6 ms·

Text-Messaging Rates Come Under Scrutiny

70 points by raghus 18y ago

Protophore 18y ago
I have to agree that current rates are absurd considering the file size and actual cost incurred by the carriers. It would be nice if the government can slap a collusion case on them and make them send a refund to all of their customers and lower the texting rate. It's interesting that typically as new technologies become more popular and are adopted by more and more people the costs tend to decrease. In this case however the prices have gone up. Seems counter intuitive.
- Goronmon 18y ago
  I think it's just a case of offering a service that costs so little to use. Even the inflated price is an insignificant cost for most people on a per message basis.
MicahWedemeyer 18y ago
What is particularly alarming about this industrywide rate increase is that it does not appear to be justified by rising costs in delivering text messages Yep, I don't really believe that it costs the telcos $1000/MB to handle SMS. http://mobilejones.com/2007/07/27/you-might-be-paying-1000-per-mb-for-sms/ http://mobilejones.com/2007/07/27/you-might-be-paying-1000-p...
- kirse 18y ago
  From what I recall too, the marginal cost of SMS is 0, because text messages are sent on your cell phone's control channel (also why you can't send/receive a call while a text is transferred): http://mobile.slashdot.org/comments.pl?sid=433536&cid=22219254 http://mobile.slashdot.org/comments.pl?sid=433536&cid=22... That said, I can't wait to see the BS they come up for this one.
- mdasen 18y ago
  To be fair, there is overhead to opening a connection. If sending a text was a matter of transmitting 160 bytes, it wouldn't take a second or two to send. Networks now transmit at 600kbps easy and yet my messages don't send in 1/3750th of a second. And that network usage counts. Calculating it based on the number of bytes just seems unfair. That said, they're still overpriced. They should cost less than a minute of phone conversation. Really, they should cost probably around the equivalent of 1 second of phone conversation. So, you should be able to send 60 messages for, say, 10cents. That would come to $10-11/MB by your logic which is high if you don't count the cost of building/tearing down the connection.
jcromartie 18y ago
What I find to be particularly evil is that most carriers charge you for receiving messages, but you cannot opt-out. That means I have to pay for every stupid stock spam and wrong number, and there is nothing I can do about it. They give some bullshit answers about being able to block certain short numbers by configuring it manually through their website and calling them for a refund... but seriously, who is going to take the time to do that?
- ROFISH 18y ago
  Umm... I have AT&T and I could cancel all text messages from their setup website or by calling customer support. The messages just went into a blackhole and I never saw or paid for anything my friends would send me. Of course I share unlimited text with a "family" plan that me and 5 friends are on. But the opt-out for texts still exists last I checked.
- jonknee 18y ago
  You can always opt out. Call up your carrier and say you never want to receive a text message and you never will receive a text message.
  - cstejerean 18y ago
    I'm guessing not receiving text messages at all is also not an option for some people. Being able to whitelist numbers from which you can receive messages would be much better.
  - procrastitron 18y ago
    Up until recently T-Mobile refused to let people opt-out of receiving text messages, regardless of what steps you were willing to go through. The only reason they changed their policy was because of a class-action lawsuit that was filed against them.
    - jcromartie 18y ago
      Ah, yeah, that's what I was talking about. I didn't realize there was a suit that changed their policy. I talked to them fairly recently, and their reps denied the possibility of opting out.
snewe 18y ago
Interesting: "Mr. Kohl's letter noted that each company appears to have changed text-messaging rates at nearly the same time, with identical prices. 'This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace,' he said."
ardit33 18y ago
Two words: Tacit Collusion And to all those libertarians here, no just market forces wont fix it, as in this case they are clearly broken. As long as the carriers have a lock on the data on your phone, and what applications you use on your phone. This is a classic examples where some gov. regulation is required, by: 1. Forcing prices down. 2. Or forcing carriers to allow users to use their prefered SMS provider EU has been using option 1., where it recently forced carriers to put caps on insanely "roaming data" pricing. (or better rip-off). The internet equivalent of this would be that your ISP forces you to use only one kind of push email that they provide. Kinda outrageous, no?
- fallentimes 18y ago
  I think the internet equivalent of the wireless industry as a whole (instead of just this situation, which you noted) would be the following: 1. Misleading pricing that never matches the advertised rates 2. Unexplained and unrefunded outages 3. Misleading services that have built in caps that aren't explicitly stated in company literature or advertising 4. For consumers, only able to choose between 1-4 providers, based on your location 5. Normal hold times of 30 to 60 minutes Oh wait, that's how the internet is if you're stuck with Comcast, RCN, et al in the States. It's almost uncanny how much the internet providers, wireless providers and the RIAA/Big Labels have in common including their share prices.
  - time_management 18y ago
    Automatic bill payment is a great thing, especially for people who are busy and would miss payments if it didn't exist. However, it unfortunately allows companies to get away with a lot of crap, given that the majority of customers are no longer reading monthly bills and don't notice the fluctuations.
