What Carriers Don't Want You To Know About Texting 570
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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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.
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That's because their parents are the ones footing the bill... ouch.
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Is it true they even charge you for receiving calls in the states????
Yes, they do. And there's good reason for it.
In the US, most people can make "local" calls free of charge. The definition of "local" varies, but it is generally the town/city that you reside in and maybe the surrounding suburbs. To be semantically correct: it's not actually free... it's covered by a flat monthly rate. But, there is no per-minute rate.
Calls outside that area are considered "toll" calls. They are assessed a per-minute rate, although phone companies are now offering calls to the entire US for an additional flat monthly fee.
In some states, a toll call must be dialed differently. In mine, it must be preceded by a '1'. This is imposed by the public utility commission, to prevent a caller from claiming they didn't know it was a toll call that would assess additional charges.
Faced with the public expectation that "local" calls are free -- or at least no additional charge, the cell phone services in the US chose to assess airtime charges to the user of the cell phone, rather than the person that called them. Had they not done so, consumer acceptance of cell phones as a replacement for wire-line phones would have been inhibited.
(An aside: free mobile-to-mobile calling on the same network is also a standard feature in the US)
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)
Re:INCORRECT Correlation (Score:4, Interesting)
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.
WTF? Does that mean the US telcos are double dipping?!
In Australia, depending on the plan, text messages generally cost around 10 to 20 cents to send. The receiver never pays to receive an ordinary call or sms. (There are exeptions for premium rate services though).
Re:INCORRECT Correlation (Score:5, Informative)
WTF? Does that mean the US telcos are double dipping?!
Well, you have to understand the differences in evolution in telephone service. Traditionally in the USA, local phone calls are unmetered. That was never the case in Europe.
When the first radio phones started coming out(they weren't cellular yet), ALL calls were metered because you were paying for relatively expensive limited radio transmissions. Because such people were relatively rich, and didn't want to discourage calls too much with getting the equivalent of a 900 number, they accepted the charges.
Think of it as the tradition is that the owner of the cell phone pays for the radio transmission costs, outgoing or incoming. Thus the reason you get charged minutes for incoming as well as outgoing calls.
That's not to say that the charges for text messages aren't crazy. It's one of those things that I wouldn't be surprised that there's more bit traffic to charge for text messages than to send them. More expense to bill for a text message than to send one, etc...
Re:INCORRECT Correlation (Score:5, Informative)
This has always been the case in Russia, though, but we don't pay for incoming calls & messages, either. We used to, but a few years ago the government intervened and mandated all cell providers to not charge for incoming (forcing them to strike up agreements to redistribute the payment to cover expenses on both sides in cross-network calls).
Re:INCORRECT Correlation (Score:5, Insightful)
"WTF? Does that mean the US telcos are double dipping?!"
No, it is just a different model.
In the US/Canada, calling a mobile vs. calling a landline is the same price (often unmetered or very cheap). In most cases it costs just a few cents a minute to call anywhere in the US, landline or mobile, usually including Alaska and Hawaii. Some packages even extend that to Canada, and western Europe (non-mobile in the latter case).
That is not the case in Australia, the caller to a mobile is usually charged a hefty surcharge. Take a look at your international calling rates, you will see no special mobile rate for calls to the US. It is all the same rate, there are no special mobile area codes (a.k.a. city codes).
In many cases, you can even transfer your home number to a mobile if you are eliminating your landline.
One could argue which concept is better, fairer, or whatever. As with Australia (and almost everywhere) it really depends on the package you get.
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"WTF? Does that mean the US telcos are double dipping?!"
No, it is just a different model.
Don't you mean: "Yes, but it is also a different model."?
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When it comes to voice calls, then no, I wouldn't consider they are double dipping. However, when it comes to text messages they really stick it to us with a ten-feet old-school telephone pole and no lube. Not only you pay $0.20 to send one, your recipient pays $0.20 again, to receive it. And they make it hard or impossible to block incoming messages. So if you have a bunch of dumb-ass or malicious friends with unlimited texting plans, they can really run up your bill.
It is all geared to push people to pay
Re:INCORRECT Correlation (Score:5, Informative)
To the UK, it's normally 4 cents a minute (free if you have an unlimited plan). But, if you are calling a mobile phone in the UK, it's 34 cents a minute.
