednesday July 02, 2008 @10:24AM (#24029993)

          I never understood why you would have to pay to receive a text-message. I'm from the Netherlands and here only the one who sends a message has to pay, receiving is free. As far as I know it is like that in every courty in Europe (but I didn't check them all). Where you come from, do you have to pay to get called too? Because if you don't, the whole thing doesn't make sense - a one second call has way more data-transfer than a 100-character text-message.

          • Re: (Score:3, Informative)

            by gmack (197796)

            Unless you have an unlimited incoming plan that starts at $25+ with Telus (don't know for the other carriers) Your paying for incoming calls.

            Land line calls incoming and outgoing are free as long as the outgoing call isn't long distance so that's how they justify it.

          • Re: (Score:3, Insightful)

            In Europe (and the rest of the World) Mobiles have separate number ranges, So you can tell you are calling a mobile by the number, and so you (the caller) can be charged extra ...

            In the USA someone made the odd decision to scatter the mobiles within the normal geographical number ranges, and so the telcos cannot charge extra to call them (but someone has to pay for the "additional" cost) so the person called pays

            This has been extended to SMS messages even though they could be a standard cost! SMS = Mobile?

            B

        • by dwater (72834) on Wednesday July 02, 2008 @10:24AM (#24029997)

          you get charged to *receive* sms messages????

          wow.

          they'll be charging to receive phone calls next.

          • Re: (Score:3, Insightful)

            by snl2587 (1177409)

            Why should you have to pay for incoming texts? No one charges you for letters you receive (well, not unless the person sending it is really cheap). So why should texts be any different (especially since you're already paying the carrier a large sum to remain connected to their network)?

      • Re:Some data 4 U (Score:5, Interesting)

        by Amouth (879122) on Wednesday July 02, 2008 @10:14AM (#24029811)

        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 (Score:4, Interesting)

          by bonehead (6382) on Wednesday July 02, 2008 @10:48AM (#24030489)

          but they don't have a way of disabeling them coming in

          Not true. One of our employees was racking up around $50.00 a month from unsolicited incoming text messages. Just took me a simple phone call to AT&T to get them completely blocked from his phone.

        • Re:Some data 4 U (Score:4, Informative)

          by norminator (784674) on Wednesday July 02, 2008 @10:57AM (#24030703)
          And to add to the USPS comparison:
          Have you ever sent a text message, then found out that it didn't get to the recipient until the next day? For crying out loud, if you're going to charge an arm and a leg for me to send a message, and again for someone else to receive it, all in the name of "convenience", then just make sure it gets there within a minute or two!

    • Re: (Score:3, Insightful)

      There should be a class action suit over this.

      I am having a hard time seeing who the class is or what their injury might be. You need a few more facts for price-fixing, and otherwise there is no cognizible injury in charging what the market will bear.

    • Re:Some data 4 U (Score:5, Insightful)

      by Dirtside (91468) on Wednesday July 02, 2008 @09:56AM (#24029545) Journal

      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.

      • Re:Some data 4 U (Score:5, Informative)

        by Lumpy (12016) on Wednesday July 02, 2008 @10:35AM (#24030237) Homepage

        No they will not. AT&T will NOT disable incoming texts.

        you can easily bankrupt an ass-hat by having thousands of SMS messages sent via the net to them. AT&T will NOT block the incoming they claim they dont have the ability.

        and yes this has been tested, I saw it happen to a business colleague. He kind of deserved it and the only solution was to have AT&T add a unlimited messaging plan to his phone for $29.95 a month. Otherwise he was having an extra $280.00 a month on his phone for the incoming spam and prank messages that was being sent by several hundred computers from all over the planet.

    • Re:Some data 4 U (Score:4, Insightful)

      by Registered Coward v2 (447531) on Wednesday July 02, 2008 @10:02AM (#24029633)

      I was recently reading about the whole George Vaccaro [blogspot.com] fiasco and did some calculations on how much the cost of transfer is over a T1 line vs. what companies like Verizon charge for data transfer. Its astonishing that people put up with this:

      • Cost of a T1 line: $600 (Verizon's cost would be less and they probably have higher capacity lines in many places.)
      • Monthly bandwidth capacity of a T1: 40,687,488,000 Kilobytes (86,400 sec. * 30.41 avg days * 197 KB/sec)
      • Cost per KB over a T1 line: 60,000 cents / 40,687,488,000 KB = 0.0001159190 cents per KB = $0.000001159190 (for all those Verizon reps out there)
      • Verizon's charge per KB to the customer: $0.02
      • Verizon's markup on data transfer: x 17,253!!!!!
      • Screwing generation Y & Z: Priceless

      Why do people put up with this? Some people might say I'm comparing apples to oranges, but Apples dont' cost 17,000 times more than oranges. There should be a class action suit over this.

