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OMG Did U C What U R Paying 4 Texting?
theodp writes "If you thought gas prices were rising too quickly, writes CNET's Marguerite Reardon, check out what's been happening to text messaging. Since 2005, rates to send and receive text messages on all four major carrier networks have doubled from 10 cents to 20 cents per message. If the same pricing was applied on a per-byte basis to a single MP3 song download, it would set you back almost $24,000 according to one estimate. So why are carriers gouging their customers so? Because they can, concludes Reardon."
I was recently reading about the whole George Vaccaro fiasco and did some calculations on how much the cost of transfer is over a T1 line vs. what companies like Verizon charge for data transfer. Its astonishing that people put up with this:
Why do people put up with this? Some people might say I'm comparing apples to oranges, but Apples dont' cost 17,000 times more than oranges. There should be a class action suit over this.
The 40,687,488,000 should actually be 517,602.528.0 I made a mistake the first time I did this and corrected the prices, but didn't correct the rest of the comment. The rest of it is right.
In the UK, the Telecom Regulator OFCOM recently (as in a few days ago) started pushing our mobile operators to reduce the cost of sending and receiving text messages while abroad, where the price was often around 30p (60c!) or more just to send one.
I hope this sets a precedent and they start to clamp down on the cost of sending regular, local messages as well.
+1 IDisagreeSoHeMustBeATrollOrAnAstroturferOrAShill
actually, with the new plan from AT&T with the 3G IPhone, the price for unlimited texting is $20/month. See here.
In Norway, NOK0.59 is a pretty average price to pay, which corresponds to about $0.012 using todays rates. Furthermore, many companies give you 100+ free messages per month. With my own usage pattern, I keep my cellphone for free (No monthly charge, 120 mins of calling and 90 sms for free per month). Stiff competition does wonders :) If companies in Norway can do this, I'm sure it would be possible in the states too, as long as the consumers keep up the pressure.
A professor at my university was recently asked by a British TV program to calculate the cost of retrieving data from the HST, and it came out quite a lot cheaper than sending text messages.
From the physorg article:
Dr Bannister estimated the cost of the data from Hubble could vary between £8.85 and £85 per MB- much cheaper than the £374.49 per MB cost of transmitting one MB of text.
Texting prices in .dk: ~5 cents and falling. Yay free market economy! The US should try it one day.
You started the economics discussion, so here comes ECON 102.
There are only a small number of wireless carriers. Therefore an oligopoly exists. The demand curve for oligopolies is "kinked." This means above a certain point customers will rapidly stop buying, but below this point buyers will not start purchasing in drastically greater numbers. This means that the oligopoly will set a price point right at the kink in the graph.
What does this mean?
1) A section of the populace feels txts are necessary, and demand is inelastic. This is the lower half of the demand curve. This means a change in price does affect demand significantly.
2) An increase in population of that subset of people changes the demand curve, and moves the kink in the graph higher on the price axis. A price increase ensues. The oligopolies charge exactly the price they can get away with because market dominance allows them all to effectively charge the same prices easily. One carrier changes, the rest change to follow.
3) To stop this pattern, you don't have users reduce demand, you have to break the oligopoly, because lack of competition means that prices don't follow standard supply and demand.
"All great wisdom is contained in .signature files"
Cellular carriers give out free or subsidized phones as a method of keeping their customers signed up for long contracts. They keep a stranglehold on the equipment to further that.
However, by law when a carrier makes a material change mid-contract their customers, *all* their customers get a get out of contract free 30 day window. It's a great deal and you should exercise your rights when a carrier changes *anything* whether the change affects you or not.
So now that you know you are gaining important new rights that you didn't have before they raised the text message rates you can take advantage of that. You don't have to stop using the service, you can probably just cancel the agreement, though they may deny that. If they do just hang up and call back, it costs cellular carriers over $400 to acquire a customer, they don't want to lose you even month to month though they may deny that. So you're now month to month and can threaten to leave unless they give you another free phone. Heh.
FWIW I have done this. There was much gnashing of teeth at the cell carrier. Uh-oh. A customer who has actually read the contract!
.
Wrong!
I live in Ukraine where ALL incoming calls are free by law. So cell companies HAVE to compete on outgoing call rates. And the do compete - I see a lot of advertisements like: "0.1 cent for all calls!".
Also, the stupid '300 minute a month' plans are also US specific. Most plans here are of debit 'pay-as-you-go' type. For example, I pay about $20 a _year_ because I just don't talk much other the phone.