What do text messages actually cost?
Monday, January 5, 2009 | 08:54 AM ET
By Jesse Brown, CBC technology columnist.
What do text messages actually cost?
Interesting revelation in the New York Times: text messages, which can cost consumers twice what they did just three years ago, actually cost cell phone providers nothing ... or at least, next to nothing.
SMS messages are apparantly so small (160 characters of raw text or under) that they don´t even count. They´re "free riders" slipped into a corner of the spectrum put aside for the operation of wireless networks - the teeny weeny data packets that go back and forth between towers and handsets.
So while you get dinged each time you text if you´re off a plan (or each month, if you do have one), that cash is pure profit to your cell provider.
Well, almost - they do pay for the data storage, which is currently priced at $100 a terabyte (a cost that is always going down as storage gets cheaper).
One terabyte will store a lot of little text messages - more than 6 billion. That puts the hard cost of an SMS message at less than a millionth of a penny.
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Comments
DrDuKeS
Ottawa
Surprise surprise, cell phone providers are ripping us off. I had NO idea!
Posted January 5, 2009 11:55 AM
DrDuKeS
Ottawa
I have to admit I'm not surprised in the least. Everyone knows cell phone providers are ripping us off.
Posted January 5, 2009 11:56 AM
RIchard Small
So what? Profit is the ONLY thing that makes this kind of technology possible in the first place.
Anyone who has a problem with the idea of profit should consider moving to Cuba, I hear communism there makes everything a lot cheaper.
Posted January 5, 2009 12:52 PM
Kchan
Ottawa
I don't mine telco making money, what piss me off is that they change the rule mid stream, like when they start to charge for incoming or when they start caping downloads.
What change for the telco that they have to start charging for incoming text? Didn't they advertise unlimit download just a few years back?
Posted January 5, 2009 02:45 PM
Ben
Montreal
Good one Small, people keep complaining when it'S not THEM making the profit! If you think cell phones are too pricy, just do like me: DON'T USE ONE. Can't blame the companies for making a buck.
Posted January 5, 2009 03:20 PM
Patrick
Toronto
Richard, I don't know if you realize this but our taxpayer dollars were used to fund the network build-outs. So given that we paid in part for the technology and infrastructure, we should also share in the benefits at a reduced price. But not only are we not getting a reduced price, we're being ripped off. Free market economics only works if this is a free economy. If the providers wanted to rip us off, then they should not be asking for taxpayer funds.
Posted January 5, 2009 04:22 PM
michael macdonald
that story was still cool
Posted January 6, 2009 08:12 AM
Angus Miller
Truro
The primary complaint that most people have with current text message rates is not that people are paying for them at all, as Small suggests. I'm sure that everyone who uses the service agrees that it is worth paying for. What annoys people most about the current text rates is that we are paying more for less service. If I went to a restaurant and ordered a glass of water with my meal, something that is more or less free to provide, I would expect to pay less than if I ordered imported vintage wine.
In regards to Ben's comments, while I don't blame companies from trying to make an easy buck, but I think that If they want to keep their customers when new wireless players enter the market, they aught not to yell that they hate us quite so loudly.
Posted January 6, 2009 02:52 PM
Ernest
Few will argue that companies need to make money. The problem arises in an oligopolic environment of near zero competition and no government willingness to regulate.
This creates what we have now in Canada: wallet-raping profiteering.
Posted January 6, 2009 03:09 PM
Chris Lawton
toronto
From God to Ernest's mouth. I complete agree with Ernest. And given that telecommunications is infrastructure for the 21st century economy, I would argue the teleco situation here in Canada is spelling doom for us. We obviously can't rely on manufacturing and oil forever. I hope the government will shake up and industry and insure ubiquitous affordable wireless in Canada. Passive average Canadians certainly won't be the agents of change.
Posted January 6, 2009 04:33 PM
taCA2009
Toronto
If it cost 1 millionth of a penny to store one message, then $2/month is more than enough for this service.
Posted January 7, 2009 11:30 AM
Paul Greber
Manitoba
Using Jesse's numbers:
If 1TB of data storage (which could hold one trillion characters or letters) costs $100, then the actual cost to send and store a 200B text message (accounting for the actual text and overhead) should be $0.00000000002.
If you currently get charged $0.05 per text message then you should be able to send 160 copies of War and Peace.
Posted January 7, 2009 12:18 PM
Bill Catchem
Ottawa
Communications in Canada should be nationalised.
Ya. I'm a socialist for things that can actually help us.
Posted January 7, 2009 01:15 PM
Christie
Oakville
The story is not entirely correct, but it does depend on how you define costs. If you send a text message from one mobile network to another there may be a "termination fee" charge by the recipient network. It does vary from country to country, and in some cases SMS's are free, even on international circuits, but in many cases the orginating network has to pay the terminating network a fee for the use of their network. So all that means is that the profits from this costless message are shared across different players in the (local and international) network.
Posted January 19, 2009 05:10 PM
gartych
edmonton
Just another symptom of a flawed society. Every business is driven by greed and willing to swindle for profit requiring a corrupt bloated and ineficent government to regulate every minute detail of the market place.
Posted March 6, 2009 07:58 PM