      Why? The cost to produce a product has no bearing on price; it only determines wether or not a product will be produced based on teh demand - driven price.

      The carriers should set prices to maximize their profits; which they try to do through offering teired and fixed rate plans. Given the marginal cost of extra traffic is virtually nil, the higher rates plans and flat rate bundles are probably mostly profit; by offering low usage plans you get the people who wouldn't own a cell phone if the paid $99/month while the all - in $99 captures people who are willing to pay alittle more than the highest capped plan per month to eliminate the chane they will go over their plan usage and get hit with a large bill every now and then.

      Profit maximization, as long as their isn't collusion, is not illegal.

  • by hansamurai (907719) <hansamurai@gmail.com> on Wednesday July 02, 2008 @09:39AM (#24029283) Homepage Journal

    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.

    • by 192939495969798999 (58312) <info@noSPaM.devinmoore.com> on Wednesday July 02, 2008 @09:42AM (#24029305) Homepage Journal

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

    • Re: (Score:3, Informative)

      by Nukenbar (215420)

      actually, with the new plan from AT&T with the 3G IPhone, the price for unlimited texting is $20/month. See here [att.com].

    • Re: (Score:3, Insightful)

      by kiehlster (844523)
      It is going to become more of a problem when SMS spam starts to rise. I for one pay per message because of the low number I get, but when you start receiving excessive amounts of spam that starts to add up. I'm not going to pay $5/month for spam, and I certainly never send/receive more than 4-8 messages per month, so the cost isn't warranted. I'm just waiting for people to band together and class-action the big four for hiking prices without properly informing customers. The "I would have blocked data i
  • Texting vs. Hubble (Score:5, Interesting)

    by damburger (981828) on Wednesday July 02, 2008 @09:42AM (#24029309)
    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.
  • Green Text! (Score:5, Insightful)

    by Mongoose Disciple (722373) on Wednesday July 02, 2008 @09:42AM (#24029313)

    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?

    • Re:Green Text! (Score:4, Insightful)

      by faloi (738831) on Wednesday July 02, 2008 @09:50AM (#24029451)
      I tend to think it's more about price fixing. They're charging what the market will pay. If they keep bumping the cost of text messages on a per message basis, more people will pay the monthly fee for unlimited.

      I still find it fascinating that I have an unlimited data plan with minutes that roll-over, and since talking mobile to mobile on people that have the same carrier (which happens to be the majority of the people talk to regularly), I've got minutes to burn. I can call them, or log in to a web-email app and email them, for my monthly fee. But sending a text message is so taxing on the providers system, apparently, that they need to charge extra for it.
  • by fork_daemon (1122915) on Wednesday July 02, 2008 @09:44AM (#24029335) Journal
    In India the cost of texting is as little as 80paisa. i.e 0.80 INR. Now calculate the difference and make your new calculations on it.. Why do you guys spend so much then. Sue the companies that charge you so much for something which costs next to nothing.
    • Re: (Score:3, Informative)

      by CastrTroy (595695)
      Based on the current exchange rate on xe.com, .8 INR is equal to .018 USD. That's 1.8 cents per text message.
  • by xpuppykickerx (1290760) on Wednesday July 02, 2008 @09:44AM (#24029341)
    and solve this issue. Caution: Unlimited texting may decrease your social skills and will cause everyone around you to want to smash your phone!
  • free (Score:5, Interesting)

    by jupiterssj4 (801031) on Wednesday July 02, 2008 @09:44AM (#24029347)
    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
  • by neokushan (932374) on Wednesday July 02, 2008 @09:45AM (#24029355)

    In the UK, the Telecom Regulator OFCOM recently (as in a few days ago) started pushing our mobile operators to reduce the cost of sending and receiving text messages while abroad, where the price was often around 30p (60c!) or more just to send one.
    I hope this sets a precedent and they start to clamp down on the cost of sending regular, local messages as well.

  • Same as gas... (Score:5, Insightful)

    by Frosty Piss (770223) on Wednesday July 02, 2008 @09:45AM (#24029359)

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

    Pretty much the same as gas...

