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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."
Most people who are serious about texting have unlimited plans, at least in the U.S. I'm not sure how much they cost but say $5/month on top of your regular contract, even 100 text messages is 5 cents a piece.
Reviewing just the first hour of video games.
Maybe these prices will help drive the American consumer away from their opulent sport utility text messages to something a little more environmentally sustainable.
You'd think one of the wireless carriers would be able to differentiate themselves in the market and make a killing off selling 10 cent text messages. (That is, people would change to their service when possible because they're half the price of anyone else, and 10 cents for a text message is still a huge profit.) Do I just not understand the market dynamics, or could this be a case of price fixing?
In India the cost of texting is as little as 80paisa. i.e 0.80 INR. Now calculate the difference and make your new calculations on it.. Why do you guys spend so much then. Sue the companies that charge you so much for something which costs next to nothing.
Pretty much the same as gas...
If you want news from today, you have to come back tomorrow.
Okay, now remember that you need a cell tower in every area you want coverage. Now remember that you need to wire up all of those cell towers. Comparing the cost of a single T1 to that is insane.
There should be a class action suit over this.
Why? No-one is forced to spend their money on text messages. Truth is the networks charge what they do because people are willing to pay it. People simply don't care about the bytes to dollar/euro/pound; ratio. For example, the last four messages I received from my brother contained a total of about 25 characters, 8 of which were exclamation marks.
If usage drops, then prices will follow, but that doesn't look like happening soon.
This comment is for entertainment purposes only. Any similarity to real insight or information is purely coincidental.
I am having a hard time seeing who the class is or what their injury might be. You need a few more facts for price-fixing, and otherwise there is no cognizible injury in charging what the market will bear.
Tilt at windmills. Occasionally one will fall over out of sheer surprise.
Price is the intersection of supply and demand curves. The US carriers charge what they do because people are willing to pay those prices. If you don't like the pricing, don't text. If enough people vote the same way with their fingers, prices will drop.
My father's 64, I'm 37, and he and I text each other several times per day. Just because you're an adult, doesn't mean you have to be a Luddite.
God invented whiskey so the Irish would not rule the world.
To put it bluntly, your mobile communications' market isn't free. The companies serving that market don't feel the need to compete with each other in any way perhaps besides area coverage. Their clients' business is always a given as they are unable take it elsewhere (no alternatives) and are happily shelving away more and more money to get the exact same service.
So, if they have a captive audience and there is no other actor in the stage, what else forces them to put on whatever show they wish?
Slashdot, fix your code or at least hire someone who is competent at it to do it for you.
Telcos can charge you 4-10-30-50 cents for a text message that costs them hundredths, thousandths of a cent to carry because they monopolize the network. If your phone could login to any radio network to which it can eletromagnetically connect, depending on which services and prices it provides, then the networks would compete for those connections.
Instead, you're locked in. If you want to switch in realtime, you have to pay prohibitive "roaming" fees that are arbitrary and extremely high - higher than even the ripoffs from the primary network. Switching your primary network requires "porting" your phone number, days or weeks of bureacratic "processing", and sometimes can't port, and breaks your old primary network's contract at great expense.
These constraints are all made-up for telcos to retain their old monopoly status with their existing customers. The exact same truths that forced open the wired networks are still true for the wireless networks, but the telcos have lobbied to make that much more expandable market into an "exception".
Note that this problem is more true in the US than in Europe and elsewhere. Foreign countries don't have as much contractual monopoly, but do have some residual technical fragmentation that is more of a basis for lockin, even though there's somewhat less lockin. But since their formerly more separate states (AKA "countries") had separate telcos that compete with each other, there's still some effort to keep whatever lockin they can, though there's less of it.
The US Congress should fix the laws to apply "universal access" to the radio networks as well as to the wired networks (including the Internet). Make these lockin contracts illegal, so they become the exception (merely to purchase rates even lower than the open market produces after competition, to pass along to consumers the savings telcos get from lower "churn" rates). We're a loooong way away from that kind of Congressional alliance with consumers instead of telcos. But we can get there, just as we got there with landlines after many years of fighting.
We just have to start by making the problem of telco monopoly privilege the conventional wisdom. 300M Americans whining about paying too much with no choice usually eventually has an effect.
--
make install -not war
If you don't think text messages are worth 15 or 20 cents each, then don't use them. (Yes, you can get your cell carrier to disable texting to your phone, you just have to yell at them for a while until they give you to a supervisor who can actually do it.)
