Slashdot Mirror
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.
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.
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.
If we can put a man on the moon, why can't we shoot people for Apollo-related non-sequiturs?
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.
517,602,528. There must be something infectious about Verizon and getting your decimal points in the wrong place.
and solve this issue. Caution: Unlimited texting may decrease your social skills and will cause everyone around you to want to smash your phone!
I just emailed Sprint asking for free text messaging and got it. I have done this for about 10 extra things on my account for free. I have 500 free text messages a month and never used half
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
Pretty much the same as gas...
If you want news from today, you have to come back tomorrow.
to download an mp3 ... if the RIAA smells you.
The so called free market isn't free.
If customers had any idea about the true cost of things to the companies that they purchase from, they wouldn't buy at the prices that things are being sold at.
Free markets require perfect knowledge. And without that, the invisible hand doesn't work.
Oh yeah, like in the US you have to pay to receive messages? Would you put up with having to pay to receive emails or take all phone calls? Fuck no.
Meh, this is a random ol' rant.
(Oh yeah, to the fuckers who say "communism", I'm an anarchist. Check my "homepage" for info about that. Oh yeah, and no I don't get anything for the referral link, and if it really bothers you, you can remove it.)
I wank in the shower.
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.
Furthermore, get off my lawn!
Given that these messages use the infrastructure messages that are used to keep track of which cell the phone is in it effectively costs them nothing (other than the cost of billing the 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.
Looks like we're not downloading MP3's from the same place... Even if my price goes up 2000%, I will still pay exactly $0.00 for my MP3's.
Seven puppies were harmed during the making of this post.
You don't have kids (teenagers). Texting is a lot less stressful than talking with them and makes you look hip. Ok, not "hip" because that would make you sound old.
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.
I have SMS disabled on my phone at the carrier level. The only SMSs I can receive are administrative which are free. No one can send me a mesg and I can't send out. I did that after my previous carrier (which got bought by AT&T) started charging for incoming messages. I asked why they did that and they said because everyone else was charging for incoming too. And of course then it went from 10 cents to 20. I don't need SMS so the charges don't hurt me because I don't have any.
this nation, under God, shall have a new birth of freedom. -- Lincoln, Gettysburg Address
I wonder what the feasability is of getting two mobile phones, each with unlimited text accounts, hook one up to your home PC and the other to your laptop. Now for the tricky part; write custom software that would enable you to use the text messaging system as a communication system between the two computers.
So with such a setup you can do rudimentary webbrowsing (without images) / emailing etc., your laptop sends an url via the mobile to the mobile at your home, which the PC there picks up, retrieves the webpage & sends it back in txt message "packets" and your laptop retreives and combines back into a web page, with all the txt messages encrypted so the carriers can't directly snoop on your browsing/emails.
To do something right, you often have to roll up your sleeves and get busy.
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
Thank god no one texts me duplicate Slashdot stories!
The only surefire protection against Microsoft infections is abstinence. - The Onion
Might be thousands of dollars, but likely it is not.
Back during my days I call 'The search for internet', I priced out the cost of some of my options.
A T1 would have run me about $600/month, and I couldn't even get cable until I paid to run the lines myself. I was even too far for DSL (my CO didn't support DSL, but I would have been too far even if it did)
I cannot imagine that on average, T1 lines cost so much that text messaging needs to cost as much as it does. Heck, in the rural areas, could there even be that much text traffic?
Out of modpoints but really liked a post? 1BDkF6TtmmeZ3yqXbz9yhdYVqRYnwFoXDj
My verizon contract is up this month, forget renewing. Forget it all, I'm going 50$ a month wifi card, EEEPC and Skype. They can keep their minutes.
Now kids remember "Deregulation will result in more competition and lower prices for the consumer"
I love it when an industry that is inherently non-competitive due to the fact that the spectrum is limited and the only way to make money in telecommunications is through economies of scale. The only guys who make money in telecom are the big guys and they make it buy making us pay and controlling parts of the spectrum. This is why it is licensed, the "tubes" are only so big and you can't add more.
It is just like the media ownership rules. Buy loosening the rules, consumers don't benefit but the bottom line gets bigger for the big guys. Government used to understand that because these companies are caretakers of our EM spectrum, they are allowed to make money and have monopolies (or close to it) but they must follow certain rules like justifying price increases with fact.
OK, rant over. Proceed with texting while driving.
---- aut viam inveniam aut faciam
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.
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"
Rubbish. That's only true if
(a) There are lots of suppliers (limit as number of suppliers goes to infinity)
(b) There are lots of buyers
(c) There's perfect information (about the value of goods, and about all options)
(d) All goods are equivalent
(e) The market is "free" of regulation (but there's a dodge here -- regulation constraining theft, murder, or the threat of one of those is allowed)
The mobile market fails on many of these. Certainly it fails on (a). (c) is also a failure -- all of the services advertise to distort their brand worth, use confusing contracts, and so on. (d) is of course not true, since each network has different coverage (and small networks that may be interested in cheap prices suffer here). (e) doesn't hold either, with the FCC et al. involved in the game.
But even supposing that the big BIG assumptions of the free market held, why do you think the "equilibrium" delivered by the intersection of supply and demand is stable? It seems obvious to me that it's an equilibrium because no player in the market is happy with the price, but the forces pulling the price each direction are perfectly balanced. That sounds like an unstable equilibrium to me.