    • Re: (Score:3, Insightful)

      by IBBoard (1128019)

      Except that the US doesn't have terrible gas prices ;) Try working out how much we're paying per gallon in the UK and comparing it!

      • Re:Same as gas... (Score:4, Interesting)

        by _Sprocket_ (42527) on Wednesday July 02, 2008 @11:25AM (#24031351)

        Except that the US doesn't have terrible gas prices ;) Try working out how much we're paying per gallon in the UK and comparing it!

        Of course, the US has states as large as the whole UK. The UK is simply not going to burn as much fuel maintaining infrastructure as the US is.

        It reminds me of a fluff piece I saw on the local news a while back. The angle was comparing the price of gas to the price of various other commonly used liquids. For example, they noted how much more shampoo cost per gallon. Of course, that overlooked the fact that we don't use shampoo by the gallon.

        Volume affects a market. What your paying per gallon may not have the same effect if you're not using as much of it (and no - its not all about the SUVs).

    • by MagdJTK (1275470) on Wednesday July 02, 2008 @10:52AM (#24030599)

      I wish there was a "-1, American complaining he's paying too much for fuel".

      (PROTIP: The average cost of petrol in the UK is just under $9 per US gallon.)

  • by Anonymous Coward on Wednesday July 02, 2008 @09:45AM (#24029361)

    to download an mp3 ... if the RIAA smells you.

  • by apathy maybe (922212) on Wednesday July 02, 2008 @09:45AM (#24029375) Homepage Journal

    The so called free market isn't free.
    If customers had any idea about the true cost of things to the companies that they purchase from, they wouldn't buy at the prices that things are being sold at.

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

    Oh yeah, like in the US you have to pay to receive messages? Would you put up with having to pay to receive emails or take all phone calls? Fuck no.

    Meh, this is a random ol' rant.

    (Oh yeah, to the fuckers who say "communism", I'm an anarchist. Check my "homepage" for info about that. Oh yeah, and no I don't get anything for the referral link, and if it really bothers you, you can remove it.)

    • Re: (Score:3, Insightful)

      by maxume (22995)

      Efficient markets require perfect knowledge. Free markets require a relative lack of regulation.

      If people actually cared, prices would go down, the information is available. People don't care.

    • by hansraj (458504) * on Wednesday July 02, 2008 @10:23AM (#24029977)

      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!

    • Re: (Score:3, Insightful)

      by Foolicious (895952)
      Why does it matter how much I pay for something I want to sell you? If you can afford what I am charging, then you can afford it. If you cannot afford what I am charging, then you cannot afford it. Do you think it violates the principle of a free market if I charge my customers as much as I possibly can without scaring them away? Your ridiculous viewpoint operates under the ridiculous assumption that there should be some sort of set control about what an appropriate markup is, right? It also dictates t
  • Just to compare (Score:5, Informative)

    by Anonymous Coward on Wednesday July 02, 2008 @09:47AM (#24029403)

    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 (Score:5, Funny)

    by Dunbal (464142) on Wednesday July 02, 2008 @09:49AM (#24029425)

    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 (Score:5, Insightful)

    by Frequency Domain (601421) on Wednesday July 02, 2008 @09:50AM (#24029467)
    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.
    • by hellfire (86129) <`moc.liamg' `ta' `vdalived'> on Wednesday July 02, 2008 @10:21AM (#24029933) Homepage

      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.

    • Re:Basic economics (Score:5, Interesting)

      by Hoplite3 (671379) on Wednesday July 02, 2008 @10:25AM (#24030023)

      Rubbish. That's only true if
      (a) There are lots of suppliers (limit as number of suppliers goes to infinity)
      (b) There are lots of buyers
      (c) There's perfect information (about the value of goods, and about all options)
      (d) All goods are equivalent
      (e) The market is "free" of regulation (but there's a dodge here -- regulation constraining theft, murder, or the threat of one of those is allowed)

      The mobile market fails on many of these. Certainly it fails on (a). (c) is also a failure -- all of the services advertise to distort their brand worth, use confusing contracts, and so on. (d) is of course not true, since each network has different coverage (and small networks that may be interested in cheap prices suffer here). (e) doesn't hold either, with the FCC et al. involved in the game.

      But even supposing that the big BIG assumptions of the free market held, why do you think the "equilibrium" delivered by the intersection of supply and demand is stable? It seems obvious to me that it's an equilibrium because no player in the market is happy with the price, but the forces pulling the price each direction are perfectly balanced. That sounds like an unstable equilibrium to me.