In France, it's 4 cents a minute vs. 21 cents a minute.
In Germany, it's 4 cents a minute vs. 31 cents a minute.
Here it can depend on cell phones because there's a lot of services that charge a flat rate for X No. of minutes. Both parties can be charged when you call mobile to mobile. Charges can range from free (if the person is on the same network or in a network of friends) or the individual rates. IOW, you're charged depending on your plan, they're charged depending on theirs. In my case I prefer the pay-as-you-go plan. If you don't call all the time it works out pretty economically. On my cell plan, for example, I pay $1 a day on the days I use it and 10 cents a minute to anywhere or 0 if I call another member with the same service. I spend about $150 a YEAR. While fixed minute packages may run cheaper per minute, Being that most run $40/month for the cheaper packages, it's a lot cheaper for me to do the pay-as-you-go and I don't have to worry about running over minute limits.
If you have a land line, it doesn't cost you any more to call a person's cell phone if it's a local number. It does cost the cell phone owner as stated above. However land line companies also compete with cells by offering a flat rate per month cost for both local and long distance, usually around $50/month.
Our biggest cell problem in the US is coverage. It depends on where you are as to which service has the best coverage.
Regarding the texting, it should be obvious: The price is high, not because it taxes the systems more, it's because texting is popular. How is this surprising? When something is popular or needed, the price goes up. When it's not, the opposite is true. This popularity allows the telco's to rake in additional profits and offer package deals with a guaranteed income. Sorry, but a company is not require to responsibly price things according to their cost. If you want texting prices to go down, then texting needs to become less popular or more competition needs to come in that offers cheaper or included texting.
Re:INCORRECT Correlation (Score:5, Insightful)
No its not obvious... supply and demand economics, right? Well, the demand is high, but the supply is essentially infinite as TFA points out. N/infinity = zero for extremely large values of N. Therefore it should be practically free. What we are looking at is a price-fixing scam.
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Not with Verizon.
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Wrong. It costs money to receive text messages, and you pay for the minutes on the phone whether you are calling, or being called.
I don't understand why, but that is the way it works here. We should not live in a place where capitalism is understood as see how you can screw people by making it impossible to do anything about the current system, and neutering the FTC and Justice department by upward revisions of the concentration needed for industries to be considered monopolistic, or ogliopolistic. Also, wh
Re:Correlation (Score:5, Insightful)
exactly. but people don't care or don't seem to realize how badly they are being fucked by the wireless companies.
i read an article recently that assessed the cost per MB given the size of a 160 character text message and found that it's actually cheaper per MB to send/receive data from the Hubble Telescope.
wtf?
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Hurray for the virtues of value based pricing. If we could find a catchy name for it, it might be legal for rich people to murder poor people too!
Re:Correlation (Score:5, Informative)
http://www.itproportal.com/articles/2008/05/13/text-messaging-costs-more-receiving-data-hubble/ [itproportal.com]
http://www.physorg.com/news129793047.html [physorg.com]
http://thelede.blogs.nytimes.com/2008/05/12/costs-of-text-messaging-vs-space-transmissions/ [nytimes.com]
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That was posted here. :) I'm too lazy to find the link, but I know it was only a few months ago.
Hey, with any business, the price tag is never what the cost is. The market dictates what the price will be. If people are willing to pay $100 for a bag of cheezie poofs, they will charge that much. If the price drops below the cost, unless there's a way to recover it through other means, the product will be dropped.
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You don't see this sort of thing in markets with real competition. Try to charge $100 on that bag of cheezie poofs, and the other guys will take your profits by charging $98 dollars a bag, you'll be forced to match them, and so on, until the prices are at the limits of profitability, and can't be lowered any further.
Re:Correlation (Score:5, Insightful)
Up until about August this year, all carriers charged $0.10 per text message, now they all charge $0.20.
This should scream price fixing.
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So it's reasonable to you to pay 20EU a month for something that effectively costs nothing?
