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How Facebook plans to bust up the SMS profit cartel
- kylelibra 16y agoGood to see Facebook using their power for good. SMS prices are outrageous. Although on second thought, I really don't like the idea of all my texts going through Facebook.
- radicaldreamer 16y agoIt's quite a stretch to say that Facebook's purchase of Beluga will lead to a "bust up" of SMS. SMS will be around for a long time because it's compatible with every cell phone, regardless of OS or carrier and it's compatible internationally, even in countries where Facebook is blocked. This sounds like the start of a cycle of "death of email" style stories for SMS.
- sp332 16y agoIt's not going to kill SMS, it's going to drive prices down by competing in an overlapping market.
- davidmathers 16y agoIt's already begun. With Virgin Mobile I pay $25/month for unlimited 3G data and unlimited SMS.
- corin_ 16y agoIn the UK (I can't speak to other regions) unlimited SMS plans became common because the networks realised it was a great way to hook young people - and it's been available for several years.
- pyre 16y agoUnlimited SMS plans are common in the US, but the 'cartel' part comes from the pricing structure: $10/month for unlimited $0.35/text sent (without an unlimited plan) $0.25/text received (without an unlimited plan) The pricing structure is there to drive you to the unlimited model by price gouging you if you remain ala carte. They even make it difficult for you to turn off the ability to received text messages. This way when you rack up the charges from receiving text messages, you are up-sold to the unlimited plan rather than given the option to disable receiving of text messages. [This is also rather annoying when someone spams you with a text message advert... b/c now you've just PAID to get an advertisement that you didn't want.]
- corin_ 16y agoPaying to receive is the part of the US system that I don't understand, not just when it comes to SMS. In the UK/Europe (and afaik most other non-US regions?) receiving never costs - even if I receive a call when in another country, doesn't cost me anything.
- Skalman 16y agoThat's not true in Sweden. Most plans in Sweden charge when you receive a call in another country, but never for an SMS.
- msh 16y agoSame in denmark, it costs to recieve a call in anothe rcountry, but not sms messages. The reason is that you can decline to recieve a call, but you cant decline a sms.
- smiler 16y agoDo you check your bill? It does cost to receive calls in other countries (cheaper than dialling out, so always get people to call you if you can)
- corin_ 16y ago
- omfut 16y agoIts not going to kill the SMS. However, its going to impact operators revenue. SMS has been the cash cow to operators for a longtime now. The cost for sending/receiving SMS is almost zero except for the network maintenance cost. So this will definitely impact operators revenue. Mobile VoIP didn't kill circuit switch calls, but did dent operators voice revenue especially international calls.
- codevandal 16y agoNo mention of Google Voice? So far it's the best option I've found for free texting from a smartphone.
- statictype 16y agoIsn't the SMS pricing racket pretty much limited to America? Do other countries also charge exorbitant amounts for sending text messages?
- citricsquid 16y agoMost serious texters here in England have contracts which include a large number of "free" texts, but my own experience is paying £0.10 per message which is about $0.18. I'm on a contract phone now with "free" texts, so prices may have changed in the past few years.
- pyre 16y agoIn the US, you pay to receive text messages as well when you aren't on an unlimited plan.
- l0nwlf 16y agoYes, they do. In India the average price of sending an SMS is 1 rupee, the same as making a call for 60 seconds. EDIT: Which carrier ? Unless you buy SMS pack, the default rate per SMS is rupee 1. Am talking about Airtel and BSNL. I think the article too mentions this. Quoting it: "The wireless companies all told Kohl's antitrust committee that while the price of individual texts was going up, consumers were paying far less per text by buying huge bundles for flat rates."
- kingsley_20 16y agoHaving just moved back to India, and having researched SMS rates/recharge behaviour for an app I'm building, you're getting a bad deal. The bad deal is the default in India, but knowledge of how to fix that is so widespread, and fixing it is so easy that effective SMS prices are closer to Rs0.02-0.05.
- statictype 16y agoSeriously? I live in India and I get something like 3000 free messages a month. (I don't think I use more than 150 of those). I'm under the impression that local messaging in India is practically free.
