September 10, 2008
My dad sent me a note today about ZDNet Government Reporter Richard Koman digging into the per-megabyte cost of text messages as charged by the top four wireless service providers. The original post that did the exploration on the unit cost of AT&T text messages was posted on CrunchGear back in July but Richard Koman’s post included a recent note from Sen. Herb Kohl (D-Wisc.) to the wireless carriers asking them to clarify some of the details about how they provide and price their text messaging services. CrunchGear determined the cost to send one megabyte of text messages was around $1,300. Wow.
Senator Kohl noted a 100% increase in the price of text messages with major carriers from 2005 to 2008 which I’ve been mentioning casually to friends as well recently. I found out back in January that Verizon had bumped me off of the unlimited text messaging plan that I had purchased (probably back in 2002) for $7/month. The new price for the unlimited plan was offered to me for right around $20/month. Back in 2002 I used to send text messages to people with the expectation of getting an immediate call back to ask me how the heck I got a message into their phone. In fact, in July of 2004 I got a call from my mother (from her Nokia phone) to thank me for text messaging her a happy birthday message but she was confused a bit since her birthday is in September. I remembered sending the message a long time before so I asked her to check the date on it… it was from September of 2002 (nearly two years old). She simply didn’t know how to find text messages in her phone and somehow didn’t get alerted when the message arrived years before.
The increase in utilization of text messaging can’t be denied and the continuous release of new mobile phones with full keyboards is driving adoption as the momentarily brilliant but frustrating T-9 input phones continue to die off slowly. But Senator Kohl is looking for hard details on the costs mobile service providers incur in providing text messaging to their customers and for proof of the increased demand for text messaging over the last three years. I think the increased demand is obvious and the doubling of cost seems appropriately related to the increased demand for text messages among wireless networks. The Senator also asked for a comparison of the gross profits across multiple lines of wireless provider revenue including text messaging, voice service, and data service. He cited a recent text messaging price increase by Sprint that was followed shortly by the other three of the top four vendors to wireless phone subscribers doing the same. He mentioned that he thought the steadily increasing rates for text messages wasn’t indicative of the fierce competition that should exist among carriers in an open market… indirectly accusing the wireless carriers of collective price fixing although he described his letter instead as the opening of a conversation.
One of the comments following the CrunchGear article mentioned that the figure of $1,300/mb of text messaging data was probably a bit underestimated because it assumed that the average text message contained the full 160 characters when it may contain as little as 20 on average, I don’t know. I thought another comment was brilliant as well and I wonder if it’s true. It mentioned that the data transfer required to send the average text message was nearly identical to the overhead required for the messages between a mobile phone and the local cellular towers that it updates with its position as it moves. Also, as I discussed my thoughts on this tonight with my friend Wes he mentioned that the issue really isn’t with bandwidth at all considering the fact that text messages don’t always go over main carrier networks where bandwidth is at a premium. These messages only move over the airwaves between mobile phones and cellular towers in most cases and this type of exchange of data occurs over the last mile in concept (where bandwidth usually isn’t an issue).