

What Carriers Aren't Eager to Tell You About Texting - ojbyrne
http://www.nytimes.com/2008/12/28/business/28digi.html

======
eli
SMS is a cash cow. It's the only thing that really makes money for some
carriers. After voice, it's generally the biggest contributor to ARPU (average
revenue per user) -- more than selling ring tones or 3G service.

This isn't really a big secret; read any quarterly report from a carrier or,
heck, read the press release about the report.

------
gaius
A terabyte costs only $100? Someone had better tell NetApp.

I dispute that so-called professor's assertion about the size of a text
message making it cheap; for transmitting data over long distances the
limiting factor is packet latency; for tiny messages proportionally greater of
the system's time is going to be spent waiting for packets to move on the
wire. It's quicker and easier to move a gigabyte file 3000 miles than
10,000,000 100-byte files. Per byte of data, SMS traffic is probably the most
expensive traffic to route and switch.

~~~
rcoder
SMS messages are _much_ smaller than a single TCP packet is capable of
carrying (or, if you want to roll your own re-transmit logic, a UDP datagram).
They also have effectively no QoS guarantees attached, so you can queue them
for transmission whenever bandwidth is unavailable (or would degrade service
for more critical streams, like active voice calls).

Since the "last mile" bandwidth is effectively free, by virtue of being
embedded in the control channel, there's no reason other than "consumers will
pay it" that justifies the cost of SMS traffic.

The Internet is full of services that blast millions of tiny packets between
networks (routing, DNS, etc.) without incurring significant per-transaction
costs. There's nothing special about SMS that should drive costs up as much as
they have been.

------
IsaacSchlueter
Who cares? Prices aren't based solely on cost, they're based on competition
and demand. The author seems to miss the point of capitalism.

From their point of view, why _shouldn't_ AT&T, Verizon, Sprint, and TMobile
charge whatever the market will bear? What's the incentive to charge less?

Of course, there's an opportunity there. Should one of them, or some new
company, start charging $5/month for unlimited texting, it could be pretty
popular.

