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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 $61 million if you were to send it over SMS. Why has the cost of bandwidth, infrastructure, and technology in general plummeted while the price of SMS messages have risen so egregiously? How can carriers continue to justify the high cost of their apparent super-premium data transmission?"
I had an unlimited texting plan from when I used it for server messages at work. When I switched to my own plan with the same cell phone I just kept the unlimited texting thinking I would use it for something. I never did. The only texts I have on there are from 411 calls.
An Education is the Font of All Liberty
This might be a cultural thing. In regions where mass transit is more frequently employed, such as Japan, people almost exclusively use text messages. Since the US is more car-centric, it makes more sense to talk while driving instead of trying to type a text message.
Jean-Francois Im's blog
Idiots. I remember somebody saying there was a "sucker born every minute". Some people just have no clue what they are spending when they cannot see a price tag or look someone in the face when that person asks them 1$. They just don't think about the big picture, what their bill is at the end of the month, and what they are getting for their money. I have a mentally challenged friend, which I love to death. I take care of him as much as I can. I actually pay some of his bills for him. He cannot handle the money. He can do basic math and figure out that the drink costs 2.50$, and he can pay for it and makes sure he gets the right change. He CANNOT figure out how many drinks he can afford on his paycheck. I don't want to sound condescending, but I am not sure most of the people getting stuck with high SMS charges are that much smarter than he is.
I always knew SMS was a scam. 160 characters per message and I was getting 25 gratis? WTF? Were they communicating these messages with 300 baud modems over phone lines? I was instantly aware there was an extreme difference in the actual overhead of sending the message and the price point being set for the market. I did not understand the technology that much, but nobody could make me believe the cost of broadcasting a small message was that high. They do OTA programming all the time. The signal cannot take that much of the bandwidth on the cell tower. It would have to be equivalent to a 1 second conversation maximum, and since it is more like a UDP packet than a TCP packet, there would be less communications "overhead" to send it. Maybe I am wrong, I don't know if a cellphone sends an ACK type packet when it receives an SMS. Anyways, the technical aspect of it could not make me believe it cost that much.
What made it far far worse as well was that early on, some systems like Exchange Server would use SMS as part of their delivery system. Try getting nailed for an SMS message for every 15 minutes for the whole day. Wheeeee. The SMS cost alone made enterprise email exchange on smartphones or pda phones cost prohibitive. Hence part of the real reason why that technology has moved to Direct Push and uses the WAP gateways instead. The other reason, IMO, is that Direct Push does not depend if your on the phone or not. You spend 30 minutes on your phone without it and email/contact/task synchronization stops during that time period.
Please DON'T get me started on SMS messages that cost the person 1$ just to send them. American Idol? Deal or No Deal? Mofo Puhleeeze. The sheeples wonder why they are being charged 45$ at the end of the month in just extra charges.
So that's what it really boils down too, sheer idiocy on the part of a lot of consumers... and many of them tend to be of the younger "hipper" generation that coincidentally does not pay their bills.
In any case, its all over now. Verizon has started offering unlimited texting plans with all types of messages included, not just SMS. Included gratis in just about any voice plan. Recently switched 6 lines over to it and saved 30$ doing it. So if Verizon is doing it, and they are the WORST at plans, then everybody else must be doing it already.
I just found out that AT&T (A-fee&fee?) is raising their text message pricing. When I first signed up for AT&T 6 or so years ago it cost 10 cents to send an SMS message, and it was free to receive them.
When AT&T switched to Cingular the price of sending a message dropped to 5 cents, but they started charging for incoming texts - also 5 cents. Assuming you send a message for every message you receive, this works out at about the same price as before.
AT&T came back online and phased out the CIngular brand name, and prices were again changed. This time to 15 cents each way.
More changes have taken place that I can't quite remember. At one point text messages were 10 cents either way, and at another point they even included MMS (multimedia messages) at the same price as SMS.
As of March SMS messages on AT&T will cost 20 cents and MMS will cost 30 cents - both to send a receive.
So let's do some math here, and figure out how much this simple transmission is actually costing us.
A standard SMS message contains up to 140 bytes (1120 bits) of data - this takes care of the 160 characters allowed in your text message. This might not make sense at first, until you realize that SMS uses 7 - not 8 - bit characters - leaving you with 128 possible character values instead of the normal 256. So 1120bits/7bits = 160 characters.
So our total message length is about a tenth of a kilobyte (.13671875 Kbytes). In terms that the iPod generation would understand - if you had an iPod with a tenth of a kilobyte you could fit 1/4000th of a song on it. I assume here and for the rest of this article that 1 song = 4 Megabytes.
