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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.
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.
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.
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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?
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"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.
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.