It's a common mistake that since an additional unit ( in this case call/text) is practically zero cost then the service costs nothing. This is not the case; the FIRST call/text costs a staggering sum in infrastructure investment and THEN subsequent calls/texts are practically free. The 20EU subscription is his share of the up front costs. This model makes a lot more sense than the outrageous per-text and p
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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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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.
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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
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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.
Re:Correlation (Score:4, Interesting)
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.
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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)
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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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)
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)
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, Funny)
So let me understand this: The wave of the future is that we'll be talking to our computers and typing on our phones? "Oh brave new world..."
Re:Correlation (Score:4, Insightful)
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.
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In some parts of the world, notably the North American continent, one cannot expect SMS between carriers to work properly; there are many missing routes, including where there is a route from carrier A to carrier B but not from B to A so you can't get a reply to your SMS. Also even when it works it can be very slow, transit times of hours are within my experience.
It's not like Europe where SMS can be expected to work so well that it effectively always works and is fast.
Of course the North American telcos st
Re:Correlation (Score:5, Funny)
Or during an grammar test.
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It may not have been a cellphone, but back when I was in high school, I used to take out whatever novel I was reading at the time, and just read that for the duration of the class. And my teachers never bothered me about it. Why? Because I was not disrupting others. Because I got my work done regardless.
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It's one thing to be a bored honor roll student reading a book, (been there, done that), it's quite another to be an average student chit-chatting away with your friends when you should be making an effort to learn.
Your teachers probably never bothered you about it because your work got done, and you did well in the class. If you didn't do well in the class, they should have been all over your ass about it. It really confuses teachers when you ace an AP math course doing pretty much what you did, (OK, I a
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As long as they are not disrupting others, I do not see the issue.
The issue is that I'm taxed out the wazoo to pay for the education you're throwing away. I'll remember your attitude the next time I'm asked to vote for a tax hike for schools.
And my teachers never bothered me about it. Why? Because I was not disrupting others. Because I got my work done regardless.
Did you know that it's legal - and often even encouraged - to sign up for more difficult and challenging classes so that you're not wasting everyone's time?
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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)
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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.
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.
Re:This makes me dream... (Score:4, Interesting)
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.
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Re:This makes me dream... (Score:5, Funny)
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!
Re:This makes me dream... (Score:4, Interesting)
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.
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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
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My fiancee is getting a new phone as a late Christmas gift (only late because of a delay in shipping) which has AOL IM built in, and my BlackBerry will also do IM. Since unlimited internet is only $15/month for her phone and our group unlimited text package is $30/month, I will most likely drop the text package when her phone arrives. I prefer IM to SMS anyway.
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.
duh (Score:2, Insightful)
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.
Re:Goodness gracious me (Score:4, Interesting)
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I'm in Argentina. Coca-cola labels say it has HFCS.
Re:Goodness gracious me (Score:4, Funny)
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.
Re:Goodness gracious me (Score:5, Insightful)
HFCS is only less expensive because of the sugar tariffs place on the importing of sugar.
The problem is political.
Corn farmers are getting tax incentives to grow corn.
Then creative people need to figure ways to use all this corn.
It's hard to find something in the usa that isn't made with corn. It's not the healthiest thing. Farmers could be growing crops that are much healthier.
It's not C&H's fault that there is a sugar tariff.
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Don't be ridiculous. It certainly is C&H's fault a sugar tariff exists: the tariff is there to protect them from foreign competition. And how did they convince Congresscritters to enact this tariff and keep it in place? Bribes, err, I mean campaign contributions, of course.
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."
Um what? (Score:4, Interesting)
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)
And people wonder why I don't text...
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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)
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.
Re:Um what? (Score:5, Interesting)
Do the math (Score:3, Informative)
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)
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.
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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!
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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
Failed economics class (Score:2, Insightful)
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.
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.
Re: (Score:2)
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
Re: (Score:3)
Trying to apply the Supply&Demand curve to SMS is a failure because it satisy neither of the factors needed to make the S&D curve applicable.
* A non-constant marginal cost (raw material markets being the strongest example here)
* Short term over/under-satisfied market (limited factory capacity for new products, any product with a long production->consumtion cycle where you have to guess the market demand)
However, SMS (and pretty much any information service) has neither of those factors. The margi
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.
