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The True Cost of SMS Messages
nilbog writes "What's the actual cost of sending SMS messages? This article does the math and concludes that, for example, sending an amount of data that would cost $1 from your ISP would cost over $61 million if you were to send it over SMS. Why has the cost of bandwidth, infrastructure, and technology in general plummeted while the price of SMS messages have risen so egregiously? How can carriers continue to justify the high cost of their apparent super-premium data transmission?"
They can justify the cost because we continue to reward them with lots of our dollars.
-Ryan
AUWYHSTOT (Acronyms are Useless When You Have to Spell Them Out Too)
SMS is the byproduct of the GSM standard. It was never designed to actually be a customer product. It was more or less thought to be some stderr of sort.
When SMS was introduced at the beginning of the 90ies in Europe, it was basicly free. There were SMS gateways all over the Internet. But then the carriers were recognizing the marketing potential of SMS, and slowly the prices per single message were rising until they reached 49 ct (in Germany at the end of the 90ies). Only when parents were stunned by the SMS cost of their children, protests started to mount, and then the diverse regulation offices in the different countries were trying to limit SMS prices, so there were actual plans which included for example 1000 short messages per month.
SMS is a prime example for the difference between price and cost of a product. The cost is nearly zero, but the pricing is expensive.
They've invested a crazy amount of money in technologies customer's don't care for (3G, all the different ways to get the Web on phones), so now they have to charge a lot for the two things people actually use (SMS and ringtones).
It's a market economy with lots of morons as customers. As long as they find enough morons to pay their super-inflated prices, they don't have to justify anything. And if they don't find them, they just have to justify why they're not making profit in front of their shareholders.
I've quit sending text messages years ago.
Cellular air links don't have "net neutrality". The pricing for voice, web browsing, SMS, video, and non-Web data connections is totally different. That's what it's like without net neutrality.
Having to pay to send and receive SMS.
Imagine if the postal service did that: I have to pay to mail you a letter, and then you have to pay to receive it. Better yet, you have no choice but to receive it and the postal service will bill you for it. Imagine all that spam you get in your mailbox costing 10c each. This is how SMS is charged on most US carriers.
With the ludicrous fees associated with SMS (dollars per byte), if I pay several cents for a 160 character message it ought to get delivered without charges on the other end (including that persons bundled SMS "allowance").
Score one for you on the textbook definition of reasonable profit in a professional service provider sense (i.e. an engineer or architect). Now try this: How about incorporating loss leading products and services, multinational issues, public trading levels, etc into an overall picture of profitable operations, from the start of the telecom supply chain to the handset that's chirping in the customer's hand?
Do you personally know people who do in-depth cost analysis calculations on the profitability of their web hosting provider before forking over their cash? Seems like a big waste of time to me; most people seem to primarily care about the reliability and long-term track record of the company. Look at what the market as a whole is willing to pay, and compare that with your personal cost in time and money to use the service to arrive at a decision.
512 MB RAM, 20 GB disk, 200 GB transfer, five datacenters. $19.95/month.
In the Philippines, widely considered the SMS capital of the world, where the three major carriers among themselves handle over a billion messages a day, prices have always been relatively low as well. They have generally been, for as long as I can remember, priced at PhP 1, which is about 2.5 US cents at current exchange rates, also with no charge for incoming messages. The basic rates go even lower when you factor in things like the carriers giving you a certain number of free SMS per month for monthly plans and per prepaid load, unlimited text messaging for a day for a fixed rate deals and other similar things. And even at these rates it can't be said that the carriers are losing money. In fact, they're making scads of it.
Qu'on me donne six lignes écrites de la main du plus honnête homme, j'y trouverai de quoi le faire pendre.
So you're saying that by spamming those email to sms gateways, the victims will actually have to pay to receive those spams? That's a system just asking to be abused.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
- Also, the author takes an average of 80 characters for the cost of SMS and compares them with the max number of words/characters you can send via US mail. An unfair comparison.
All in all, all fallacies skew the numbers towards the point that the author is trying to make, which is quite unethical. It is also stupid because a fair comparison would totally support his point, just with slightly less astounding numbers.> Development, maintenance and hardware costs must be
> covered (service providers don't get the system for free).
> Then there is support you need to provide for customers. And billing.
The infrastructure is exactly the same as that used for voice calls.
In building the voice network, they DO get the SMS facility for free (or very nearly so).
There is pretty much no reason why SMS and for that matter, data charges are so high. Even if they only charged quarter of what they do now for texts, they would still make a healthy profit on each one. People would probably also write more often and not stick to the 160 character message size so much so they might make a similar amount of money anyway.
The article promises to tell us about the "true cost of SMS" but never actually does this.
Cellular networks are very different than the data networks. One big difference is that while our data networks are connectionless, the focus of cellular networks is on connections. Operators must balance the use of SMS messages with the normal call traffic. Perhaps SMS use is disrupting normal call traffic and the operators are using the free market to curb SMS volume?
