Slashdot Mirror
What Carriers Don't Want You To Know About Texting
An anonymous reader writes "Randall Stross has just published a sobering article in The New York Times about how the four major US wireless carriers don't want anyone to know the actual cost structure of text message services to avoid public outrage over the doubling of a-la-carte per-message fees over the last three years. The truth is that text messages are 'stowaways' inside the control channel — bandwidth that is there whether it is used for texting or not — and 160 bytes per message is a tiny amount of data to store-and-forward over tower-to-tower landlines. In essence it costs carriers practically nothing to transmit even trillions of text messages. When text usage goes up, the carriers don't even have to install new infrastructure as long as it is proportional to voice usage. This makes me dream of the day when there is real competition in the wireless industry, not this gang-of-four oligopoly."
The feckless youth I see texting in public do not appear to be the sort who employ reason or critical faculties. That's the kind of customer base dreams are made of.
The cost of that cleanup, of course, will be borne by taxpayers, not industry.
...but it's good to see this fact receiving some mainstream attention. I guess it's inevitable that people now tend to ask that if it costs x dollars to transfer y megabyte from my phone, why do text messages cost a lot more when they are so tiny? In the digital age text message fees seem more and more ludicrous even to ordinary people.
It takes a man to suffer ignorance and smile
Be yourself no matter what they say
As a service that the operators could milk their customers with. It was only when it started getting popular that they heard the cha-ching sounds and start charging outrageous fees.
Spose its just me since I've worked on mobile phones for 3 years but I already knew this. Its not that the messages cost anything like that. its that they can so its done. If they could still get away with charging $10 per minute for a phone call they would do the same thing.
Classic economics says that things are priced what people are willing to pay for them, and are not based on how much the cost to make.
As long as people are willing to pay 10 cents per text, that's how much carriers will charge, regardless of how many there are.
The cake is a pie
When text usage goes up, the carriers don't have to install new infrastructure as long as it is proportional to voice usage.
Quiz time! What will happen if the price of text messages goes down? Will it INCREASE or DECREASE the use of text messaging compared to voice usage? People never seem to get that the product price is not only the costs+profits, but also the additional costs if the demand grows larger or smaller. I imagine the operators have found the ideal text/voice ratio and are pricing the product so that the maximum capacity of the current network is in use. I don't know about USA, but at least in Europe the youths prefer using text messages over talking, so keeping the ratio in the sweet spot might be somewhat hard. In Finland cost for both voice-per-minute and text are 6,9 eurocents (that's what? 8 american cents?), pretty much from every operator you can name. How much do they cost in your part of the world?
Chronologically late.
Yes it uses a control channel that existed already. That doesn't mean this said channel hasn't had to be beefed up, the signal quality improved everywhere as what was acceptable for the odd, low priority message isn't good for large amounts of bandwidth being thrown around. Just like phone lines weren't designed for data but when they started being used for it, phone companies had to go around improving exchanges, replacing old wiring etc.
160bytes isn't much but that's still data that has undergo handshaking, be routed around a limited bandwidth network, processed to find the destination then sent to the destination phone. It's incredibly inefficient to do this for a small amount of data. It's also incredibly costly to manage lots of minuscule transactions. To price it on pure bandwidth costs is stupid. It costs phone companies a hell of a lot more to send 1000 texts than it does for a 3G user to download a 160kb image.
It's true for pretty much every business everywhere that if you do things in incredibly tiny properties, you're going to be charged through the roof. If I did a home delivery service from a supermarket and bought just 1 banana, that banana would cost me £5.10. If I ordered 100, each banana would cost me £0.15. It doesn't matter than my house is on the delivery truck's route and they'd use no additional petrol and only minimal time to deliver the single banana, I would still have an incredibly expensive banana.
It's been possible to send SMS via GPRS for a long time
Possible in theory, but it mostly doesn't work in real life. Many mobiles have broken support for this. Many networks have broken support for this. If your customer changes from one mobile with support to another without it's a complete pain to make sure everything works right. Finally, even in this case, the SMS mostly travels over the SS7 network which is not well designed for user data.
Personally I like that SMS is expensive. I don't get SMS spam and it means that mostly I know that an SMS contact is something important. I agree with you, however, that SMS is a totally stupid thing and everybody should be using email or instant messaging instead.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
SMS is just a special case of very low-bandwidth data traffic, which should be superseded by email or jabber anyway.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
World prices for sugar is about 1/5 that of sugar costs inside the USA.
HFCS is less expensive in the US than sugar.
The artificial prices of sugar and the artificial price of corn leads the USA to use corn for sweeteners and corn to make ethanol.
The solution is to stop propping up the US sugar companies. If C&H cannot compete on the world market, then let them fail. Why should the population of the US prop up an industry which has had many many decades to compete on the world market.
I was an exchange student in Finland back in '96. This was when *nobody* had a cell phone in the US. Shortly before I left for Finland, my sister and I were in a shoe store. We heard a guy walking down the isle talking to himself, and we both looked nervously at each other, because we were about to encounter an obviously crazy guy. Turned out he was on a cellphone.
