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Facebook May Bust Up the SMS Profit Cartel
AndyAndyAndyAndy writes "Fortune had an interesting article recently about wireless providers and their exorbitant profit margins for SMS handling, especially when looking at modern data plans. 'Under the cell phone industry's peculiar pricing system, downloading data to your smartphone is amazingly cheap — unless the data in question happens to be a text message. In that case the price of a download jumps roughly 50,000-fold, from just a few pennies per megabyte of data to a whopping $1000 or so per megabyte.' A young little application called Beluga caught the attention of Facebook, which purchased the company a Thursday. The app aims to bring messaging under the umbrella of data plans, and features group messaging, picture and video messaging, and integration with other apps. The author argues that, if successful, Beluga (or whatever Facebook ends up calling it) could potentially be the Skype/Vonage or Netflix-type competitor to the old-school cellular carriers and their steep pricing plans."
Carriers already detect Internet traffic that isn't really an SMS and bills it as an SMS, such as various instant messengers.
I've found the available workarounds are sufficient to the point that I could give a crap about texting fees. I use GoogleVoice and TextFree and they work great. My wife uses Virgin Mobile for $25/mo (that's it no extra taxes or garbage) and can text to her delight.
Congrats, I've been getting/sending free text messages for two years?
-Google Voice User
I can already do this. It's called Google Talk (or pick almost any other IM system). Why is "Beluga" any more special than any other IM system?
I remember when SMS was free and was hidden in the advanced menu of a 3-line text display of a phone.
Custom electronics and digital signage for your business: www.evcircuits.com
I mean, isn't this exactly why Google Voice exists?
Furries make the internet go.
Well, I can't believe I'm going to say this considering I am definitely not a fan of Facebook, but if this is what it would take to make them drop the completely outrageous SMS price tag, then I'd support it.. And, that's knowing full-well that Facebook is just doing this to increase platform adoption, since if you want to 'text', you'd have to be on FB..
That said, I doubt I'd use it, just because I don't have a Facebook account. But I'm hoping it would lower the SMS fees for myself. Competition is good, right?
Kik messenger is doing this right now, and surprisingly well. With the exception of being kik'ed (hah) off of Blackberry, although I could see BB doing the same thing to any other startup doing the same thing, Facebook backed or not...
My user number is prime. Is yours?
So, do I need to use facebook?
I think most of us have known for years that the amount we get charged for cell phone SMS and data plans is really out of whack.
How is something with a limit of 140 chars or so worth the 10 or 15 cents they charge you for it?
They've been advertising broadband and cell for the last decade as "look at all the shiny things you can do", but the price never goes down, and they keep lowering the cap on what you can use.
They've bet the farm selling telecom services, but they can't actually afford for you to use them the way they advertise them. Or, at least, we can't afford to use them the way they're advertised.
Lost at C:>. Found at C.
the way facebook sells and shares private data is too scary, wouldn't want them to have personal contacts or phone browser information
Call me skeptical, but I've never heard of anything like that.
Google Voice plus a few other services already offer this (sms only, no mms) via an app download. Only thing is that you'd have to tell your friends about your new number.
Wow, that's amazing news. It does almost everything that email can do. What will they think of next?
... I've been boycotting SMS for, well, years. I only send or receive them when absolutely necessary (activating some service or other, or for Google's two-step authentication)...
SMS is bullshit, plain and simple. Then again, I doubt anyone at Slashdot wasn't already aware of that.
that's an easy one. more dead people. this is one of the most difficult public relations problems, or holycosts, unprecedented evile has faced yet? good thing our free press media won't let us down/leave us in the dark here? we can't afford to lose anything more? the price of gas,,, oh god.
Isn't this why BB IM is so popular amongst young people?
SMS isn't normal data. Ever notice how you can still send text messages even when you don't have a data connection?
Anything to stop that horrendously unconscionable markup is a good thing. ...or so I'd say if it's under the Facebook umbrella. I didn't notice any technical talk but this is FB so I can only assume everything flows through their servers and is saved.
You are confusing "internet companies provide IM clients which bill as SMS if you use them" with "companies monitor traffic to . . ."
if you get your new non-smartphone with its included AIM application and send messages with that, it will likely bill those as a SMS message. That is entirely a different thing.