Modern cellular protocols are reducing the connection-centricity of the networks and the price of text messages will likely come down, but at that point the messages will probably be run over 3G instead of the SMS mechanism.
If you do the comparison, do it right:
With your ISP you have a direct medium (usually cable) capable of high-speeds (in this case, even 1mbps is high speed). And data overhead is less than 50% (IP header compared to 140 characters of data) on a pre-established link.
With your cell, you have a shared medium (air) with a limited number of frequency bands. The overhead is not only the extra data transfered, but also (like a phone conversation) it has a separate line negociated to transfer.
If you would have smaller prices on SMS (let's say 10 times smaller), more and more users would use it. This would increase the providers load, and even if they could handle it, some cells could be limited by their bandwidth which is regulated by the FCC. This would increase the transmission times and even affect regular communications, which means more angry calls to tech support.
So providers probably justify it as a "crowd control" (something like use it only if you really have to).
Im Romania at least one of the ISPs had a 1st 3 seconds not charged. Needless to say, the consumers started making 1-word calls (call, say 1 word and hang up, then do the same for each other word). I've heard about 1000-page detailed phone bills which were less than 10$. After the 1st year, they cancelled it on ALL contracts, not just the new ones. I don't have to say how it was during phone "rush hour" when you wanted to make a regular call.
This is just the SMC. In order to handle SMS it relies on capability in the network and the price is driven by the network capability, not by the system which uses it.
Unless the phone can do SMS over GPRS, each SMS message eats signalling capacity and travels along an SS7 link. After that it once again eats signalling capacity and competes with the rest of the signalling traffic for a place in the sun on the beacon channel. This is probably the most expensive way to encapsulate data known to man. You use mostly serial links, reliable transfer everywhere, transaction safe forwarding on every step and so on. It is not surprising that it is hideously expensive. When the protocol was designed nobody had the slightest idea how popular it will be and now it is a commodity so everyone is afraid to break it while trying to optimise it.
So the hideous price of GSM SMS is here to stay until we switch to 3G.
Baker's Law: Misery no longer loves company. Nowadays it insists on it
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a. Abba's "Waterloo" is more work appropriate than, say, Johnny Paycheck doing "Take this job and shove it" or Rage Against the Machine's "Killing (In the Name Of)".
b. If they leave it out, someone will grab it and jump off the train when it gets to the station.
Next?
Quidnam Latine loqui modo coepi?
In Indonesia, people use text messages since they're much cheaper than calling. A single message could cost you Rp250~350 ($0.03) compared to a phone call which could cost Rp1000/min. (US$1 ~= Rp9000)
it depends on the price too, not just habit.
"also they advertise through sms"
That's great isn't it? It costs money to receive spam. If the cost of sending SMS is lowered, I'll start receiving more SMS spam.
Today I receive an occasional spam message via SMS, probably because it's so expensive. If they lower the price to 1 cent, I'm sure I'll start receiving thousands of such messages every day, rendering mobile phones as useless as e-mail has already become, and bankrupting me in the process through the fee for receiving the messages.
If it were up to me, SMS would cost nothing to receive, and $100,00 to send.
How nice for you. I live with my wife and kids and talk to them.
It's free and nearly effortless, so compression is the furthest thing from my mind.
The person in the passenger seat is in the same environment as you, and is far less likely to just keep chattering in your ear if something important starts happening. Instead, they'll probably be yelling "Look out!" or "Red light!"
Except with a hands free, you have both hands available, so you can accurately control the car and safely respond to safety issues. If you're holding a phone, driving becomes more erratic as you're trying to steer and change gear with one hand.
I just checked my family plan with Sprint (though I doubt it's different from a individual plan) where I know my wife text messaged me yesterday (she sent, I received and replied). On her phone it shows one text message used (not two if the receipt of my response were to count). Mine account shows 18 messages used (I have no data plan, so these are 10c apiece), but I know I've received more messages within the last month and that 18 reflects only the ones I've sent.
I don't know where people get the notion that Sprint charges for incoming text messages because they don't. They also don't charge you for minutes spent listening to voicemail or charge you roaming charges at all inside the U.S.
Say what you will about Sprint being one of the big bad telcos (and they are), but they certainly are doing a good job of steering clear from all the other crap the Verizon and AT&T do to their customers which keeps me locked into Sprint out of sheer audacity that a phone company would do such things to their customers and expect them to stay.
I'm also waiting to see what Sprint/Nextel have to offer in the way of Android-enabled phones this year. Believe me, if Sprint started pulling the stunts Verizon and AT&T are pulling, then I would go without a cell phone.
...and that's the way the cookie crumbles.
Except with a hands free, you have both hands available, so you can accurately control the car and safely respond to safety issues. If you're holding a phone, driving becomes more erratic as you're trying to steer and change gear with one hand.
