
Text-Messaging Rates Come Under Scrutiny - raghus
http://online.wsj.com/article/SB122100918492217655.html
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ardit33
Two words: Tacit Collusion

And to all those libertarians here, no just market forces wont fix it, as in
this case they are clearly broken. As long as the carriers have a lock on the
data on your phone, and what applications you use on your phone.

This is a classic examples where some gov. regulation is required, by: 1.
Forcing prices down. 2. Or forcing carriers to allow users to use their
prefered SMS provider

EU has been using option 1., where it recently forced carriers to put caps on
insanely "roaming data" pricing. (or better rip-off).

The internet equivalent of this would be that your ISP forces you to use only
one kind of push email that they provide. Kinda outrageous, no?

~~~
biohacker42
Three words: High entry cost.

As a libertarian, I blame regulation for that.

~~~
ardit33
That's trivializing a not so simple problem. In a pure market, with no
regulation whatsover, anybody could just stick an high power antena on it's
roof, and bam, they have their own network.

But, also spectrum is finite, especially on what we can use with the current
technologies. If everybody puts it's own high powered antenas, it would just
make everbody's service unsuable. And taking out your competitor, ment to just
place a bigger antena.

Also, high costs and barriers of entry don't just come b/c regulation. There
is huge capital costs to build a infrastructure (towers, technology, etc.)
Look at Wimax, (which has less regulations than cellular telephone) where two
companies had to merge in order to make it feasable.

What I would like, is option 2. The goverment makes sure there is fair
competition for services, and where a carrier shouldn't lock your devices, and
not allow you have your own apps and services in your phone.

If you look a classical use of goverment regulation: Road traffic, traffic
lights, rules etc. In the early days of the car, none existed, and it used to
be every man for each own. Result was lots of accidents, traffic jams
(deadlocks everywhere), making cities almost too chaotic. People driving
without knowing how to really drive (accident rates where very high).
Regulation brought some control to the chaos, where it made roads usable,
traffic flowing, and make sure only people that know how to drive, drove.

But, regulation can also go too far, but making things expensive, excessive
tickets that serve only to make revenue to cities and states. etc.

And yes, I have real life experience with this. I come from an ex-communist
country, where twice in my life time goverment basically ceased to exist (once
in 90-92, and once in 97). It was everybody on it's own, and it wasn't pretty.

I remember my favorite TV channel went off air, b/c one their competitors
decided to erect a bigger antena, and use the same band.

Overegulation is bad, but under regulation is surely aweful. And I lived
through it. Most of you probably just dream about it, and think it is cool,
but it is not.

~~~
biohacker42
Spectrum is finite. But consider that the "junk" spectrum was left
unregulated, completely unregulated and pretty much every exciting wireless
tech started in this unregulated junk spectrum.

Obviously you're right too, we could come up with examples all day long,
suffice it to say I think that a big part of texting costs is due to
regulation driven high entry costs.

~~~
evgen
> But consider that the "junk" spectrum was left unregulated, completely
> unregulated and pretty much every exciting wireless tech started in this
> unregulated junk spectrum

It was not "unregulated." If it was then I could have built my 1000 Watt
802.11b network to cover an entire city. There were rules and regulations on
this spectrum, it was just not reserved for specific users.

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MicahWedemeyer
_What is particularly alarming about this industrywide rate increase is that
it does not appear to be justified by rising costs in delivering text
messages_

Yep, I don't really believe that it costs the telcos $1000/MB to handle SMS.

[http://mobilejones.com/2007/07/27/you-might-be-
paying-1000-p...](http://mobilejones.com/2007/07/27/you-might-be-
paying-1000-per-mb-for-sms/)

~~~
kirse
From what I recall too, the marginal cost of SMS is 0, because text messages
are sent on your cell phone's control channel (also why you can't send/receive
a call while a text is transferred):

[http://mobile.slashdot.org/comments.pl?sid=433536&cid=22...](http://mobile.slashdot.org/comments.pl?sid=433536&cid=22219254)

That said, I can't wait to see the BS they come up for this one.

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jcromartie
What I find to be particularly evil is that most carriers charge you for
_receiving_ messages, but you _cannot opt-out_. That means I have to pay for
every stupid stock spam and wrong number, and there is nothing I can do about
it. They give some bullshit answers about being able to block certain short
numbers by configuring it manually through their website and calling them for
a refund... but seriously, who is going to take the time to do that?

~~~
jonknee
You can always opt out. Call up your carrier and say you never want to receive
a text message and you never will receive a text message.

~~~
procrastitron
Up until recently T-Mobile refused to let people opt-out of receiving text
messages, regardless of what steps you were willing to go through. The only
reason they changed their policy was because of a class-action lawsuit that
was filed against them.

~~~
jcromartie
Ah, yeah, that's what I was talking about. I didn't realize there was a suit
that changed their policy. I talked to them fairly recently, and their reps
denied the possibility of opting out.