I don't mind that the market will bear such high prices; what I mind is that there seems to be no competition on the part of the cell companies. Why would the price of SMS go UP when the cost of everything else related to cellphones has gone down? Compared to a few years ago, you can get more minutes, more features, better phones, etc. for the same or better prices... except SMS. Hell, I have unlimited web browsing on my cellphone, and it's $6 a month; unlimited SMS is $15 a month.
"Destroy science and religion. Science would re-emerge exactly the same; but not religion." - Penn Jillette, paraphrased
My verizon contract is up this month, forget renewing. Forget it all, I'm going 50$ a month wifi card, EEEPC and Skype. They can keep their minutes.
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.
Why? The cost to produce a product has no bearing on price; it only determines wether or not a product will be produced based on teh demand - driven price.
The carriers should set prices to maximize their profits; which they try to do through offering teired and fixed rate plans. Given the marginal cost of extra traffic is virtually nil, the higher rates plans and flat rate bundles are probably mostly profit; by offering low usage plans you get the people who wouldn't own a cell phone if the paid $99/month while the all - in $99 captures people who are willing to pay alittle more than the highest capped plan per month to eliminate the chane they will go over their plan usage and get hit with a large bill every now and then.
Profit maximization, as long as their isn't collusion, is not illegal.
I'm a consultant - I convert gibberish into cash-flow.
No-one is forced to spend their money on text messages.
Not 100% true. If you have Cingular/ATT disable text messaging on your phone, they don't promise that you won't receive any text messages. And I'm not talking about ATT's own free text-spam, but rather texts from people you don't know that you still get charged for. I wouldn't be surprised if other carriers do that too.
I am not a crackpot.
The pricing of datacom and telecom services has not had anything to do with the cost of the service since the original AT&T monopoly was broken. Pricing is determined by the market, not by the cost of providing the service. This is because most of the cost is fixed, while the revenue is highly usage-dependent.
From the carrier perspective, the only thing that matters is revenue. The new product (whatever it is this year) will always be marketed at premium price. The old products are priced to maximize revenue. If they can gain revenue by lowering the price and selling more units at that lower price, they do. If they can gain revenue by increasing price and selling fewer units, they do that.
Voice minutes have become cheaper over time largely because of competition. SMS messages are currently fashionable, and so carry a premium price. As soon as text messaging starts losing fashion appeal, some carrier will start selling it for lower pricing, or even giving it away, to get subscription revenue. Abusing the customers with ludicrous per-message pricing will make that day come sooner rather than later.
Efficient markets require perfect knowledge. Free markets require a relative lack of regulation.
If people actually cared, prices would go down, the information is available. People don't care.
Nerd rage is the funniest rage.
I never understood why you would have to pay to receive a text-message. I'm from the Netherlands and here only the one who sends a message has to pay, receiving is free. As far as I know it is like that in every courty in Europe (but I didn't check them all). Where you come from, do you have to pay to get called too? Because if you don't, the whole thing doesn't make sense - a one second call has way more data-transfer than a 100-character text-message.
And, as history shows, the market always makes correct, sound decisions that maximize the present and future wellbeing for all involved?
Why does it matter how much I pay for something I want to sell you? If you can afford what I am charging, then you can afford it. If you cannot afford what I am charging, then you cannot afford it. Do you think it violates the principle of a free market if I charge my customers as much as I possibly can without scaring them away? Your ridiculous viewpoint operates under the ridiculous assumption that there should be some sort of set control about what an appropriate markup is, right? It also dictates that companies fully disclose some predetermined set of information, right? Who decides what this markup is? Who controls this disclosure? Perhaps some sort of governing body? As much as you may be struggling with the cognitive dissonance of it, your viewpoint on what should drive an economy is extremely more communist or socialist or even current-Western-economist than "anarchist". I guess that makes me a "fucker", huh?
Please don't use "umm" or "err" or "erm".
No, in this case the price is NOT the "intersection of supply and demand curves". It has nothing to do with supply at all, in fact. Too see this, imagine that their bandwidth costs got cut in half. The supply has increased, so you would expect the price to drop. But the price would not drop because they have discovered that people will pay the increased prices. It's simply collusion and price-fixing.
Not to mention that their text messaging packages are much lower per message. Verizon's cheapest package (that they don't advertise) is $0.002 per message.
11 was a racehorse
12 was 12
1111 Race
12112
I don't get why US people put up with the receiver of a call or txt paying. It's absurd to me. Does the receiver of a letter pay? No. So why does the receiver of a call or txt pay??
== Jez ==
Do you miss Firefox? Try Pale Moon.
Why should you have to pay for incoming texts? No one charges you for letters you receive (well, not unless the person sending it is really cheap). So why should texts be any different (especially since you're already paying the carrier a large sum to remain connected to their network)?