Use the Firehose to mod down Second Life stories!
For Verizon, you can block TXTs sent via email and the web. After doing this, I haven't received any spam. To do this, go to www.vtext.com and login with your verizon account.
Then, under Preferences > Text Blocking, select the options to block all messages sent via the web and email. Since my friends all text me from their phones, this is not a problem.
Price is the intersection of supply and demand curves.
Are you really so naive?
If text messages cost to the user a lot more than what they cost to carriers the normal laws of economics would make new carriers appear on the market that offer competitive prices and drive the cost down to the _real_ service cost. Why doesn't it happen? Well first entering the wireless carrier business require a huge initial investment and second: *monopoly*. The current american carriers are a cartel that agrees to keep the sms prices over a certain price so that the business is profitable for all the players.
quoting from a comment:
So you wonder, why do I pay so much for a SMS or a MMS or even a Call: after the debts for the initial hardware infrastructure have been paid by the carrier you are still paying because of market segmentation (You wonâ(TM)t change the carrier on the fly) and a little monopoly (Almost impossible to start a new carrier from 0).
A very similar thing is happening in Italy where a new carrier (Wind, but later Blu did the same thing) entered the field offering free sms, then started to charge for them after it established a position in the market.
I'm really surprised that more people haven't worked this out.
I have unlimited Internet, so I just log in to Google Talk and anyone can message me that way.
For messaging with the spouse, I use BlackBerry Messenger, because it's reliable and works even if she forgets to log in.
GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
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.
You know you're spending too much time on the net when you're supposed to laugh and instead you just say "lol" in one of various degrees of emphasis.
Onda Technology Institute
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.
My 8-year-old daughter's free* phone on a new phone number came with over 1000 spammy and raunchy text messages. They wanted to charge us over $100 for the messages. I called Sprint the instant I opened the box.
At first, she tried to say that we were on the hook for it but then I explained that we had just received the phone and I had just opened the box (direct from Sprint). I told her that we didn't want text messages (especially if some randomly-dialing computer can cause you to be charged hundreds of dollars before you even notice). Recently after we changed plans, I noticed that I got a text message again. I called them up and told them that text messages were supposed to be off on all our phones. They took it off again and I haven't had one since.
It's really not too much of a problem on Sprint. Just tell them you don't want them and they disable it.
Peter predicted that you would "deliberately forget" creation 2000 years ago...
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?
In the calling-party-pays system, the person paying for calling the cell phone is NOT a customer of the cell phone company. Therefore the cell companies have NO incentive to provide competative rates for incoming calls. If you have to call someone, you aren't going to not call just because they are using company-x.
In the mobile-party-pays system, the person paying is the cell phone owner, who IS a customer of the cell phone company and can shop around or choose a different plan to get better rates. The cell phone companies have a huge incentive to offer competative minute plans since people tend to shop around when buying a phone. Also, because there is no difference in calling a cell phone, this system allows people to abandon their landline phone and use a cell phone only -- no need for two separate bills.
In the US most people have a plan that provides more than enough "free" minutes so that they never get a per minute charge. What is the charge to call a cell phone in a calling-party-pays country? The equivalent of $0.15/minute? On my mobile-party-pays plan I have NEVER come close to going over my allocated minutes, so the marginal cost per minute is $0.00/minute.
Text messaging costs as much as it does purely to rip people off. The same as some companies charge over a quid for a poorly sampled proprietary ringtone. I used to spend maybe £10-£20 a month on texts until I realised how stupid it was and just started trying to be more organised and basically only using my phone for receiving texts rather than replying to them. Sure, I lost a lot of friends, but the savings were worth it!
Actually, these days I pay nothing for my texts because I have a company phone, but I still try not to be stupid with unecessary texting and "hi, we'll be there in 5 minutes" pointless phonecalls, etc. People eschew good organisation these days and instead waste money on their phones.. sometimes a text can easily be worth 10p (20 cents, except in the UK it's always cost that much, it never used to be 5p), but most of the time I expect it isn't. The size limit is pathetic too, I often end up getting up to the 3 texts limit if I'm sending any more than a yea or nay answer.. then again I'm quite a verbose person.
which is totally what she said
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.
One good thing I have to say about Sprint is that they let you be grandfathered into plans. I've had the same Data plan for 8 years now, and pay $10/month for unlimited data access AND text messaging. It's one of the reasons I haven't changed carriers. I would end up paying $20/Month now for the same data access then $15/month for unlimited text messaging! It's just ridiculous what they're doing now that it's popular. I'm just damn thankful that I was an early adopter and Sprint hasn't forced me to pay more :)
Text messaging costs as much as it does purely to rip people off.
[snip]
The size limit is pathetic too
[snip]
then again I'm quite a verbose person.
I didn't notice ;)
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 major providers in Canada are Telus, Rogers, and Bell. I can't speak for Bell, but I believe that when I was with Telus a year or so ago I got charges for both incoming/outgoing texts, while with Rogers my bill shows that only outgoing texts are counted towards my limit/charges.
Checking Telus' site, it looks like they're not currently charging for incoming text anymore, but are planning to change back to doing so on Text messages received from another mobile phone are free to receive until August 24, 2008.
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
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.
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.
So, how is work at Verizon these days?