:)
Anywho, when I got to Finland, everybody in the high school had a cell phone. Well, almost everyone, and if they didn't have one when I got there, they got one that year. And the thing was, *they texted all the time, because it was cheaper, much cheaper, than a voice call*.
Flash forward five years to the states, and then everyone is getting cell phones, but *without text service*. And now, text service is something that costs per text, or something ridiculous like that. In Finland, and I would guess most of Europe, you get some ridiculous amount of texting included in your plan, or you just have a straight-up bandwidth plan, which covers voice, text, media, etc.
I wish Americans would travel a little more often, to see how the US is becoming a technologically backwards society. Technological improvements which are more efficient are seen as opportunities to gouge customers, instead of compete and offer lower prices. The same thing was going on with banking about five years ago. American banks were charging fees to have people access their accounts online, while Finnish banks were giving it away for free, because then they didn't need to pay tellers. Oh yeah, and you could pay your bills and do banking by text service.
Computers are useless. They can only give you answers.
-- Pablo Picasso
Thats bloody insane. I cant understand for having to pay for what you receive AND send. If the postal system there worked that way people would be up in arms. Plus it means that crap like messages from random numbers makes you lose money.
Both the Canadian and the US phone-services work like that, or have plans that work like that. With a phonecall at least you can decide to not pick up the phone, but with an sms-textmessage you already accepted, and are charged thus. Postal services worked that way, at least until around the invention of the stamp.
All those moments will be lost in time, like tears in rain. Time to die.
HFCS is only less expensive because of the sugar tariffs place on the importing of sugar.
The problem is political.
Corn farmers are getting tax incentives to grow corn.
Then creative people need to figure ways to use all this corn.
It's hard to find something in the usa that isn't made with corn. It's not the healthiest thing. Farmers could be growing crops that are much healthier.
It's not C&H's fault that there is a sugar tariff.
How many participants in an industry do you need to have before you'll say that the goal of competition has been met? Four seems like it would be enough. If there was some advantage to be had by using a price structure that accurately reflects the true cost of text messages then I suspect one of the carriers would have already tried it.
I think you hit a big reason for the increase in prices. To push more people to packages.
Of course the companies could just start building the packages into the basic service, but then they would get no money. The main reason I see them trying to push people into getting the various texting packages isn't to make more money per se. Rather to reduce their call center service costs for all the calls when Jr.s texting has pushed the bill a couple hundred over the normal monthly cost.
A few years ago I worked as a CS rep for Sprint, texting was just starting to really take off then and I took dozens of calls from very irate parents. Irate at Sprint of course, when it was their child who they were failing to monitor or supervise, but that's beside the point.
The issue is that those calls were seldom short (or pleasant), and thus cost the company a lot of money to keep those customers as happy paying customers. The fix always included pushing the $10 or $15 texting packages $10 for a hundred texts or $15 for unlimited texts, to avoid the problem from reoccurring.
So I can see the companies increasing the per text fee to push more of their texting customers into getting the packages, and thus reducing the likelihood of having to pay for CSR's to handle those future long expensive calls.
Oh and FYI, before that job I had service with another carrier and have never been even slightly tempted to use Sprint.
I'm too lazy to compose a creative sig.
"WTF? Does that mean the US telcos are double dipping?!"
No, it is just a different model.
In the US/Canada, calling a mobile vs. calling a landline is the same price (often unmetered or very cheap). In most cases it costs just a few cents a minute to call anywhere in the US, landline or mobile, usually including Alaska and Hawaii. Some packages even extend that to Canada, and western Europe (non-mobile in the latter case).
That is not the case in Australia, the caller to a mobile is usually charged a hefty surcharge. Take a look at your international calling rates, you will see no special mobile rate for calls to the US. It is all the same rate, there are no special mobile area codes (a.k.a. city codes).
In many cases, you can even transfer your home number to a mobile if you are eliminating your landline.
One could argue which concept is better, fairer, or whatever. As with Australia (and almost everywhere) it really depends on the package you get.
The only athletic sport I ever mastered was backgammon - Douglas William Jerrold
No its not obvious... supply and demand economics, right? Well, the demand is high, but the supply is essentially infinite as TFA points out. N/infinity = zero for extremely large values of N. Therefore it should be practically free. What we are looking at is a price-fixing scam.
Wow. Quit sleeping through your econ classes.
Charging 3 different customers different prices for the same product is called discrimination. Great if you can get away with it (sometimes called a senior citizen or student discount), but not how most businesses operate.
The grandparent was correct, and you pretty much agree with the post in your second paragraph there. Text message market should be in perfect competition. Text messages from Sprint are exactly the same as those from Verizon, they are perfect substitutes. In a correctly functioning market, market forces will push commodities with perfect substitutes down to the marginal cost. Marginal cost is the price it takes to create the last widget, or in this case text message. As per the article, text messages cost almost nothing, therefore, the price of text messages should be almost nothing. The fact that this is not the case indicates that the market is not functioning correctly.