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AT&T Kills $10 Texting Plan, Pushes $20 Plan
Hugh Pickens writes "AT&T is scrapping its 1,000-texts-for-ten-bucks plan and replacing it with a plan that offers unlimited texts for $20. Users who don't want the unlimited plan can opt to pay 20 cents per text. Current AT&T subscribers are grandfathered in, so you can stick with whatever plan you selected when you signed your contract. 'The vast majority of our messaging customers prefer unlimited plans and with text messaging growth stronger than ever, that number continues to climb among new customers,' says AT&T. The news has not been received warmly in the tech blogosphere. 'AT&T calls this "streamlining." We call it what it is: an outrageous, gigantic scam,' writes Sam Biddle in Gizmodo. 'AT&T's taken away new customers' option to spend less, whereas carriers like Verizon still offer tiered texting plans for varying budgets.'"
and yet the same people don't think twice about buying a $700 phone where apple's profit margins border on ridiculous
That would be true if there was a well functioning market. A market of essentially two companies armed with contracts does not make for a well functioning market. It would be better to say:
They extract monopoly profits because they can.
Mike Mangino
mmangino@acm.org
Since Apple is introducing technology in iOS 5 for an SMS-like service among all iPhones and other iOS devices (and iChat, too, IIRC), AT&T's SMS revenue is about to plummet. And that's one of the easiest ways AT&T has to up the dollars per customer metric. (How many people use tethering? Probably very few.) So AT&T sees this, no doubt, as a way to keep their SMS revenues up. Everyone else will see it as a reason to dump SMS altogether and use an IP-based rather than cell-based messaging service. Now if only Apple and Google could agree on interoperable protocols for stuff like this....
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
Jeez ... I'm tired of reading comments from people who have no clue how the system actually works. If you did, you'd realize how AT&T actually loses money per text.
Here's the breakdown ...
You send a text message which transmits the data in digital format (ones and zeros, to the layman). The message is received in a central building where the message is repeated by flashing lightbulbs. One pulse for zero. Two pulses for one. Workers transcribe the texts then pass them off to their editorial department who double checks the transcription. Then it's passed to another department (whom I'm not at liberty say who or what it does*cough*NSA*cough) before it is passed to the encoding department where workers hand encode the messages into paper rolls that are fed into the central dispatch unit to where it is communicated to your phone.
And you complain that it costs twenty bucks a month? .
Actually, there is. It's one of the reasons why the iPhone on AT&T nearly took out AT&T's network. Yes, the AT&T network was nearly disabled because the control channel was too busy (there were plenty of voice/data channels to go around).
The bandwidth of the control channel is shared by everyone, and because it's a control channel, everything is coordinated through it. Making a call? The phone asks for two voice channels through the control channel. Ditto for incoming calls - the cells set up a pair of channels and announce the call over the control channel. Ditto to set up and tear down data connections (which can re-use voice channels).
Problem was, the iPhone was VERY aggressive. Maybe too aggressive - it would request a data channel, then tear it down the instant it went idle. This caused excess control channel traffic (but was good for battery life - holding idle data connections open costs battery).
Toss in many iPhone users, many text users, and heavy calling and the control channel can get congested way before capacity. And this leads to slow network data (it can take forever to set up a channel), dropped calls (if the control channel is full, it's hard for the radio to perform handoff), and other issues.
Europe and Asia didn't suffer because texting was so common that carriers migrated to variable-bandwidth control channels - the control channel bandwidth could expand with need.
T-mobile suffered a similar issue with an IM app - I guess the interaction between the IM app and Android's network handling starting causing the same problems.
That's the technical side, anyhow. But the practical side - texts, like gas, are products sold at market rates - what the market will pay, which have little to do with the real cost of providing the service. And people have said they'd pay heavily for texting.
Don't forget that text message costs are exclusively determined by lying to you and constant bullshit experiments in "what the market will bear".
Texting is almost completely free for carriers. The messages piggyback to and from your phone in the spare bandwidth of the tower synchronization signals the phone uses to check reception and select towers for voice/data transmission. The only infinitesimal cost that might exist to the carrier is transmitting 140 lousy bytes from one tower to another tower; the capacity on the towers themselves is free.