At least that is my experience.
I have limited data, but unlimited texts... so if anything, a large amount of SMS data would cost me near nothing... Is there any highish-latency browser that can use a stream of SMS texts for data? Cos that would be awesome...
Do you really believe the carriers will put up with reduced profit? Remove their massive SMS income and other prices will rise to compensate. So I'm hoping Beluga doesn't catch on big time.
You mean it will do what google voice has been doing for years?
Cell phone networks use digital voice protocols, of course. Essentially, your audio is being streamed as a (compressed) data file over a data network. The GSM-EFR audio codec has a bitrate of 12.2 kbps. Obviously more modern phones probably use a higher-bitrate codec. That means for one minute of audio 60 * 12.2 kb or approx. 750000 bits of data is sent. One AT&T text message costs $0.20. The maximum size of an SMS message is 1120 bits (140 characters). That means in the data space of one minute of voice you could send 700 messages. At 20 cents each that's $140. Now I'm pretty sure that there aren't any cell phone plans (excluding sat phones) that cost $140 per minute of speech.
SMS cannot be directly compared to data traffic. SMS is small amounts of data dropped into the signal that tells your phone that it's within range of a cell tower. Pretty much anywhere you have even the tiniest bit of cell coverage you can send and receive SMS. This isn't the case with Internet connectivity (email, gtalk, etc.). You can argue that SMS is too expensive for what it does, but since it's a "special" data path there's no reason for the carriers to charge a reasonable price for it.
I hear there's an app to make voice calls - actually speaking to a human!
I will never use texting - I've configured my BlackBerry firewall to block them - if TFS doesn't make a compelling argument, then perhaps learning that NASA can download images from Hubble for less than for you to send "hello world" to the person sitting next to you.
FLEECING!!
attention of Facebook, which purchased the company a Thursday.
They are going to need a Friday too. And probably a few more days. One Thursday isn't going to go very far for that kind of tech company
Not all carriers rape customers when it comes to TXTing. Sprint, for example, includes unlimited texting on all their data plans. So if you have internet on your cell, you also have unlimited texting.
In Europe, we have been getting better rates than you for years. I believe my teenage son sent over 3,000 text messages last month. Beats me how he manages to get good grades and play sports. I think his plan includes 500 talk minutes and "unlimited" internet - he has never gone over anyway. Costs £30/month because he wanted an extra clever phone. I think the cheap plans get down to between £10 and £15.
I have never heard of anyone paying to receive them. It's like post. The sender pays. The only real ripoff we have is roaming abroad costs and the phone companies are supposedly being compelled to lower them. I don't think you want that to happen in your country. That is government restricting business practices. We like it though.
This was not to laugh at you, but to show you what can be done as a start. We need to get it even lower here. Lobby your representatives or something.
I'll see your Constitution and raise you a Queen.
the reason everyone uses SMS is because every phone can do it. Even if you don't have a texting plan the carrier will happily deliver the SMS to you can charge you for the privilege.
That's not true with data plans. So you'll always have that one friend who keeps texting you everything, and thus you'll still want the texting plan. then once you've got the texting plan why make it complicated for yourself by texting some people and beluga-ing others? Thus the cycle continues and we're stuck with the idiocy that is SMS.
Texting is something we all do reluctantly. It's the way to reach older phones without data plans. And as long as data plans are too expensive to give to the whole family, texting will remain.
My wife and kids have smart phones without data plans, just plain prepaid service. Synchronising contacts and rearing mail can all be done near a wifi hotspot. Saves us tons of money.
There will be a time when data plans are cheap. But the time isn't now.
I hadn't the slightest objection to his spending his time planning massacres for the bourgeoisie... (P.G. Wodehouse)
This is why, if you use txt'ing, a fool and his/her money are soon parted.
There is such a thing as bad tech - imho this is one of them.
Txt'ing does nothing that a phone call can't!
But I guess if someone creates a service, no matter how absurd the cost, then as long as everyone uses it it it's OK.