The problem is that every carrier does this, so you can't just switch to a different one because your current one is screwing you. Your alternative is to either put up with it or forget the idea of owning a cell phone entirely. The logical extreme of the latter is to end up living like a hermit in some shack in the backwoods because all of society has terms and conditions you don't agree with.
I read the internet for the articles.
You know, in most of the free world, people are not expected to pay for incoming texts at all, even on the lowest tier phone plans. People expect it to be common sense, even. Nobody would sign up for a plan that billed you on incoming, and even incoming phone calls are free on some cheap plans. You guys are being gouged all right.
Starbucks, Harbuckle of Breath.
Yeah, if you could fit a telegraph in your pocket and use it inconspicuously when you're in a social situation in which it would be either rude or inconvenient to take/make a phone call.
In Europe (and the rest of the World) Mobiles have separate number ranges, So you can tell you are calling a mobile by the number, and so you (the caller) can be charged extra ...
In the USA someone made the odd decision to scatter the mobiles within the normal geographical number ranges, and so the telcos cannot charge extra to call them (but someone has to pay for the "additional" cost) so the person called pays
This has been extended to SMS messages even though they could be a standard cost! SMS = Mobile?
But SMS messaging is horrifically overpriced everywhere...
Originally they were test packets used by engineers but someone realised they could be used to send short messages .. the SMS packets are lost in the overhead of keeping your mobile phone on the Cellphone network and actually cost the network a vanishingly small cost
Puteulanus fenestra mortis
This article isn't about Europe and the rest of the world. But thanks for proving the point of the article and my post.
There is no -1 Disagree mod. Slashdot.org/faq defines mod options. USE IT.
The first is that the US had significant cell phone use back when they were really expensive. If it's 1980 and I'm calling Mr. Hotshot on his carphone at a buck-fifty a minute, who should pay? Me, or Mr. Hotshot?
You. Otherwise get Mr. Hotshot to call you, do a reverse-charges call, or just don't call his damn carphone so much. But, you get to choose.
The second is that I don't need to know whether I'm calling a cell phone or not. It costs me the same either way. No need to memorize which numbers are mobile and which aren't. If I know what kind of phone I'm using, I know what my rate structure is. The recipient of my call knows what kind of phone he's using, and he knows what his rates are. We don't have to care about each other, we just talk.
Well, I guess this is an inferior aspect of the US telephone system, because it's very easy to know whether you're calling a mobile or not over here; mobile numbers start 07.
The third (yes I said there were two) is that it's just fucking common sense. Remember, it's not "called party pays", it's "mobile party pays". Pays for what? Mobile service. You mean... the person with the cell phone pays to use the cell phone? Why, yes!
You said two reasons... anyway, wtf are you talking about here? It *IS* 'called party pays'... that's the whole point. I don't understand you. The cellphone user pays a regular fee for their service, *AND* to receive calls and txts.
== Jez ==
Do you miss Firefox? Try Pale Moon.
How do you Americans put up with paying for RECEIVING textmessages? You don't pay the mailman for the letters he brings to your door, do you?
anyway, wtf are you talking about here? It *IS* 'called party pays'... that's the whole point. I don't understand you. The cellphone user pays a regular fee for their service, *AND* to receive calls and txts.
Try thinking, please. If it was "called party pays", that would mean that if I had a landline phone and you called me from a cellphone, I would pay the airtime fees.
Cell towers are installed for the sake of making voice calls... they happen to then make use of these for text messages. I'd hesitate to explain the price of text messages with the cost of installing towers, when that's already easily covered by our voice plans.
Move all sig!
Is that why virtually all pricing plans in the US share the same basic pricing tiers and fee structures? Is that why it's nearly impossible to find a monthly plan that costs less than $30/month? And is that why all the companies are jacking up their prices on text messages at the same time?
Ah, the glorious efficient free market. Efficient at parting you from your hard earned dollars and putting them in the pockets of the already-rich.
As observed already, the bandwidth of a text message is a tiny fraction of that used by a voice call or a download--yet the cost for that bandwidth is astronomical. Why? Because they can get away with it. Because they collude on prices--it's to the benefit of the carriers for them all to gouge us. This is a lesson cartels have learned a long time ago. If there were such a thing as a "free" market and its alleged efficiency were a reality, then the price of text messages should be virtually free. This is an area that clearly needs more government regulation in order to protect consumers.
The price of a T1 is irrelevant; it's basic economics.
If a market is competitive, then the price will decline towards the underlying expense of actually providing the service. This is the paradigm assumed by the 99% of the posts here.