If you divide 140 (the total number of bytes available to you) by 20 (the cost per message), you find that you are paying 1 cent for every 7 bytes of data. This leaves you with a cost of $1,497.97 for the 1024Kbytes contained in a single megabyte. iPod users: It would cost you $5,991.88 to transfer - not even to buy - a single song via SMS.
By comparison, I pay $50 a month for a soft bandwidth limit of 500 gigabytes through a local ISP. That comes out to 512,000 megabytes or 10,240 megabytes to the dollar. This allows me to transfer 2,560 songs for the same price as a Junior Bacon Cheeseburger off the value menu at Wendy's: $1. I will use this my standard measurement for the rest of this article.
So far I can make the following statements concerning the costs of bandwidth:
Cost to transfer 2560 songs:
From my ISP: $1
Via SMS messaging: $15,339,212.80
But wait, there's more!
When calculating SMS charges, most people don't take into consideration that the message is really being paid for twice! If I send a message to another AT&T user, I am paying to send it AND they're paying to receive it! This should probably be illegal, but that's for another discussion.
So how much does an SMS message actually cost? Not 20 cents - but 40 cents! This doubles all of my numbers above.
Furthermore, my above figures estimate that people actually use all 160 characters available to them. Say people on average actually only used half of that (which is still being generous) - then their price of data has again doubled from the numbers I gave above!
Making adjustments for both of the above statements, we realize that our above number isn't even close to correct! Corrected, the comparison looks more like this:
COSTS OF TRANSFERING 2,560 MP3s:
via my ISP: $1
via SMS: $61,356,851.20
Phew! THAT is premium data! It's no wonder that SMS texting alone is a 100 Billion dollar a year industry!
How big is that? Take all of hollywood movie box office revenues worldwide. Add all of the global music industry revenues. And add all of videogaming revenues around the world. Even all those three together, we don't reach 100 billion.
Let's even go more premium - how much would it cost to hand deliver data?
The U.S. Postal service is currently cha
512 MB RAM, 20 GB disk, 200 GB transfer, five datacenters. $19.95/month.
Yep, assuming that you have a cell grid covering the better part of a geographic area. A phone that's just turned on with a user who expects coverage wherever he goes costs almost as much as one with a limited, but regular, usage of SMS and voice. Still, the first one can get off far cheaper than the second, simply because users seem more willing to accept paying for actual actions, than just waiting. The interesting aspect in this light is that the text message might very well transfer as much information as a phone call of equivalent cost. The fact that the data content is far smaller is simply due to the ingenious idea of letting the user do the compression.
It is a lie. It may be a post or base policy from the post or base commander, but that doesn't make it a violation of anything other than UCMJ, which is not ever referred to using the words "federal law". Fort Bragg has a similar policy, in that as long as the cell phone is not physically in your hands, you are free to talk and drive. You cannot hold a speaker phone in your hand or use the phone to your head, because you will get pulled over and fined by the MPs and you will also have to attend a Saturday "safe driving" course. The device must be hands-free of any type.
I work with some satellite based systems that cost less than the SMS rates AT&T is apparently charging. For example:
Iridium (yes, they are still around): $1.50/minute (prices vary). This buys you a 1200 bps link (they claim 2400 bps, but your actual throughput is closer to 1200). This means to send a megabyte of data would cost you (1048576 / 1200 / 60 * 1.5 == $21.85). According to the article a megabyte of SMS would cost you $1,497.97. Iridium was generally considered to be grossly expensive when it came out.
Now lets compare against a real (even more expensive) satellite connection. Inmarsat BGAN charges by the megabyte, a common plan is $7 for each modem/satellite hop, so in the worst case scenario you're sending modem to modem for $14/meg.
I read the internet for the articles.
I spent a bunch of years working in the field, it was a rare site to see SS7 saturating a link. These days it is simple and cheap to add more SS7 capacity. You can already jam a metric crap load of phone calls down the bearer and still have lots of nice white space to spare for data. SS7 isn't much of a bottleneck at all. Certainly it's not the most elegant way to do SMS, but there really isn't that much competition with all the other dialing cruft that goes over the wire.
I guess others might disagree.
If you have the number of customers that would saturate your existing links, then you are also making more than enough money to add in more capacity.
SS7 works well over pretty much any type of link. It's extremely common to see it on satellite, I think that would be about as unreliable as it can get, though you could get creative and try and do it over HF with a couple of home made transceivers and some bent up coat hangers for antenna.
Maybe in the US it is taken as seriously as you say, but elsewhere the telco's really don't care how it happens, just so long as it almost always accurate and still turns them a stupidly high profit. Here in Asia it's quite common to see 8 or more SS7 links on a single E1, that's the popularity of SMS in this part of the world.
It's technically more efficient to do SMS some other way, but right now it would seem bandwidth isn't so scarce that it makes economic sense just yet.