All the members of "Team Beluga" are old google employees or worked on/at google. I find that really funny...wonder what google thinks of that. just sayin'
$action = empty(PHP) ? backToC() : unset(PHP) ; "when the concrete cases are understood, the abstractions are readily
Carriers already detect Internet traffic that isn't really an SMS and bills it as an SMS, such as various instant messengers.
I use Google Voice on my iPhone and pay no additional fee. Same with TextFree, which was my free text alternative while waiting for Google Voice to make it through Apple's approval process. You can text until your thumbs bleed with no SMS charge.
The only issue I have is that, while Google Voice and/or TextFree work fine most of the time, there is randomly a delay where the messages do not come through in a timely manner.
I hope Facebook is successful at this. Not because I have any intent to use Facebook messaging, but I would like to see the carriers forced to drop their text charges.
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Sorry, but I would rather trust my sms messages to a cell phone carrier who are forced by law to put privacy controls in place (government excepted), than facebook, who will sell my messages to the highest bidder...
The cost of text messages, down greatly.
The time taken to delete spam texts, up exponentially.
If the pattern goes 9am, 10am, 11am, why isn't noon 12am?
So... Facebook has an App that lets you send short 140 character messages across the Internet by data instead of by SMS..... aka... Twitter.
I've never understood why everyone gets so offended at SMS rates.
Because the cost to the telecom company is almost zero and the only way it should be staying so high is if the telecom companies are either expressly or tacitly colluding. There is no other explanation for the cost of text messaging being as high as it is when all other forms of data are constantly dropping in price. Competition should be driving the price down but that isn't happening.
You cannot begrudge a company a profit.
Sure I can, especially if that profit comes at some detrimental expense to society or myself. I definitely begrudge the profit that tobacco companies make. Just because companies exist to make a profit doesn't mean any and all behavior becomes acceptable.
What is the cost per MB of caller ID on landline phones? Another probably larger rip off by the telecom providers.
there'd be music in the air at all times.
has anyone heard our 'swan' song?
What would happen to SMS pricing if people, en masse, simply stopped using it unless and until the price became actually reasonable and proportional?
Yes, I know... that solution requires educated consumers we don't have, but I can dream, can't I?
I can already do that by sending a message using the Facebook client on my smartphone. BB Messenger works great for folks with Blackberries. There are also 5 other IM clients on my phone. Although I used ICQ extensively years ago, its only function now seems to be receiving solicitations from Russian hookers.
Some mornings it's hardly worth chewing through the restraints to get out of bed.
Keep in mind that the pricing model your carrier offers at the moment is based on what the consumer is prepared to pay, rather than what the service actually costs them to offer.
Some plans offer SMS for "free", but at the end of the day you're still paying.
If the market changes such that the consumer will no longer pay extra for SMS, then those fees will be absorbed into something else the consumer is prepared to pay for.
I remember when SMS was free and was hidden in the advanced menu of a 3-line text display of a phone.
SMS messages go over the (VERY!) low bandwidth control channel used for communication between the cellphone and the tower, and from there over the call set-up channels among the towers, their controllers, and the rest of the telephone network. Using them to let cellphone handsets emulate a text pager (and a text pager message sender) was something of an afterthought, put into the GSM spec and then ported to others. Because they're on the control channel, they work even if the phone has no data service or is not data service capable.
Once they caught on and started having major traffic despite the small packet size, the telcos put a price tag on them, both to try to avoid channel saturation and as a handy revenue stream. (Yes even a large number of the little text messages wouldn't clog the channels. But a customer-deployed IP-over-SMS would have been trivial. Charging a few cents for every 140-byte packet killed that idea.)
Now that mobile data services has created a fat data pipe under the separate "payload" bandwidth, moving the services currently running on SMS makes great sense for the users. But now that SMS messages have become a major income stream, despite their extreme price, the carriers have no incentive to kill this surprise cash cow. So the innovation has to come from apps developers.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
No, I want to know. Why are people complaining about the cost of text messages when there are plenty of plans out there that give you an unlimited option.
I remember back in 1999..or was it 2000...it was a long time ago when the carriers in my area first started having digital service. I discovered the text message feature and promptly used it to text my sister (who was the only other person I knew at the time who had a cell phone...being as, you know, when I was a kid cell phones were, rare). These things NEVER showed up on our bill...which was an already STEEPLY discounted corporate rate with 0 minutes but free weekends.
