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Cellphones Communications

What Carriers Don't Want You To Know About Texting 570

Posted by timothy
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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What Carriers Don't Want You To Know About Texting

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  • Correlation (Score:5, Insightful)

    by conureman (748753) on Sunday December 28, 2008 @09:26AM (#26248739)

    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)

      by Anonymous Coward on Sunday December 28, 2008 @09:38AM (#26248811)

      That's because their parents are the ones footing the bill... ouch.

    • Re:Correlation (Score:4, Informative)

      by BobReturns (1424847) on Sunday December 28, 2008 @09:43AM (#26248841)
      If they need to send a short message to someone it's not like there's a viable alternative - it's really the only game in town.
      • Re: (Score:2, Insightful)

        by TheRaven64 (641858)
        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...
        • by Dachannien (617929) on Sunday December 28, 2008 @10:24AM (#26249037)

          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)

          • Re:Correlation (Score:5, Insightful)

            by vadim_t (324782) on Sunday December 28, 2008 @11:53AM (#26249539) Homepage

            Contrary to many people I still remember enough of my days at school to realize that young people aren't a lot different from adults, they just live in a different environment.

            While at work it may be acceptable to take a phone call at any time, such things usually aren't welcome by teachers. And while at a job there's a hierarchy that may result in you having maybe 5 people you can regularly talk to, at school you're in a deeply social place, and part of a class that may be around 30 people. The small amount of separation between classrooms and common recess and food areas means it's very easy to meet a very large amount of people. Receiving 30 SMS per day is easily doable, while taking 30 phone calls, most of which don't need to be replied to isn't near as convenient.

            • Re: (Score:3, Insightful)

              by Grishnakh (216268)

              And why do schoolchildren need to electronically communicate with anyone during school hours? I managed to get through school just fine by employing a form of communication called "talking", and never had a cellphone (they weren't exactly cheap around 1990). In fact, as another poster pointed out, many schools don't allow kids to use cellphones as a matter of policy.

              As far as I'm concerned, it's fine that the carriers are profiting so much off text messaging. No one really needs it, and apparently the cr

        • Re:Correlation (Score:5, Interesting)

          by mollymoo (202721) on Sunday December 28, 2008 @10:43AM (#26249137) Journal

          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.

          • Re:Correlation (Score:4, Interesting)

            by lysergic.acid (845423) on Sunday December 28, 2008 @12:45PM (#26249897) Homepage

            no, voice and landlines are different. this is basically like if you were shipping a package to someone and you "piggybacked" a message onto the delivery by writing a note on the actual box. the surface area of the box is going to be there whether you write that extra message on it or not, and it doesn't cost FedEx or USPS anything extra to deliver a box with writing on it. as long as you're paying for the box/shipping, you really shouldn't have to pay for the text you write on the package.

            the article is talking about actual bandwidth usage, not the bandwidth potential of the existing infrastructure. yes, the infrastructure is going to be there whether you use it or not, but it's there because of all the voice traffic we send/receive. consumers are charged minutely or per-message rates because, presumably, these activities increase network usage. but sending SMS doesn't increase network usage as it's recycled bandwidth.

            but even if SMS activity used more network resources, it should not cost anywhere near what we're being charged for them today. it's only because the telecoms have a monopoly/oligopoly that they're able to charge these outrageous rates. frankly, it would be more efficient if simply build a national open wireless infrastructure. text messages could be sent/received for free using open standards like e-mail or XMPP. voice calls could be made independent of carriers/telecoms using VoIP. this would also foster innovation and technological progress as people would be free to develop new applications/technologies using the wireless network.

            • Re: (Score:3, Insightful)

              by bullgod (93002)

              No. The article makes the mistake in thinking the the Radio part of the GSM bandwidth is the same as the Network bandwidth. It's not.

              To continue the FedEx example, an SMS is like a post-it was was stuck onto your package. Trouble is the post-it might be going to a entirely different recipient to the parcel. So it's only piggy-backing until it reaches the sorting office.

              Some networks work by store and forward of SMS much like email, others attempt direct delivery first. The point being that, if the recipient

        • Re:Correlation (Score:5, Insightful)

          by michael021689 (791941) on Sunday December 28, 2008 @10:56AM (#26249215)
          There are reasons a lot of us prefer texting over a call in most situations.