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Protophore
I have to agree that current rates are absurd considering the file size and
actual cost incurred by the carriers. It would be nice if the government can
slap a collusion case on them and make them send a refund to all of their
customers and lower the texting rate.

It's interesting that typically as new technologies become more popular and
are adopted by more and more people the costs tend to decrease. In this case
however the prices have gone up. Seems counter intuitive.

~~~
Goronmon
I think it's just a case of offering a service that costs so little to use.
Even the inflated price is an insignificant cost for most people on a per
message basis.

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fallentimes
I wish there was a carrier that advertised their real rates for every aspect
of their plan instead of their bullshit rates.

Real rates include those ridiculous fees they add on at the very end each
month - and no those fancy sounding names aren't all government taxes and
ridiculousness - just clever suit trickery. Excluding sales tax, grocery
stores aren't allowed to lie about their prices, why are cell phone carriers?

I'd pay a premium and tell my friends.

~~~
kqr2
<http://www.consumer.att.com/ccrf/>

My favorite bogus "fee" is AT&T's "Cost recovery fee". In their explanation,
they explicity state that :

This fee is not a tax or charge required by the government.

"Cost recovery" used to be known as the "cost of doing business" and was
included in the monthly price.

This is just a deceptive way to add a few extra dollars without raising the
nominal price.

~~~
dkokelley
"This fee helps AT&T recover costs associated with providing state-to-state
and international long distance service, including expenses for national
_regulatory fees and programs_ , as well as connection and account servicing
charges..."

It's a regulatory fee that AT&T gets hit with, so they pass it on to
customers. Other than the fact that I'd prefer they absorb the cost, I don't
see how it's unethical in any way.

~~~
fallentimes
It doesn't matter. They still shouldn't lie about their prices.

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snewe
Interesting:

"Mr. Kohl's letter noted that each company appears to have changed text-
messaging rates at nearly the same time, with identical prices. 'This conduct
is hardly consistent with the vigorous price competition we hope to see in a
competitive marketplace,' he said."

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fallentimes
Mooooooooonooopoly. Actually colluding oligopoly, but that's not as fun to
say.

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steveplace
Dr Nigel Bannister’s calculations were used for the Channel 4 Dispatches
programme "The Mobile Phone Rip-Off".

He worked out the cost of obtaining a megabyte of data from Hubble and
compared that with the 5p cost of sending a text.

He said: "The bottom line is texting is at least 4 times more expensive than
transmitting data from Hubble, and is likely to be substantially more than
that.

The maximum size for a text message is 160 characters, which takes 140 bytes
because there are only 7 bits per character in the text messaging system, and
we assume the average price for a text message is 5p. There are 1,048,576
bytes in a megabyte, so that's 1 million/140 = 7490 text messages to transmit
one megabyte. At 5p each, that's £374.49 per MB - or about 4.4 times more
expensive than the ‘most pessimistic’ estimate for Hubble Space Telescope
transmission costs."

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antirez
what's the cost in your country? In Italy it's more or less 10 cents of euro
for SMS sent. To receive an SMS is of course free.

~~~
blang
0.20 USD send and receive, with no data plan.

~~~
shiranaihito
It's around $0.11 for sending a text message in Finland.

There's no charge for receiving one, because that would be just silly.

Finally I found something that's cheaper here than in America! Sure
compensates for the cars you get at 1/3 of the price over here..

Out of curiosity, are we talking about text messages because of the iPhone 3G?
:)

~~~
plinkplonk
In India, the cost of sending a text message is 0.006 - 0.02 United States $
(0.30 - 1 Indian Rupees), depending on your plan. No charge for receiving a
message.

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ggrot
While I agree text message rates are absurd, we have an economy in shambles, a
rapidly worsening energy issue, a very expensive war, and a large hadron
collider defense system to build. Senator, please tell me you aren't wasting
much of your time on text messaging rates.

~~~
khafra
So, you're saying Congress should fix the SMS cost at the current rate, but
tax carriers 95% of their text message revenue so they only make a reasonable
profit? Not a bad idea; that might go a long way toward balancing the budget.

~~~
gills
Allowing government to dictate an enterprise's pricing structure or profit
margin is a dangerous road to walk. Government should really only bust fraud
and handle arbitration, to keep markets competitive.

Anyway, there's no source of money in the world that Congress won't
overspend...

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__
I wonder how much text messaging costs in China, where $0.20 USD is a larger
fraction of the average person's income. I suspect it's much cheaper, and yet
the companies presumably aren't losing money on it.

~~~
Protophore
"In China, text messages cost an average of 1.3 cents to send"

Pulled from: <http://www.marketoracle.co.uk/Article419.html>

I thought this line was a bit staggering "...the average cost of a text
message is $0.10. Last year, mobile telephone operators pulled in $50 billion
in revenues just from text messaging."

$50 billion, that's a nice racket!

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jeffy
Text messages are the new long distance...

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time_management
The obvious motive here is that text messages compete with (also absurdly
overpriced) phone calls.