- cletus 16y agoSMS is in a dominant position because it is ubiquitous. It has had this advantage on every IM platform to date. It is for this reason alone that it still exists and thrives. The SMS prices are indeed ludicrously high, particularly in the US. Unjustifiably so and I can't see how you can't look at the actions of Spring, Verizon, AT&T and T-Mobile and conclude anything but price collusion. To me this looks like CNN making a story out of nothing. Facebook has said that every acquisition made to date (at the time of the quote at least) was a talent acquisition. I'm far from convinced Beluga is any different. It's an app for group messaging? Unless I'm missing something, that's neither new nor revolutionary. How exactly does it conquer the ubiquity of SMS?
- ozziegooen 16y agoHonestly, I really don't mind the SMS charge. Sure, each text isn't very expensive, but cell phone companies have to take huge risks to build the infrastructure to send those texts. It's kind of like bashing Facebook for charging for "virtual drinks". Sure, it's free for them. But they've earned the right to sell it.
- fossuser 16y agoI would liken it more to your ISP charging you an additional $30 a month on top of your internet subscription to be able to use instant messaging.
- corin_ 16y agoI wouldn't. That would be comparable to phone networks charging for access to instant messaging on their phone (on top of data costs). Charging for SMS is more like your ISP charging you an additional $xx/month to use an instant messaging system that they themselves provide and host.
- orangecat 16y agoI can see that, but the lockstep price doubling in the last few years is pretty clearly collusion. If you want a real ripoff, look at tethering "plans" where they charge you for literally nothing except not deliberately blocking certain data traffic.
- schwabacher 16y agoIf they had taken risks in a perfect market, I would agree. The problem, at least in the US, is that because a limited amount of spectrum is available, and only a few companies have been given an exclusive right to use it, wireless data is natural monopoly / oligopoly. Cable, telephone, wireless monopolies are very similar to, and should clearly be regulated in a similar way to power and water utilities... The only reason that they are not in the United States is political corruption.
- magic_haze 16y agoI'm not sure if this isn't an urban legend (I couldn't find any references on wikipedia)) but I was under the impression that the infrastructure used by sms would have been needed anyway for other GMS related services: transmitting things like the time etc., and sms doesn't cost them any extra. In this case at least, it definitely reeks of double dipping.
- antihero 16y agoWill Beluga have push messaging? I think that's one reason SMS is so successful - the near instantaneousness of it.
- ams6110 16y agoDo a lot of people pay per SMS message? I've been on an "unlimited" text message plan for at least 4 - 5 years. Granted it's still a lot of money in terms of the raw bandwidth consumed, but as is pointed out here very often, the price of a product is more about its value to its users than the cost of its raw materials.
- pavel_lishin 16y agoNot only do they pay per SMS message to send, quite a few people pay per message received. Which has always seemed insane to me. That's like being billed every time someone called your phone, whether you picked up or not.
- pyre 16y agoDeciding to move to an unlimited plan from the price gouged ala carte pricing seems like caving into the whims of the cell providers. They want you to go to the unlimited plan, otherwise they wouldn't raise the pricing of ala carte text messaging so high. Once you are paying a flat fee per month, they can count on 'guaranteed' income from you rather than hit-or-miss income from ala carte charges that they can't predict from one month to the next. [Either way, the raw costs of text messages are waaaay below what you actually pay for them.]
- pavel_lishin 16y agoJust because it's a hugely exploitative tactic doesn't mean it's not a better deal for me. Should I fight The Man by paying him $200 extra in SMS fees? I suppose I could just disable SMS on my account, but then I'd be stuck without my favorite method of mobile communication. Fight the power.
- pyre 16y agoIt's always easier to join the 'evil empire' than it is to be a 'rebel fighter.' You seem to advocate giving up on your principles just because it's too hard to stick too them. 'Fight the power' indeed...
- martian 16y agoHow does Beluga's offering differ from push notifications on any other platform? Are they actually making SMS cheaper? If so, does anyone know how?