          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.
          • Re: (Score:3, Insightful)

            by Ihmhi (1206036)

            Essentially, texting gets the same job done faster and with less hassle.

            Yes, but if people used cheap texting over making phone calls, how would the phone companies gouge us when we go over our limits?

        • Re:Correlation (Score:5, Interesting)

          by WDot (1286728) on Sunday December 28, 2008 @10:59AM (#26249233)
          I disagree. To get the equivalent of a text message in a short call, I would have to say "My plane landed safely in Phoenix, I love you, bye," and then hang up before they have a chance to respond. I use phone calls for conversations, even short ones. However, if I can fit the entire conversation into 160 characters, I use a text message instead.

          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.
        • Re:Correlation (Score:4, Insightful)

          by 0100010001010011 (652467) on Sunday December 28, 2008 @11:37AM (#26249449)

          It's hard to hear that one phone call in bars
          It's easier to save that one text than to find a pen and paper to write something down on. (Or finding that one paper again when you need it).
          I can read faster than I can wait for someone else to talk.
          I can silently send a text when I'm "here" instead of picking up and being obnoxious.
          I can send that text in between the tiny intermittent signal that I get instead of the 1 full bar I need to make a phone call.

        • Re:Correlation (Score:4, Insightful)

          by vadim_t (324782) on Sunday December 28, 2008 @11:45AM (#26249489) Homepage

          Not really, no.

          Why would I want to interrupt somebody just to inform them of something like "My plane landed, will be there in 30 minutes"? These days, with a modern phone with predictive typing and presets such a message can be fired off in about 10 seconds. It's much easier than finding a quiet place, waiting for the phone to be picked up or voice mail, saying it and hanging up.

          It's also much more convenient for the recipient: They might be in the middle of gaming, driving, talking or a meeting. An SMS can be unobtrusively checked when some free time becomes available. SMS is also known not to be urgent by the recipient, while a phone call can't be assumed to be possible to ignore for hours.

          Depending on who you're communicating with, and SMS also has the advantage of not initiating the conversation. This is great when you have to tell something to one of those people who takes any opportunity to update everybody on what happened during every minute of their lives, and manage to turn a 1 minute call into an 1 hour one.

          Voice mail is also very inconvenient when you want to keep an archive. I can send a SMS like "Could you get me blank DVDs next time you go to the shop?" and the recipient will be able to find it quickly a week later. Try digging it out from a fairly busy voicemail account, if it remained there at all after being listened to.

          It doesn't have to be expensive either. I get 1000 free messages with each 10 Euro recharge with a time limit of a month.

    • Re:Correlation (Score:4, Interesting)

      by Nazlfrag (1035012) on Sunday December 28, 2008 @10:09AM (#26248963) Journal

      You were once those feckless youth, and I'm sure believed what you had to say was of utmost importance. We have been conned into thinking that text messages actually cost the network operators anything, but while this is to do with the critical faculties of the general public it isn't about those teenagers utilising our new social conference ground. They are wiser than you assume.

  • Isn't exactly news (Score:5, Insightful)

    by A beautiful mind (821714) on Sunday December 28, 2008 @09:26AM (#26248741)
    ...but it's good to see this fact receiving some mainstream attention. I guess it's inevitable that people now tend to ask that if it costs x dollars to transfer y megabyte from my phone, why do text messages cost a lot more when they are so tiny? In the digital age text message fees seem more and more ludicrous even to ordinary people.
    • Re: (Score:2, Insightful)

      by alx5000 (896642)

      And that's why the news on slashdot should be that a major paper is shining some light onto the issue for the uneducated masses to see, instead of the current story.

      I can safely bet that it's going to elicit some dozen 'Duh! We already knew that'-comments.

  • by TuaAmin13 (1359435) on Sunday December 28, 2008 @09:26AM (#26248743)
    Of when we'll be nickled and dimed for text messages instead of quartered.
    • by arashi no garou (699761) on Sunday December 28, 2008 @10:16AM (#26248999)

      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.

      • by Anonymous Coward on Sunday December 28, 2008 @10:39AM (#26249099)

        I still think it's pretty funny that Americans have to pay to send and receive texts.

        I'm not sure of many, if any, other countries where this happens.

      • by mprindle (198799) * on Sunday December 28, 2008 @10:39AM (#26249103)

        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!

