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Texting What a Good Deal

Text messaging is big business worldwide and is expected to grow. Last year an estimated 2.5 trillion text messages were sent and that is expected to rise to 3.3 trillion messages in 2009.

The average cost has risen over the past couple years and we expect that. Here is what we most of us don’t know. The cost for the wireless companies is very reasonable. Let me restate that it is very very very reasonable for them. Their cost approach nothing here’s why.

First the packet of text, usually limited to 160 characters, is tiny. When you send a text it goes wirelessly  from your phone to a cell tower and then by wire copper or fiber to the tower of your friend, breathlessly waiting for your message. The once again wirelessly to his/her phone.

On the wired part of the journey it is so small it tucks into the data and voice stream and causes no load. On the wireless part of the journey however you would think there would be some overhead incurred. Not so the cell tower is constantly broadcasting to your phone this is the control channel and the text message rides for free. The channel is being used all the time whether a text message is sent or not.

Eight or nine years ago I was reading about the at the time fledgling cell phone network then being set up in Manila.  And there was this new phenomenon text messaging. The cell providers were eager to promote texting as an alternative to calling because it lacked bandwith to acomidate phone calls.

So why do we pay for this service Randal Stross writing last week in the New York Times explored the anti trust issues

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 fortext 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.

So what is the best deal well it depends on your point of view. For the phone companies the best plan is the one that extracts the most money from it’s customers.

Professor Keshav said that once a carrier invests in the centralized storage equipment — storing a terabyte now costs only $100 and is dropping — and the staff to maintain it, its costs are basically covered. “Operating costs are relatively insensitive to volume,” he said. “It doesn’t cost the carrier much more to transmit a hundred million messages than a million.”

Yes what a good deal especially if you are the service provider


January 4, 2009 Posted by | wireless phone | , , | Leave a comment