If a market is not competitive, the vendor changes according to how *useful* the service is, regardless of the underlying expense, and pockets the difference.
Texting just shows that the cell phone service market is not very competitive.
AT&T Family unlimited texting plan ($30 covering five phones) ... Let's just call it 26,000 messages per month. 3000 / 26000 = $0.115 per message.
Layne
You're a couple decimal places off... you mean .115 cents per message, or $0.00115
This is why I don't understand complaints about text message prices. If actually use text messaging a decent amount, then yes, it is ridiculous to pay per message.
If you want cheaper text messages, then buy a plan that includes them (Verizon has a 250 message option for $5 = $0.02/message). If you want to send a single text message here or there, then you're going to pay a premium for using services that aren't part of your plan. I don't see how this could be considered unfair.
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.
Let's consider these same calculations on the $30 unlimited ATT plan. A single MP3 download would cost... $30. Let's just say if I'm planning on downloading MP3s using text messages I'm going to get an unlimited plan and save myself $23,970.
Really, did everyone forget that the Invisible Hand will fix this situation? A wireless carrier will offer their services at a much lower price, and then the customers will change to that carrier. Other companies will see this and lower their own prices, thus the Invisible Hand will prevail.
Unless, of course, the companies' managements see that it is in their own interests to maintain a defacto many-headed monopoly and watch each others prices with the single purpose of matching each other's price increases. Funny, but Adam Smith warned us, about something like that, what was it, oh yes: no two businessmen ever met together that didn't conspire to fix prices.
Posting anonymously because of all the socialists here who down mod anything pro free market.
I can't tell if you're trolling or not...
While the Free Market is an ultimate equalizer, the Free Market can only exist in these modern times with a bit of regulation. When companies can force others out of industry and inhibit others from joining (similar to the old days of Standard Oil), a Free Market can not flourish, because they will be unfairly undercut, to the point of obtaining monopolies. It's not a matter of socialism.
I'm all for getting rid of government regulations where possible, but if corporations are given the power to, they will unfairly abuse it, and dismantle the Free Market for their own well being. Unfortunately, the only way to safeguard the Free Market these days is to create regulations protecting it. Pure Anarchy is not the answer and is an unrealistic goal.
Microsoft Sucks, F/OSS Rocks. I get mod points now right?
the vendor changes according to how *useful* the service is
Or, more accurately they charge what they can get away with to maximize profits before people start shifting to less suitable substitutes. In this case things like voice mail(or even old style answering machines), actual email, or just don't text.
Texting just shows that the cell phone service market is not very competitive.
Or, at least at the moment, that people don't choose their service providers on the basis of per-text charges. As others have noted, those that text a lot generally go for unlimited plans.
I had a choice of a whole two of the cell companies given my location(verizon and alltel), and I'm old-gen, I don't text or surf. I bought a phone on the basis of reception, battery life, and bluetooth. The bluetooth headset helps reception because there's only a few good reception spots in my house/area. Being able to stash the phone in one helps. I have the second cheapest national plan they offer(I do travel semi-frequently). I don't even remember what the fees for data or text messages are - because I don't do that. Though I am considering getting a data plan now - my cell can act as a modem using bluetooth with my new computer. Then again, I have high speed internet at home through DSL that'd kick the data rate I could push through my one to two bar signal zone, have high speed internet at work, and most hotels/motels today offer free internet. The biggest area for me to use my computer would be in the airports - and I'm not in them enough. Still cheaper than the $10-20 my local hub wants for the hour or two layover I generally have, but I just do without at the moment. I looked at it mostly in the 'wouldn't this be neat' fashion.
Back on text messaging - you could say the same thing for long distance rates, pay phones, per minute charge rates for going over your monthly minutes.
In fact, it seems that phone companies like doing the same thing as banks - offer plans/accounts with decent terms and rates - yet charge fees/penalties like crazy for any deviations.
I don't read AC A human right
And in the US, they have slaves picking cotton. It MAY have been true, but not any more. You can move your old landline number to a cellphone number any time you want. When you get a phone number it's "yours", in the sense that if you change your carrier (landline and cellphone alike) you can take the number with you.
We do not live in the 21st century. We live in the 20 second century.
Yes, but damnit, they're being gouged by "the free market" and they have the complete freedom to choose who they want to be gouged by, and if they also want to be gouged by paying for people sending unsolicited messages to them. And as a bonus they are free to switch providers after ONLY two years. Think about it - that's only HALF as long as a presidential term!
It's all good, mate. It's all good.
We do not live in the 21st century. We live in the 20 second century.