What Carriers Aren't Eager to Tell You About Texting

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Digital DomainWhat Carriers Aren't Eager to Tell You About TextingBy RANDALL STROSSThe New York TimesDecember 28, 2008TEXT messaging is a wonderful business to be in: about 2.5 trillion messages will have been sent from cellphones worldwide this year. The public assumes that the wireless carriers' costs are far higher than they actually are, and profit margins are concealed by a heavy curtain.Senator Herb Kohl, Democrat of Wisconsin and the chairman of the Senate antitrust subcommittee, wanted to look behind the curtain. He was curious about the doubling of prices for text messages charged by the major American carriers from 2005 to 2008, during a time when the industry consolidated from six major companies to four.So, in September, Mr. Kohl sent a letter to Verizon Wireless, AT&T, Sprint and T-Mobile, inviting them to answer some basic questions about their text messaging costs and pricing.All four of the major carriers decided during the last three years to increase the pay-per-use price for messages to 20 cents from 10 cents. The decision could not have come from a dearth of business: the 2.5 trillion sent messages this year, the estimate of the Gartner Group, is up 32 percent from 2007. Gartner expects 3.3 trillion messages to be sent in 2009.The written responses to Senator Kohl from AT&T, Sprint and T-Mobile speak at length about pricing plans without getting around to the costs of conveying text messages. My attempts to speak with representatives of all three about their costs and pricing were unsuccessful. (Verizon Wireless would not speak with me, either, nor would it allow Mr. Kohl's office to release publicly its written response.)...

David Clayton · Accepted Answer

This scam was debated in Australia quite a few years ago when SMS use (finally) took off. It was highlighted that all the GSM networks already had to have all the required infrastructure for short messaging in place as it was an integral part of the GSM standard, and their charges for transporting and storing such a small amount of data was many (many) times in magnitude higher than charges for moving other data along the exact same infrastructure.

Most GSM networks here now charge a lot less (or virtually nothing) for SMS within their own networks (depending on your Plan), because they recognise that it is a very low cost service and encouraging more use at a lesser margin still makes them heaps of money. Even SMS between carriers is relatively cheap now because the microscope was put on the inflated "interconnect fees" that they used to charge for the trivial job of moving up to 160 bytes of data (usually much less) from one handset to another.

MC · Answer

Isn't it the case that carrying a text message is considerably less expensive(to the carriers) than carrying a voice call?

danny burstein · Answer

(to the carriers) than carrying a voice call?

Absolutely. And as an added advantage to the carriers, the text message doesn't have to go through "immediately". Even the option of just a two minute delay gives them much, much, more flexibility and lower costs.

Mark Smith · Answer

Verizon offered "free" Sms on a plan I still have that began in the late 90s. It may charge a minute off your usage, I don't remember. But when texting took off with the teenagers, all the US providers exploited it's profit potential.

Mark L. Smith snipped-for-privacy@stones.com

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________________________________ From: MC To: snipped-for-privacy@invalid.telecom.csail.mit.edu Sent: Sunday, December 28, 2008 5:07:07 PM Subject: Re: [telecom] What Carriers Aren't Eager to Tell You About Texting [Telecom]

Isn't it the case that carrying a text message is considerably less expensive (to the carriers) than carrying a voice call?

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T · Answer

(to the carriers) than carrying a voice call?Indeed it is. 160 character at 8 bits is only 1280 bits. A voice call via cell probably takes several tens of kbits.

Scott Dorsey · Answer

(to the carriers) than carrying a voice call?

Sure, but when has that ever mattered? It costs them more money to provide pulse dialing service than touch-tone, but they still charge you for touch tone.

It's all about what the customer is willing to pay money for, not about what it actually costs to deliver the service.

--scott

Gordon Burditt · Answer

Isn't a voice call several tens of kbits *PER SECOND*? (like

56Kbits/sec?) That would put a typical 3-minute voice call at about 10 million bits, or the equivalent of about 7,800 text messages. This number could be smaller with compression on a voice call, but it's still huge.

David Clayton · Answer

And the cost of storing such small amounts of data - in what is essentially just another Store and Forward system - is trivial these days, even for millions of users.

T · Answer

Yes that's per second. You're right though, voice calls require much more bandwidth than text messages.

What Carriers Aren't Eager to Tell You About Texting

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