The problem with using a phone while driving is not one of physical control, but one of attention. Which is why people with only one arm, or other physical disabilities, are allowed to drive.
The real reason the price for single text messages has skyrocketed is because the carriers don't want you paying per-message. They want to drive you into getting a monthly bundle of X messages for Y dollars. Maybe you'll save money, maybe you won't, they don't care. What they care about is a steady income.
Having people paying for five messages one month, then fifty the next, then ten the next is lousy for their bookkeeping. They don't like the unreliability. But if you're giving them $10 every month instead, their accountants are able to sleep at night.
Im not sure why you even bothered responding. Everytime someone talks about cellphones and driving someone says it's no different that talking to a passenger. And every time, people try to explain why using a cellphone is worse.
But the same people will keep up with the "no worse than talking to a passenger" crap the next time the subject comes up. They are not looking for facts or honest explanations. They are just trying to justify their own actions and maybe manufacture some doubt among the get-off-your-phone-and-pay-attention-to-the-goddamn-road-while-driving crowd.
I'd love to see a study that compared cell phone talking to having a conversation with a passenger and having your kids in the car. With luck we can get having multiple car occupants banned as a safety hazard. After that food, anything that can be read, the radio, etc... There's just no end to what we can ban!
You are in a maze of twisted little posts, all alike.
One can text multiple people at the same time while talking is one-to-one communication. Texting is like IM. There's no reason to use IM when there's a phone on your desk right?
11 was a racehorse
12 was 12
1111 Race
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I believe (from the UK experience) that both indicators and mirrors are optional extras on German cars, as they never, ever indicate even when pulling out 3" from my front bumper :)
One swallow does not a fellatrix make
If memory serves, that study has been done. Passengers aren't problematic because they recognize road hazards (or at least your reactions to road hazards) and will temporarily stop talking when the situation calls for it.
G
you forgot the last bit.
... and I will continue to pretend it isnt happening if the steak is prepared exactly as I prefer."
"
Actually, talking on a cell-phone with handsfree is more distracting than talking to a real live person sitting in the seat next to you. The same thing can be said for pedestrians using their phones (or handsfree) in traffic. The reason is that the people you are talking to aren't seeing the same thing as you do, so they don't know when you are experiencing a situation that needs your attention. If somebody is sitting right next to you while you are coming up to a crossing or anything remotely dangerous, there will normally be a pause in the conversation untill the situation is resolved. Not so with cell-phones.
I've noticed this phenomenon myself, when I'm driving my mentally retarded brother. He can't really talk, but is fond of attention, and typically says a lot of "hi" and "hello" and other things to grab your attention. Since he has absolutely no understanding about what goes on in traffic, his attention-grabbing often comes at unfortunate times, and I have to admit that this has caused some potentially dangerous situations. Naturally, I'm more careful when driving him now. I'll bet most parents have similar experiences.
My cell-phone usage while driving is mostly related to professional activities with people who know I'm driving, so I have no problem with telling them that I'm coming up to an intersection or something, and they have no problem waiting. On the other hand, I can easily see that other types of conversation can be a lot more dangerous. I try to avoid those while driving, but unfortunately, it's not always easy to pull over, especially in dense traffic where you need it the most.
What?!!!! I want what you're smoking. I can attest to the pathetic driving capabilities of people from Philadelphia. Forget about stopping at a stop sign when there's oncoming traffic. Red light? Sure, we can fit five more cars through as the opposing traffic advances.
Merging traffic? Naw, you don't need to merge. Just stick your nose in. If the guy hits you, keep driving.
and required response time may not leave time for signaling or other kinds of politeness.
The only excuse for not using your turn signal is in an emergency situation or if you are the only car on the road at 2 AM. Other than that, turn signals should always be used.
And yes, I do use my turn signal every single time no matter where I'm at.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
Wow, if you're constantly reacting last minute like that, then you must be part of the problem. Are you near-sighted or something? I grew up driving in New York, on Long Island, New York City, Queens. I've lived in DC and surrounding areas. I've driven in Miami, San Fran, Seattle. I haven't had a chance yet to drive in LA. I've also driven in 3rd world countries where people have habits that would utterly blow your mind (Right turns from left lanes, driving in reverse on major roads, no headlights, 6 cars abreast in 3 lanes, I saw all 4 of these just TONIGHT on my way home). I can count on one hand the times that I've had to do an emergency maneuver because something unexpected happened, and I'm a pretty aggressive driver. Every other time, I use my turn signals. Where I live now, I'm not just the minority; I'm the ONLY ONE who uses them; I can drive home from work and be the only person I can see who signals the entire way.
As far as I'm concerned, signalling is the easiest thing you can do to avoid accidents. Accidents are caused by something unexpected happening. If you telegraph your intentions, others know what you're doing, and have more time to react to you.
Its not like you have to reach anywhere. stick your finger out and flip it up or down. pretty easy.
-- My Sig is a P228.