Then..I don't remember when as I personally had an analog phone till 2001 and got a digital phone in 2002; text messages started costing like, a dime to send. This was on the major contract carriers...prepaid was limited to tracfone and AT&T (in my market), I never had a digital Trac and my AT&T was a dime to send...and I was using the AIM-over-SMS feature a LOT. When I went to the then new Virgin Mobile in late '02, i still think it was like a dime to send...i can't remember if they were the first place I saw the charge to receive a text...come to think of it, when I got Boost back in '04, that was the first time I remember seeing that.
I had both Sprint and Tmobile contract plans and on both of those I chipped in the extra for the text messaging (of course I was also paying for data and with TMobile they never informed me the AIM app on the phone was over SMS) because...I'm not a fan of making phone calls unless it's required. The first prepaid I remember having unlimited text for was the Sidekick...that was part of the standard plan. I went back to VM in Oct '09 and was, for a while, paying separate for a block of data and 1000 text messages...now I'm giving them $25/month for unlimited data and texting on an Android device...with only 300 minutes of airtime.
Ok, I seriously didn't mean for that to be an ad for VM...the point I'm making is this. Prepaid providers used to be the real gougers out there...but somehow the cost of texting has stayed close to equal on both sides of the phone world (prepaid/no-contract vs contract)....I could go on at how the prepaid providers have switched to more of a no-contract model and are actually beating the bigger brothers in terms of price and features....but maybe that's part of the point.
If I'm getting unlimited texting as part of a no-contract plan....why am I still hearing all this crap about the cost of texting? Surely if the N.C guys offer it, the ones that want to lock you in for a couple of years should to. Are they not making it clear? Are you people just not purchasing it? It's that very reason when I hear someone talk about a huge bill due to text I find it hard to believe.
This is going to mean higher cell phone bills for me. I don't send text messages. Therefore all the chumps that run up high cell phone bills with text messages are effectively subsidizing me by letting the phone company offer me basic cell phone service at a lower rate. I don't believe the cell phone companies simply will earn less gratuitous profit if you remove the ring-tone and text messaging markets from profitability. Instead if you lower their margins in one area you will simply drive them up in another.
Some drink at the fountain of knowledge. Others just gargle.
I'm going to repost an older post of mine, regarding twitter - frankly - fuck facebook (and yes, I have an account but those slimy assholes treat privacy and their users with utter disdain)
Twitter is one of the greatest new forms of communications in the last 20 years.
My first 2 tweets stayed for 6+ months iirc and were just "twitter is lame" and "update: twitter is still a wank" or something like that.
I didn't 'get' twitter.
Now that I do, I do not understand why on earth SMS still exists, this website / application(s) allows me to talk to people instantly across the planet with a 0$ fee (unlike SMS) and I can include pictures, links or whatever, I can use trending topics to see what is big in the world right this second! (yes, that's big)
When someone posts "is that an earthquake?!" I go to twitter, type in earthquake and can have confirmation in seconds
Twitter allows manufacturers, famous people and important people to instantly share messages and thoughts with people. There is an awful awful lot of stupid and irrelevant shit, mark my words I understand this but inbetween all that it's amazing, utterly amazing.
I can see my friends have conversations - and yes they can do it privately but they can also do it publicly, that ability to see their conversation - is almost like being at a restaurant or bar where everyone is having a chat - my ears are tuning in (if I desire) to their conversation and I can at any moment join in, all wirelessly, all instantly - in any timezone.
I don't often praise things and it sure as shit took me a while to get it, infact until you literally have an account and follow a couple of people, I totally get hating on it - the interface is silly to understand at first, once you do get it - it's incredible, utterly incredible.
My only problem with twitter, or rather their only problem is that I simply can not fathom how they can monetize it - in any way. Google however purchased Youtube and I distinctly recall me saying "what the fuck is google thinking? 4 billion? That's stupid - this is googles first big mistake" - I mean there was no ads back then and it was 5 years ago, bandwidth is fucking expensive and they just paid money to serve up terabytes of data a day, why?!