- mseebach 18y ago
  The market forces work just fine. It's just that there isn't a free market. If every mom and pop could set up a cellular service with a reasonable investment, there'd be a bunch of community providers, and prices would go down - just as we've been seeing with internet connections. But the spectrum is intensely regulated by authorities, frequencies are not just expensive, they are usually not available at all(:1) - because the authorities want to protect the investment of the early providers. Effectively, they made a deal that created a government sponsored monopoly, which, even if you can privately buy a share in it, is the opposite of free markets. 1: This is true for most of Europe, can't say for the US.
deleted 18y ago
[deleted]
fallentimes 18y ago
I wish there was a carrier that advertised their real rates for every aspect of their plan instead of their bullshit rates. Real rates include those ridiculous fees they add on at the very end each month - and no those fancy sounding names aren't all government taxes and ridiculousness - just clever suit trickery. Excluding sales tax, grocery stores aren't allowed to lie about their prices, why are cell phone carriers? I'd pay a premium and tell my friends.
- kqr2 18y ago
  http://www.consumer.att.com/ccrf/ http://www.consumer.att.com/ccrf/ My favorite bogus "fee" is AT&T's "Cost recovery fee". In their explanation, they explicity state that : This fee is not a tax or charge required by the government. "Cost recovery" used to be known as the "cost of doing business" and was included in the monthly price. This is just a deceptive way to add a few extra dollars without raising the nominal price.
  - joshwa 18y ago
    Doesn't that count as 'bait-and-switch?'
  - dkokelley 18y ago
    "This fee helps AT&T recover costs associated with providing state-to-state and international long distance service, including expenses for national regulatory fees and programs, as well as connection and account servicing charges..." It's a regulatory fee that AT&T gets hit with, so they pass it on to customers. Other than the fact that I'd prefer they absorb the cost, I don't see how it's unethical in any way.
    - fallentimes 18y ago
      It doesn't matter. They still shouldn't lie about their prices.
fallentimes 18y ago
Mooooooooonooopoly. Actually colluding oligopoly, but that's not as fun to say.
antirez 18y ago
what's the cost in your country? In Italy it's more or less 10 cents of euro for SMS sent. To receive an SMS is of course free.
- blang 18y ago
  0.20 USD send and receive, with no data plan.
  - shiranaihito 18y ago
    It's around $0.11 for sending a text message in Finland. There's no charge for receiving one, because that would be just silly. Finally I found something that's cheaper here than in America! Sure compensates for the cars you get at 1/3 of the price over here.. Out of curiosity, are we talking about text messages because of the iPhone 3G? :)
    - plinkplonk 18y ago
      In India, the cost of sending a text message is 0.006 - 0.02 United States $ (0.30 - 1 Indian Rupees), depending on your plan. No charge for receiving a message.
time_management 18y ago
The obvious motive here is that text messages compete with (also absurdly overpriced) phone calls.
__ 18y ago
I wonder how much text messaging costs in China, where $0.20 USD is a larger fraction of the average person's income. I suspect it's much cheaper, and yet the companies presumably aren't losing money on it.
- Protophore 18y ago
  "In China, text messages cost an average of 1.3 cents to send" Pulled from: http://www.marketoracle.co.uk/Article419.html http://www.marketoracle.co.uk/Article419.html I thought this line was a bit staggering "...the average cost of a text message is $0.10. Last year, mobile telephone operators pulled in $50 billion in revenues just from text messaging." $50 billion, that's a nice racket!
ggrot 18y ago
While I agree text message rates are absurd, we have an economy in shambles, a rapidly worsening energy issue, a very expensive war, and a large hadron collider defense system to build. Senator, please tell me you aren't wasting much of your time on text messaging rates.
- khafra 18y ago
  So, you're saying Congress should fix the SMS cost at the current rate, but tax carriers 95% of their text message revenue so they only make a reasonable profit? Not a bad idea; that might go a long way toward balancing the budget.
  - gills 18y ago
    Allowing government to dictate an enterprise's pricing structure or profit margin is a dangerous road to walk. Government should really only bust fraud and handle arbitration, to keep markets competitive. Anyway, there's no source of money in the world that Congress won't overspend...
steveplace 18y ago
Dr Nigel Bannister’s calculations were used for the Channel 4 Dispatches programme "The Mobile Phone Rip-Off". He worked out the cost of obtaining a megabyte of data from Hubble and compared that with the 5p cost of sending a text. He said: "The bottom line is texting is at least 4 times more expensive than transmitting data from Hubble, and is likely to be substantially more than that. The maximum size for a text message is 160 characters, which takes 140 bytes because there are only 7 bits per character in the text messaging system, and we assume the average price for a text message is 5p. There are 1,048,576 bytes in a megabyte, so that's 1 million/140 = 7490 text messages to transmit one megabyte. At 5p each, that's £374.49 per MB - or about 4.4 times more expensive than the ‘most pessimistic’ estimate for Hubble Space Telescope transmission costs."
jeffy 18y ago
Text messages are the new long distance...