        • by horatio (127595) on Sunday December 28, 2008 @02:15PM (#26250649)

          That's what pisses me off. Both Sprint and AT&T have both told me that there is nothing I can do about unsolicited text messages (except to add texting specifically), that I will be charged for them. Sprint, at least, has a bit buried on their website which most of the reps don't know about where you can block specific numbers - but last I checked it was limited to 50 numbers - no way to block all text messages. Alternatively, like you, we can call every month and argue with the clowns.

      • Re: (Score:3, Insightful)

        by dwillden (521345)
        I think you hit a big reason for the increase in prices. To push more people to packages.

        Of course the companies could just start building the packages into the basic service, but then they would get no money. The main reason I see them trying to push people into getting the various texting packages isn't to make more money per se. Rather to reduce their call center service costs for all the calls when Jr.s texting has pushed the bill a couple hundred over the normal monthly cost.

        A few years ago I w
  • by msgmonkey (599753) on Sunday December 28, 2008 @09:27AM (#26248749)

    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.

  • duh (Score:2, Insightful)

    by iduno (834351)
    Spose its just me since I've worked on mobile phones for 3 years but I already knew this. Its not that the messages cost anything like that. its that they can so its done. If they could still get away with charging $10 per minute for a phone call they would do the same thing.
  • by hobbit (5915) on Sunday December 28, 2008 @09:28AM (#26248759)

    Next you'll be telling me that when you buy Coca-Cola, you're mostly just getting sugar and water!

  • by geekmux (1040042) on Sunday December 28, 2008 @09:31AM (#26248771)

    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."

  • Um what? (Score:4, Interesting)

    by imroy (755) <imroykun@gmail.com> on Sunday December 28, 2008 @09:34AM (#26248789) Homepage Journal

    The truth is that text messages are 'stowaways' inside the control channel â" bandwidth that is there whether it is used for texting or not â" and 160 bytes per message is a tiny amount of data to store-and-forward over tower-to-tower landlines.

    From what I understand, the problem with SMS's sent on the GSM standard is that it is in the control channel - as the anonymous submitter stated. But there's only one control channel for each cell versus many data (voice, etc) channels, and it has a lot less bandwidth than even one data channel. It was only ever meant to handle connecting calls, phones moving from one cell to another, etc. Administrative stuff. SMS was never meant as a proper way to move lots of messages. But it's now a major form of communication and it's using a channel (the control channel) that is very limited.

    When "text usage goes up", I'm guessing the only thing the carriers can do is to install more cells in order to get more control channels. But surely there's a limit to how many cells can co-exist in a given area. But everyone's moving to various "3G" networks and AFAIK they have proper means to send messages, photos, videos, etc. The anonymous submitter is still an idiot though.

    • Re:Um what? (Score:5, Informative)

      by TheRaven64 (641858) on Sunday December 28, 2008 @09:46AM (#26248849) Journal
      It's been possible to send SMS via GPRS for a long time, and now it is mostly sent via UMTS or GPRS, rather than the GSM side channel. This means that it costs as much as any other kind of data. Even if there is a 100% protocol overhead, at 5Â/message you're paying $164/MB.

      And people wonder why I don't text...

      • Re: (Score:3, Insightful)

        by rtfa-troll (1340807)

        It's been possible to send SMS via GPRS for a long time

        Possible in theory, but it mostly doesn't work in real life. Many mobiles have broken support for this. Many networks have broken support for this. If your customer changes from one mobile with support to another without it's a complete pain to make sure everything works right. Finally, even in this case, the SMS mostly travels over the SS7 network which is not well designed for user data.

        Personally I like that SMS is expensive. I don't get SMS spa

    • Re:Um what? (Score:4, Interesting)

      by betterunixthanunix (980855) on Sunday December 28, 2008 @09:59AM (#26248925)
      Yes, the control channel is bandwidth limited, but a text message is only 160 bytes. The control channel has a transmission rate of 270kbps. Do the math; literally hundreds of text messages per second could be sent over the air via a single cell.

      It is almost always the case that voice channel usage and text message usage increase in proportion with each other. A cell can handle far more simultaneous text messages than voice calls, however, so new cells would need to be installed to take care of the voice channels first, and so as the NY Times article points out, it literally costs the cell provider nothing to provide text messaging.
    • Do the math (Score:3, Informative)

      by baffled (1034554)
      I don't know actual numbers, so let's be conservative.