Now this might have changed somewhat in recent years; I'm not a communications engineer. But I don't think it has. And I'd bet my life that even if it has, texts still don't cost the carriers more than 0.1 cents.
This is the very picture of evil corporate overlords plotting in a dark tower to see how much money they can squeeze out of you for nothing and avoid advancing technology as long as possible. Real technology entrepreneurs like George Eastman struggled constantly against themselves, trying to make things cheaper and better for the consumer. Eastman in particular tried desperately to obsolete his own products in favor of offering consumers even better, years before the prior product would otherwise have dropped in sales; today we call that cannibalism, and most tech companies struggle like hell to avoid a whit of it. (People acted like Apple was batshit crazy for not better managing their product line when iphones started to cannibalize ipods. Nevermind that iphones cost hundreds more, so even that cannibalism is pure profit.)
When's the last time you saw a company that put out everything they had, every time, and didn't hold something back for upgrade cycles or a magical September festival of worship?
These guys seem to be missing the big picture here. They are missing out a lot of great returns for the future.
Verizon grows in wireless was because they had some of the best plans back in the late 90's. Back when Cell Phones charged you for Local, Long Distance calls, roaming fees.... Verizon was one of the first to give people a plan that allows a call to be a call no matter where you were at or who you were calling... A big deal back then. It opened Cell Phones for being a toy for the rich to an every-man tool.
But now Verizon AT&T Sprint and everyone else is not taking it to the next step. Unlimited Plans/Unrestricted plans.
Customers want to get rid of their cable companies. They want their internet plans to allow unrestricted tethering so they can get internet they can use at home or anywhere else. They want to use their phones without having to worry about a huge bill later on. A company who does the big push for this, and has the infrastructure to support it will Make a LOT of money and get a lot of switchers right after their other contracts expire.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
GSM was the initial platform for SMS. In fact, Deutsche Telekom was an early collaborator and help design the spec we have now.
SMS was initially designed to use a control channel in GSM, It has, of course, expanded to be used in AMPS (now dead), CDMA, and TDMA. This allowed it to use a service not needed for voice calls (and I assume for data nowadays), but imposed some limitations on the amount of data, both in terms of speed and limiting utilization to avoid interfering with necessary functions. The control channel is also used for call setup, among other things.
While this control/signalling channel is built into the GSM specs, it is used for other things, such as set registration and call setup/teardown, so using it 'for free' isn't as simple as ti seems, and it is limited by the protocl that it uses, 160 characters per 'message'. And SMS does require some 'back office' servers and data systems to function, and exchange with other carriers. SMS isn't free, but it is being sold for up to 400 times the profit margin similar data volumes are sold for as what we thing of as 'data' service. Landline telcos did the same thing, charging hugely for in-state toll calls, even to a neighboring town, and discounting nationwide toll calls dramatically. We might see some action some day by the FCC to more appropriately price SMS, unless they buy the argument that the real costs in SMS are handling the messages as they traverse the system. There is some cost and effort in processing >120 Billion SMS a month in the US alone, or 7-87 Trillion SMS worldwide per year.
Other bits of trivia:
SMS is by design a best-effort delivery system. Delivery is not guaranteed. But when was the last time you lost one? I remember when AT&T TDMA service would lose SMS for a few days, and then I would get them all in a flood. I miss my old Nokia 5150, great phone. The Siemens S46, on the other hand...
A5/1 or A5/2 encryption is used, which is weak enough to be trivially broken. There are open-source GMS implementations that let you force an unencrypted connection and own, presumably, all the data, including SMS. If you're into that sort of thing.
The SMS control channel doesn't need much of a signal to function. You can often get an SMS out even if there is no discernable signal being displayed on your phone, and can't even get an emergency call out.
Before GSM developed GPRS, you could use SMS as a 'bearer' or data packet for WAP. I had a phone that did this, and it was no worse than GPRS, which is bad enough. But WAP didn't really take off like this, since you would be locating your WAP server inside the carrier's network, just not feasible. The control channel back then was adequate for very lightweight WAP. There are plenty of places in rural America where you can be stuck with GPRS speeds, usually 8kb/s. I vacation near one. It's fun. iPhone users on AT&T sometimes get a little crazy there.
deleting the extra space after periods so i can stay relevant, yeah.
None. ;-)
Cool post bro, highfive \o