70 points by raghus 18y ago

I have to agree that current rates are absurd considering the file size and actual cost incurred by the carriers. It would be nice if the government can slap a collusion case on them and make them send a refund to all of their customers and lower the texting rate. It's interesting that typically as new technologies become more popular and are adopted by more and more people the costs tend to decrease. In this case however the prices have gone up. Seems counter intuitive.

Goronmon 18y ago
I think it's just a case of offering a service that costs so little to use. Even the inflated price is an insignificant cost for most people on a per message basis.

MicahWedemeyer 18y ago

What is particularly alarming about this industrywide rate increase is that it does not appear to be justified by rising costs in delivering text messages Yep, I don't really believe that it costs the telcos $1000/MB to handle SMS. http://mobilejones.com/2007/07/27/you-might-be-paying-1000-per-mb-for-sms/ http://mobilejones.com/2007/07/27/you-might-be-paying-1000-p...

kirse 18y ago
From what I recall too, the marginal cost of SMS is 0, because text messages are sent on your cell phone's control channel (also why you can't send/receive a call while a text is transferred): http://mobile.slashdot.org/comments.pl?sid=433536&cid=22219254 http://mobile.slashdot.org/comments.pl?sid=433536&cid=22... That said, I can't wait to see the BS they come up for this one.
mdasen 18y ago
To be fair, there is overhead to opening a connection. If sending a text was a matter of transmitting 160 bytes, it wouldn't take a second or two to send. Networks now transmit at 600kbps easy and yet my messages don't send in 1/3750th of a second. And that network usage counts. Calculating it based on the number of bytes just seems unfair. That said, they're still overpriced. They should cost less than a minute of phone conversation. Really, they should cost probably around the equivalent of 1 second of phone conversation. So, you should be able to send 60 messages for, say, 10cents. That would come to $10-11/MB by your logic which is high if you don't count the cost of building/tearing down the connection.

jcromartie 18y ago

What I find to be particularly evil is that most carriers charge you for receiving messages, but you cannot opt-out. That means I have to pay for every stupid stock spam and wrong number, and there is nothing I can do about it. They give some bullshit answers about being able to block certain short numbers by configuring it manually through their website and calling them for a refund... but seriously, who is going to take the time to do that?

