
How Facebook plans to bust up the SMS profit cartel - panarky
http://tech.fortune.cnn.com/2011/03/04/facebook-takes-aim-at-the-text-messaging-cartel/
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radicaldreamer
It'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.

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sp332
It's not going to kill SMS, it's going to drive prices down by competing in an
overlapping market.

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davidmathers
It's already begun. With Virgin Mobile I pay $25/month for unlimited 3G data
and unlimited SMS.

~~~
corin_
In 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.

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pyre
Unlimited 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_
Paying 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
That's not true in Sweden. Most plans in Sweden charge when you receive a call
in another country, but never for an SMS.

~~~
msh
Same 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.

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codevandal
No mention of Google Voice? So far it's the best option I've found for free
texting from a smartphone.

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kylelibra
Good 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.

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ams6110
Do 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
Not 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
Deciding 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
Just 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
It'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...

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cletus
SMS 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?

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martian
How does Beluga's offering differ from push notifications on any other
platform? Are they actually making SMS cheaper? If so, does anyone know how?

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statictype
Isn't the SMS pricing racket pretty much limited to America? Do other
countries also charge exorbitant amounts for sending text messages?

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l0nwlf
Yes, 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."

~~~
statictype
Seriously? 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.

~~~
statictype
I'm using Airtel. I have no idea what my actual scheme is but I do know that I
hardly pay anything on local text messages. And almost everyone I know in
India (regardless of carrier) has a similar deal where the cost of sms is, as
they say, a rounding error.

The exception is when they charge extra on holidays. I guess that part is a
bit of a racket, though a more benign explanation would be that they're just
trying to keep the network traffic to a maintainable level on those days.

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ozziegooen
Honestly, 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
I 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_
I 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.

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antihero
Will Beluga have push messaging? I think that's one reason SMS is so
successful - the near instantaneousness of it.