      Let's say the average customer sends 1 text per day, and all these texts occur during a prime 8-hour window.
      (1 text/day) / (8 hr/day) / (60 min/hr) / (60 sec/min) = 3.47e-5 texts/sec/customer average

      Now let's assume each message uses 300 bytes with overhead, and let's assume each tower handles 100,000 customers (conservatively):
      (3.47e-5 text/sec/customer) * (300 bytes/text) * (100,000 customers) = 1041 bytes/sec

      So with these insanely conservati
    • Re:Um what? (Score:4, Informative)

      by sjames (1099) on Sunday December 28, 2008 @10:46AM (#26249151) Homepage

      The idea behind the text message is that the phone and the base must handshake periodically no matter what, and the packets used for that have a minimum fixed size. They can either be padded with 160 nulls or contain a text message. That means that the text message costs literally nothing in terms of bandwidth on the control channels.

  • by Anonymous Coward on Sunday December 28, 2008 @09:42AM (#26248831)

    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!

    • Re: (Score:3, Informative)

      by Tsian (70839)

      Except that that isn't really true anymore anymore. Phones cost around $500, but the major carriers break that out into monthly payments, and give subsidies for agreeing to a long term contract -- generally 2 years (the system variest from Carrier to carrier, but that is basically the situation with AU, Docomo, and Softbank).

      The $30 voice plan does cost $30, but then you add in the data plan and you add $10~$42 / month depending on use. And e-mail useage counts towards data use (there are systems analagous

  • Classic economics says that things are priced what people are willing to pay for them, and are not based on how much the cost to make.

    As long as people are willing to pay 10 cents per text, that's how much carriers will charge, regardless of how many there are.

    • by Anonymous Coward on Sunday December 28, 2008 @09:53AM (#26248893)

      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.

      • And this is my problem with the submitted summary. The cost of providing the service must include the cost of setting up and operating the infrastructure. It's irrelevant that the SMS piggybacks on another service and that the cost of sending one message is close to zero.

        There's plenty of competition amongst mobile phone carriers. Maybe one of them will offer free texting, in order to get get ahead of the competition. Such a company would have to hope that the losses from the lack of SMS charges would be co

    • by guacamole (24270) on Sunday December 28, 2008 @09:55AM (#26248909)

      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.

    • by freeweed (309734)

      Not at all.

      People are only willing to pay 10 cents per text IF there's no one else offering it cheaper.

      Virtually any consumer good/service started out this way: "As long as people are willing to pay $250,000 for a car, that's how much manufacturers will charge, regardless of how many there are". Oops, until Mr. Ford came along and dropped the price.

      The difference with cellphone carriers is that none of them want to act like Mr. Ford. It's the complete opposite of classic economics, or at least capitalist ec

  • When text usage goes up, the carriers don't have to install new infrastructure as long as it is proportional to voice usage.

    Quiz time! What will happen if the price of text messages goes down? Will it INCREASE or DECREASE the use of text messaging compared to voice usage? People never seem to get that the product price is not only the costs+profits, but also the additional costs if the demand grows larger or smaller. I imagine the operators have found the ideal text/voice ratio and are pricing the product so that the maximum capacity of the current network is in use. I don't know about USA, but at least in Europe the youths pre

  • by Terje Mathisen (128806) on Sunday December 28, 2008 @09:56AM (#26248913)

    The SMS channel uses 7-bit ascii, so those 160 characters are only using 140 bytes.

    Charging for receiving messages, which some US carriers seem to do, is just adding insult to injury.

    Terje

  • by jcr (53032) <.jcr. .at. .mac.com.> on Sunday December 28, 2008 @10:24AM (#26249029) Journal

    SMS is just a special case of very low-bandwidth data traffic, which should be superseded by email or jabber anyway.

    -jcr

  • by reallocate (142797) on Sunday December 28, 2008 @10:40AM (#26249111)

    This makes me dream of the day when there is real competition in the wireless industry...

    Keep dreaming. We won't see wireless competition because people don't really want it. What they want are cheap phones and phones that work anywhere. They get the latter as a result of market domination by a few corportions, and are willing to accept the hit on the former.