ROFISH 18y ago
Umm... I have AT&T and I could cancel all text messages from their setup website or by calling customer support. The messages just went into a blackhole and I never saw or paid for anything my friends would send me. Of course I share unlimited text with a "family" plan that me and 5 friends are on. But the opt-out for texts still exists last I checked.
jonknee 18y ago
You can always opt out. Call up your carrier and say you never want to receive a text message and you never will receive a text message.
- cstejerean 18y ago
  I'm guessing not receiving text messages at all is also not an option for some people. Being able to whitelist numbers from which you can receive messages would be much better.
- procrastitron 18y ago
  Up until recently T-Mobile refused to let people opt-out of receiving text messages, regardless of what steps you were willing to go through. The only reason they changed their policy was because of a class-action lawsuit that was filed against them.
  - jcromartie 18y ago
    Ah, yeah, that's what I was talking about. I didn't realize there was a suit that changed their policy. I talked to them fairly recently, and their reps denied the possibility of opting out.

snewe 18y ago

Interesting: "Mr. Kohl's letter noted that each company appears to have changed text-messaging rates at nearly the same time, with identical prices. 'This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace,' he said."

ardit33 18y ago

Two words: Tacit Collusion And to all those libertarians here, no just market forces wont fix it, as in this case they are clearly broken. As long as the carriers have a lock on the data on your phone, and what applications you use on your phone. This is a classic examples where some gov. regulation is required, by: 1. Forcing prices down. 2. Or forcing carriers to allow users to use their prefered SMS provider EU has been using option 1., where it recently forced carriers to put caps on insanely "roaming data" pricing. (or better rip-off). The internet equivalent of this would be that your ISP forces you to use only one kind of push email that they provide. Kinda outrageous, no?

fallentimes 18y ago
I think the internet equivalent of the wireless industry as a whole (instead of just this situation, which you noted) would be the following: 1. Misleading pricing that never matches the advertised rates 2. Unexplained and unrefunded outages 3. Misleading services that have built in caps that aren't explicitly stated in company literature or advertising 4. For consumers, only able to choose between 1-4 providers, based on your location 5. Normal hold times of 30 to 60 minutes Oh wait, that's how the internet is if you're stuck with Comcast, RCN, et al in the States. It's almost uncanny how much the internet providers, wireless providers and the RIAA/Big Labels have in common including their share prices.
- time_management 18y ago
  Automatic bill payment is a great thing, especially for people who are busy and would miss payments if it didn't exist. However, it unfortunately allows companies to get away with a lot of crap, given that the majority of customers are no longer reading monthly bills and don't notice the fluctuations.
mseebach 18y ago
The market forces work just fine. It's just that there isn't a free market. If every mom and pop could set up a cellular service with a reasonable investment, there'd be a bunch of community providers, and prices would go down - just as we've been seeing with internet connections. But the spectrum is intensely regulated by authorities, frequencies are not just expensive, they are usually not available at all(:1) - because the authorities want to protect the investment of the early providers. Effectively, they made a deal that created a government sponsored monopoly, which, even if you can privately buy a share in it, is the opposite of free markets. 1: This is true for most of Europe, can't say for the US.

deleted 18y ago

[deleted]

fallentimes 18y ago

I wish there was a carrier that advertised their real rates for every aspect of their plan instead of their bullshit rates. Real rates include those ridiculous fees they add on at the very end each month - and no those fancy sounding names aren't all government taxes and ridiculousness - just clever suit trickery. Excluding sales tax, grocery stores aren't allowed to lie about their prices, why are cell phone carriers? I'd pay a premium and tell my friends.