Anyhow: TLDR is that twitter should utterly replace SMS, without question, SMS is completely dead to me, all my friends with twitter I can tweet in seconds, it's a fucking incredibly powerful and clever communications tool, once you learn it, you'll love it.
Sending a message via IP is generally easy but the problem is receiving a message.
I've worked on this before and It's easy to send a message via IP using HTTP or even another protocol like SIP. The problem is receiving messages. You either have to keep polling (e.g. HTTP), or keep the IP channel alive (e.g. SIP). This will drastically reduce the battery life on your phone compared to normal SMS. This is becoming less of a problem with smartphones that keep the data on, but the polling \ signalling to keep the channel open will still reduce battery life.
You also have the fact that mobile data networks are less reliable and less available than the part of the network used to send SMS, so to have a reliable service you must be able to back it up by sending a normal SMS. To do this properly and seamlessly it's best to have the co-operation of the mobile network, otherwise when you fall back to SMS you can get charged more or you can miss messages.
There is a cross platform messenger called Kakao Talk, that works like many others, except it's Korean made, which means an instant success here, with the proliferation of smart phones, sms will probably be gone within the year, as the only people who will hold onto their older style phones will be old people who don't text anyway.
I use Pingchat, which is also a cross platform app, to keep in touch with people out of country. Between the 2 of them, that's over 90% of the people I talk to.
Sure another app is nice, but I checked out Beluga and it didn't do much for me.
A young little application called Beluga caught the attention of Facebook, which purchased the company a Thursday.
Nice. Wish someone would buy me a Thursday.
Or you can use Skype, so neither government or anyone else can access your messages.
Excepting, of course, the governments and anyone else that has paid or forced Skype to offer back-doors. Austria, Russia, India, and China have all demanded back-doors. Austria has made vague claims about actually getting it, China may have cracked it instead, and with all this noise about potentially blocking Skype, I'd be surprised if there was only a small number of governments that have been awarded this access.
Use my userscript to add story images to Slashdot. There's no going back.
take a look at WhatsApp messenger:
http://www.whatsapp.com/
My friends in Spain say it's taken off and a great, versatile program.
How is that going to help? Most data plans I've seen include unlimited text messages, or at least if you're spending the bucks for a data plan, you just as well get the all inclusive version. Calling it $1000/megabyte is silly when you're not spending a fraction of that much because you're not sending anywhere near that much. Most things are a lot more expensive per unit in small quantities, just because they can be, even if the production cost is small.
...We can roam the entire continent with our standard plans...
What standard plan has unlimited North America long distance w/roaming???
Sprint did, and they cancelled that package 3 years ago or more (thats when I switched to a Canadian provider aka: Rogers). The closest I have been able to find now is the Nationwide (note that this is not continental, only in US)
My wife is a US citizen, we get raped by our Canadian plan, but we would get even more raped going with a US plan. I would love some advice on how to get unlimited long distance w/roaming.
Thanks for any response!
Oops, sorry for that. The entire the USA is covered by almost all the major carriers - Sprint, Verizon, AT&T. I said USA, not North American continent.
http://www.whatsapp.com/. Does text, pix, maps, video over a data connection, and folks just need to know your mobile number.
It will just cause data rates to go up even more ( or be capped earlier with larger overage fees )
---- Booth was a patriot ----
When I worked for a telco doing their billing system about 10 years ago a text already nominally cost them less than $0.01 and they were charging customers $0.20. I can only imagine it's gotten even cheaper since then.
This is just speculative, but those SMS prices are probably balancing out other services that don't have as high a profit margin.
https://www.facebook.com/event.php?eid=189613534411048
To this day I still don't understand why we have to pay to RECEIVE text messages while the sender is already paying to send them. In Brazil, for example, where most people have pre-paid plans, users don't pay to receive text messages which to me makes a lot of sense.
Net Neutrality rules must be clear and enforced. Without them, carriers will block traffic from apps like this.
I would actually try the app myself, if it were not now attached to Facebook
"A young little application called Beluga caught the attention of Facebook, which purchased the company a Thursday" I want a Thursday too :(
the FCC could do their damned job and ban usurious fees by carriers.