    People like their toys and tools to be standardized. Look at the personal computer market. For everyone around here who rants about the evils of Microsoft, there are a dozen others who don't care because the dominance of Windows and one particular kind of hardware platform plays to their advantage.

    The world is just one village.

  • by pooh666 (624584) on Sunday December 28, 2008 @11:02AM (#26249253)
    How much would it cost you to send a text message without using any of their networks? I know that is the point, but the issue is that monopolies are ok now, when we have been told that the U.S. government will protect us from such bad things. I have no idea what the point of the AT&T break up was, maybe someone's wife cheated or didn't fix a race or something. This is the age old story of the rich lining the pockets of the rich and focusing on one related issue like this does little good.
  • by mousehouse (610712) on Sunday December 28, 2008 @11:15AM (#26249325) Homepage Journal
    The cost involved in transporting text messages is not just the capacity in the network. These messages all end up on a SMSC, a carrier-grade system able to handle multiple-hundreds or -thousands of simultanious SMS messages and route them to other subscribers and operators. These systems are provided by a handful of suppliers that know what to charge for a decent cluster of these baby's... and somehow they need support as well! NB. Not in any way affiliated with telco's.
  • by firewood (41230) on Sunday December 28, 2008 @11:22AM (#26249359)

    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).

  • by lawpoop (604919) on Sunday December 28, 2008 @12:01PM (#26249583) Homepage Journal
    I was an exchange student in Finland back in '96. This was when *nobody* had a cell phone in the US. Shortly before I left for Finland, my sister and I were in a shoe store. We heard a guy walking down the isle talking to himself, and we both looked nervously at each other, because we were about to encounter an obviously crazy guy. Turned out he was on a cellphone.

    Anywho, when I got to Finland, everybody in the high school had a cell phone. Well, almost everyone, and if they didn't have one when I got there, they got one that year. And the thing was, *they texted all the time, because it was cheaper, much cheaper, than a voice call*.

    Flash forward five years to the states, and then everyone is getting cell phones, but *without text service*. And now, text service is something that costs per text, or something ridiculous like that. In Finland, and I would guess most of Europe, you get some ridiculous amount of texting included in your plan, or you just have a straight-up bandwidth plan, which covers voice, text, media, etc.

    I wish Americans would travel a little more often, to see how the US is becoming a technologically backwards society. Technological improvements which are more efficient are seen as opportunities to gouge customers, instead of compete and offer lower prices. The same thing was going on with banking about five years ago. American banks were charging fees to have people access their accounts online, while Finnish banks were giving it away for free, because then they didn't need to pay tellers. Oh yeah, and you could pay your bills and do banking by text service. :)
  • by lobiusmoop (305328) on Sunday December 28, 2008 @12:10PM (#26249643) Homepage

    "Texting is the closest thing to pure profit ever invented" - Sir Chris Gent, founder of Vodafone.

  • huh? (Score:4, Insightful)

    by buddyglass (925859) on Sunday December 28, 2008 @12:51PM (#26249937)

    This makes me dream of the day when there is real competition in the wireless industry, not this gang-of-four oligopoly.

    How many participants in an industry do you need to have before you'll say that the goal of competition has been met? Four seems like it would be enough. If there was some advantage to be had by using a price structure that accurately reflects the true cost of text messages then I suspect one of the carriers would have already tried it.

    • Re: (Score:3, Interesting)

      by Yosho (135835)

      How many participants in an industry do you need to have before you'll say that the goal of competition has been met? Four seems like it would be enough. If there was some advantage to be had by using a price structure that accurately reflects the true cost of text messages then I suspect one of the carriers would have already tried it.

      I think what the author meant is that there's no competition until the companies are actually competing. If any one of them lowered their texting prices, the others would have to lower theirs to match or else they'd lose business. This would eventually all of them lowering their prices, keeping the same customers, and making less profit than before. They all realize that as long as they all keep their prices high, they'll all be raking in the profit.

      If you've got any local cell providers in your area, ta

      • Re: (Score:3, Interesting)

        by buddyglass (925859)

        I think what the author meant is that there's no competition until the companies are actually competing. If any one of them lowered their texting prices, the others would have to lower theirs to match or else they'd lose business. This would eventually all of them lowering their prices, keeping the same customers, and making less profit than before.

        Assuming there's not explicit collusion and price-fixing going on, the four carriers are competing. Your analysis of what would happen if a particular carrier o

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