Re: (Score:2)
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
Not just for costs, but to keep demand down (Score:2, Insightful)
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
It is less than 160 bytes! (Score:3, Interesting)
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
Re:It is less than 160 bytes! (Score:4, Interesting)
Comment removed (Score:5, Insightful)
Competition? Never Happen! (Score:3, Interesting)
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.
The reason this is a boring topic (Score:3, Interesting)
Don't forget to factor in the SMSC (Score:3, Informative)
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).
Text pricing is ridiculous (Score:5, Insightful)
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.
Obligatory (in)Famous Quote: (Score:5, Interesting)
"Texting is the closest thing to pure profit ever invented" - Sir Chris Gent, founder of Vodafone.
huh? (Score:4, Insightful)
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)
Re: (Score:3, Interesting)
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
Re: (Score:3, Funny)
Unless your girlfriend lives on the ISS, you are comparing apples to oranges.
Re: (Score:3, Interesting)
It costs phone companies a hell of a lot more to send 1000 texts than it does for a 3G user to download a 160kb image.
It's true for pretty much every business everywhere that if you do things in incredibly tiny properties, you're going to be charged through the roof.
Yes, which explains why my x86 processor crunching 3 billion incredibly tiny instructions per second costs me millions of dollars to operate, and my gigabit ethernet lan sending millions of incredibly tiny data packets per second is just as costly.
How on earth did you get modded +4 insightful.
Re:Verizon charges txt rates for Mobile IM message (Score:3, Informative)
Have you looked at your phone bill? At lease on AT&T those "IM" messages seem to be converted into some kind of SMS message and sent through what appears to be a gateway. I originally thought like you probably do, they are actually TCP/IP packets leaving your phone. Then I looked at my SMS usage and found lots of messages to a couple of numbers and then it dawned on my the IM stuff goes through a SMS gateway.
Re:The similarity to the CB radio fad of the 70's (Score:4, Informative)
. There is the use of the arcane abbreviations used in texting. This is similar to the stupid use of the "10 codes" which was insane.
Those 10-codes were a carryover from standard police codes and anything but arcane. Early adopters of these radios were people who had training in enforcement or radio disciplines where this nomenclature was standard. SMS jargon is merely a bastardization of the English language that was not borne of efficiency, but most likely misspelling and novelty linguistic rebellion, and later adopted for efficiency. Modern phones could improve up on this by translating goofy l33t speak into actual english words, and some do.
The CB radio fad was expensive to get all of your equipment but once you had it, was cheap to operate. Texting is cheap upfront but very expensive to send messages. This having been said, both are expensive.
CB radios were never that expensive. They were necessary items for people who traveled a lot. They were in-effect a safety device and also early "radar detectors" (or should I say "smokey detectors" hehe). When the song "Convoy" became a hit, middle America decided they wanted to clog the airwaves with useless chatter, and THAT was a fad that screwed up the citizens band and forced them to open up a bunch of extra channels. Luckily the novelty use of CB radios did fade out and now once again, travelling/professionals use the system mostly, as it was always intended.
Many people just have to be on the bandwagon. Like CB radio, I think texting too is just a passing fascination.
People don't have to buy a special texting machine. SMS is built into almost all modern phones. Obviously if the telcos can't make a profit center out of it, they have no incentive to offer phones with this feature, but it's basically synonymous with mobile phones now. Your analogy might hold water if there was a CB radio sold with every new car, which there never was.
For these reasons, I believe texting will not last long.
The only thing that will kill texting is further evolution of the mobile web, and other cellular-based communications protocols, but there's no doubt "texting" in one form or another, is here to stay. If the telcos want to nickel and dime people to death then a tcp/ip phone-based skype or AIM-type messenging system will take over, but texting is here to stay. No doubt at all. It's way too efficient and desirable a feature. And it's most certainly not a fad. That's like saying "online chatting" is a fad when the first multi-user BBS offered such a feature. No. It was a revolutionary new way of communicating. It's better than voicemail and answering machines in that it can not only be passive, but also active. You can often send text messages when you can't get a normal voice call through -- this happened a lot during Hurricane Katrina... we were able to have text messages queued in our phones and when we hit service zones, the messages would be automatically sent - it was very useful.