    • Re:Basic economics (Score:4, Interesting)

      by mu22le (766735) on Wednesday July 02, 2008 @10:39AM (#24030319) Homepage Journal

      Price is the intersection of supply and demand curves.

      Are you really so naive?

      If text messages cost to the user a lot more than what they cost to carriers the normal laws of economics would make new carriers appear on the market that offer competitive prices and drive the cost down to the _real_ service cost. Why doesn't it happen? Well first entering the wireless carrier business require a huge initial investment and second: *monopoly*. The current american carriers are a cartel that agrees to keep the sms prices over a certain price so that the business is profitable for all the players.

      quoting from a comment:

      So you wonder, why do I pay so much for a SMS or a MMS or even a Call: after the debts for the initial hardware infrastructure have been paid by the carrier you are still paying because of market segmentation (You wonâ(TM)t change the carrier on the fly) and a little monopoly (Almost impossible to start a new carrier from 0).

      A very similar thing is happening in Italy where a new carrier (Wind, but later Blu did the same thing) entered the field offering free sms, then started to charge for them after it established a position in the market.

  • Simple fix (Score:4, Interesting)

    by glitch23 (557124) on Wednesday July 02, 2008 @09:54AM (#24029513)
    I have SMS disabled on my phone at the carrier level. The only SMSs I can receive are administrative which are free. No one can send me a mesg and I can't send out. I did that after my previous carrier (which got bought by AT&T) started charging for incoming messages. I asked why they did that and they said because everyone else was charging for incoming too. And of course then it went from 10 cents to 20. I don't need SMS so the charges don't hurt me because I don't have any.
  • by hack slash (1064002) on Wednesday July 02, 2008 @09:55AM (#24029525)
    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.
  • by GreatBunzinni (642500) on Wednesday July 02, 2008 @09:55AM (#24029529)

    To put it bluntly, your mobile communications' market isn't free. The companies serving that market don't feel the need to compete with each other in any way perhaps besides area coverage. Their clients' business is always a given as they are unable take it elsewhere (no alternatives) and are happily shelving away more and more money to get the exact same service.

    So, if they have a captive audience and there is no other actor in the stage, what else forces them to put on whatever show they wish?

  • Mobile Monopolies (Score:5, Insightful)

    by Doc Ruby (173196) on Wednesday July 02, 2008 @09:56AM (#24029539) Homepage Journal

    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! (Score:5, Funny)

    by proverbialcow (177020) on Wednesday July 02, 2008 @09:56AM (#24029541) Journal

    Thank god no one texts me duplicate Slashdot stories!

  • by Beached (52204) on Wednesday July 02, 2008 @10:02AM (#24029625) Homepage

    Now kids remember "Deregulation will result in more competition and lower prices for the consumer"

    I love it when an industry that is inherently non-competitive due to the fact that the spectrum is limited and the only way to make money in telecommunications is through economies of scale. The only guys who make money in telecom are the big guys and they make it buy making us pay and controlling parts of the spectrum. This is why it is licensed, the "tubes" are only so big and you can't add more.

    It is just like the media ownership rules. Buy loosening the rules, consumers don't benefit but the bottom line gets bigger for the big guys. Government used to understand that because these companies are caretakers of our EM spectrum, they are allowed to make money and have monopolies (or close to it) but they must follow certain rules like justifying price increases with fact.

    OK, rant over. Proceed with texting while driving.

  • by natoochtoniket (763630) on Wednesday July 02, 2008 @10:09AM (#24029725)

    The pricing of datacom and telecom services has not had anything to do with the cost of the service since the original AT&T monopoly was broken. Pricing is determined by the market, not by the cost of providing the service. This is because most of the cost is fixed, while the revenue is highly usage-dependent.

    From the carrier perspective, the only thing that matters is revenue. The new product (whatever it is this year) will always be marketed at premium price. The old products are priced to maximize revenue. If they can gain revenue by lowering the price and selling more units at that lower price, they do. If they can gain revenue by increasing price and selling fewer units, they do that.

    Voice minutes have become cheaper over time largely because of competition. SMS messages are currently fashionable, and so carry a premium price. As soon as text messaging starts losing fashion appeal, some carrier will start selling it for lower pricing, or even giving it away, to get subscription revenue. Abusing the customers with ludicrous per-message pricing will make that day come sooner rather than later.

  • Try this on... (Score:5, Informative)

    by Larsrc (1285062) on Wednesday July 02, 2008 @10:16AM (#24029849)

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

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