kqr2 18y ago
http://www.consumer.att.com/ccrf/ http://www.consumer.att.com/ccrf/ My favorite bogus "fee" is AT&T's "Cost recovery fee". In their explanation, they explicity state that : This fee is not a tax or charge required by the government. "Cost recovery" used to be known as the "cost of doing business" and was included in the monthly price. This is just a deceptive way to add a few extra dollars without raising the nominal price.
- joshwa 18y ago
  Doesn't that count as 'bait-and-switch?'
- dkokelley 18y ago
  "This fee helps AT&T recover costs associated with providing state-to-state and international long distance service, including expenses for national regulatory fees and programs, as well as connection and account servicing charges..." It's a regulatory fee that AT&T gets hit with, so they pass it on to customers. Other than the fact that I'd prefer they absorb the cost, I don't see how it's unethical in any way.
  - fallentimes 18y ago
    It doesn't matter. They still shouldn't lie about their prices.

fallentimes 18y ago

Mooooooooonooopoly. Actually colluding oligopoly, but that's not as fun to say.

antirez 18y ago

what's the cost in your country? In Italy it's more or less 10 cents of euro for SMS sent. To receive an SMS is of course free.

blang 18y ago
0.20 USD send and receive, with no data plan.
- shiranaihito 18y ago
  It's around $0.11 for sending a text message in Finland. There's no charge for receiving one, because that would be just silly. Finally I found something that's cheaper here than in America! Sure compensates for the cars you get at 1/3 of the price over here.. Out of curiosity, are we talking about text messages because of the iPhone 3G? :)
  - plinkplonk 18y ago
    In India, the cost of sending a text message is 0.006 - 0.02 United States $ (0.30 - 1 Indian Rupees), depending on your plan. No charge for receiving a message.

time_management 18y ago

The obvious motive here is that text messages compete with (also absurdly overpriced) phone calls.

__ 18y ago

I wonder how much text messaging costs in China, where $0.20 USD is a larger fraction of the average person's income. I suspect it's much cheaper, and yet the companies presumably aren't losing money on it.

Protophore 18y ago
"In China, text messages cost an average of 1.3 cents to send" Pulled from: http://www.marketoracle.co.uk/Article419.html http://www.marketoracle.co.uk/Article419.html I thought this line was a bit staggering "...the average cost of a text message is $0.10. Last year, mobile telephone operators pulled in $50 billion in revenues just from text messaging." $50 billion, that's a nice racket!

ggrot 18y ago

While I agree text message rates are absurd, we have an economy in shambles, a rapidly worsening energy issue, a very expensive war, and a large hadron collider defense system to build. Senator, please tell me you aren't wasting much of your time on text messaging rates.

khafra 18y ago
So, you're saying Congress should fix the SMS cost at the current rate, but tax carriers 95% of their text message revenue so they only make a reasonable profit? Not a bad idea; that might go a long way toward balancing the budget.
- gills 18y ago
  Allowing government to dictate an enterprise's pricing structure or profit margin is a dangerous road to walk. Government should really only bust fraud and handle arbitration, to keep markets competitive. Anyway, there's no source of money in the world that Congress won't overspend...

steveplace 18y ago

Dr Nigel Bannister’s calculations were used for the Channel 4 Dispatches programme "The Mobile Phone Rip-Off". He worked out the cost of obtaining a megabyte of data from Hubble and compared that with the 5p cost of sending a text. He said: "The bottom line is texting is at least 4 times more expensive than transmitting data from Hubble, and is likely to be substantially more than that. The maximum size for a text message is 160 characters, which takes 140 bytes because there are only 7 bits per character in the text messaging system, and we assume the average price for a text message is 5p. There are 1,048,576 bytes in a megabyte, so that's 1 million/140 = 7490 text messages to transmit one megabyte. At 5p each, that's £374.49 per MB - or about 4.4 times more expensive than the ‘most pessimistic’ estimate for Hubble Space Telescope transmission costs."

jeffy 18y ago

Text messages are the new long distance...