Here’s a stock tip. It looks like Apple has figured out a way to take a huge chunk of Verizon’s business and give it back to the people who use iPhones. Instead of having your texting conversation over a cellular network, why not just do it over the internet on your phone? That way, it’s just part of your data plan, and the tiny amount of information in a text message isn’t going to overload your data plan. Texting will be effectively free. And that’s bad news for Verizon, AT&T, Sprint, and anyone else whose business model is to overcharge the crap out of people for their text messages.
More than two trillion text messages are sent each year in the United States, generating more than $20 billion in revenue for the wireless industry. Verizon Wireless alone generates as much as $7 billion a year in revenue from texting, or about 12 percent of the total, Mr. Moffett said, and texting brings in about a third of the operating income.
Yeah, I’d sell my Verizon, if I had any. And it couldn’t happen to a bigger set of swindlers.
Professor [Srinivasan] Keshav estimates it costs the carriers about a third of a penny to send text messages. Considering that the major carriers charge 10 to 20 cents to send and receive them, “it’s something like a 4,090 percent markup,” he said.
At 20 cents and 160 characters per message, wireless customers are paying roughly $1,500 to send a megabyte of text traffic over the cell network. By comparison, the cost to send that same amount of data using a $25-a-month, two-gigabyte data plan works out to 1.25 cents.
I hope Apple confiscates all that business and gives the money back to the people. The mark-up on text messages is nothing less than theft. Imagine, a third of Verizon’s operating income is based in a simple crime that Apple can now rectify. Bring on the iMessage.
…which dovetails nicely with this.
I don’t send texts. I don’t see the point, and I definitely didn’t see the point in paying for them.
I text so little that I pay per text, so don’t text me.
BlackBerry Messenger
yup, same principle. That’s why people never give up their Blackberries.
Theft is right. My plan now for my wife and I is $10 a month for 200 texts each (2.5¢ per text). But last month, we both went over our limits for the first time. AT&T is supposed to send a text warning when you exceed your plan, but we didn’t get a warning until we were WAY over. At 10¢ per text, we ended up paying almost $40 more than our norm. Unlimited texting is only $30 per month. So how can they charge us $50, when unlimited is only $30? They are crooks, and I told them so in an email complaint about the late “warning.”
The limitation on late notification is a technical one (this is my area of business). But the billing matter is something the marketroids decide.
Technically it would be possible to check with each text if you are nearing a limit by having the short message system check with the billing system for the account, but this would dramatically increase the costs of each text . So instead there is a periodic check of all accounts to see if they are nearing limits and then send out warnings. However, those checks are also expensive (a carrier like ATT has 10s of millions of subscribers) and also create an additional burden on the systems, so they tend to run them only a few times per day during the low usage hours.
However, it would be easily possible to set up the system to allow the user to convert to a better plan once they run over. On ATT, for example, if you are on the $15/month 200 MB data plan and you hit 201 MB, you could set it up to convert to the $25/month 2 GB plan instead of hitting the customer up for another $15 for another 200 MB. There is no cost reason for forcing the customer to pay $30/month for 400 MB.
But the marketroids are all about “RPU” – revenue per user – balanced against “churn” – the number of customers who leave the carrier. The idea is that the cost of acquiring a new customer is very expensive (the incentives to the local cell phone sellers for getting a new customer are very high). So the marketroids try to maximize revenue in a way that might annoy customers somewhat, but not enough that they will actually switch.
This is why it is so important that no more mergers be allowed in the wireless carrier industry. With 4 major players it’s not uncommon for 2 or 3 carriers to match the practices of each other (as Verizon and ATT have done on data plans) but usually one of the carriers is desperate enough, as Sprint is following their years of horrible mismanagement, to break with the pack and offer a better deal for customers. The same thing happened a few years ago with ATT nee Cingular and the rollover minutes.
There once was hope that the MVNOs (Mobile Virtual Network Operators) like Virgin Mobile or Cricket – who use the main carrier’s network but have their own branded services and phones on top of them – could offer that kind of customer-friendly discounting, but in practice their lack of network ownership limits what they can do because they can’t make operational changes to optimize network costs in a way that supports changes in customer plans.
Not only are they ripping us off, they’re using the public air waves to do so. As with TV and radio, we the people own the radio waves that make the wireless business possible. And they want us believe that another big merger would make things better? This is yet another example of why we should regulate any industry using the commons. I can’t wait for iMessage.
This is nothing new. eBuddy, WhatsApp, Blackberry… there are literally dozens of messaging apps.
For what it’s worth, most of the time I talk to people using Facebook and Google Talk – I have one program that combines them all together. This ‘innovation’ is several years behind the curve.
I’m sure Apple’s thing will be popular, but there is the inconvenient truth that NOT EVERYONE HAS AN IPHONE. I guess if you only text people with iPhones, and you never intend to use your SMS for increasingly popular uses like password resets, emergency alerts, football scores, etc, you can cancel your text package. You’re a moron, but then again, you have an iPhone… oh, I kid the iPhone people.
Technologically, you are right. Practically, this is going to save people like me a lot of money, whereas the previous solutions did not. Because this gets installed on every iPhone as part of the operating system, the usefulness factor is far higher.
I guess you could say that I’m lazy by not seeking out these other texting substitute solutions, but I also think that I’m not alone. I did try a GoogleTalk app for the iPhone a while back and didn’t find it a terrible good substitute for text messaging. And I’m not going to give out a second phone number or email address solely for receiving texts; that’s more effort than I’m willing to put out, and simply places a burden on everyone else.
I’m going to quibble a little bit with the idea that the cost per text is around a third of a cent. But only a little. As I noted with another reply on this thread, the pricing of texting and data plans is still a scandal.
It is true that each individual text doesn’t cost that much as the texting infrastructure has been well established for over a decade, this ignores two real costs of texting. One is that the texting infrastructure relies on the overall digital cellular network – and there are significant costs in maintaining that some of which have to be allocated to texting (as with any other application that uses it). Another is that people expect accounting details to go with their texting (lists of what texts occurred to who and when), and the costs of the accounting infrastructure adds about as much cost as the texting infrastructure.
When all costs are allocated the per-text cost is probably closer to 1 cent. If you are paying 10 cents per text then the carrier is in fact making a lot of profit on you. But the majority of texts for most carriers are on infinite texting plans – which isn’t surprising if you think about it, as business users and “chatty” users are the ones most likely to use texts freely. As an example of my not-so-hypothetical family of 6 on a $30/month infinite texting plan, the kids easily exceed 2000 texts/month and occasionally hit 3000/month – which is about 1 cent per text. Which means that on the texting portion of our plan the carrier doesn’t do much more than break even on us. Of course, they do make significant profit on the other parts of our plan, so it evens out for them.
Once again, this is not to defend the carriers, who don’t justify our defense. Having worked closely with many of them (and all of the big ones) I’d say that they are all slimy both in terms of customer treatment and employee treatment.
Yes, my son texts like crazy all the time and uses Facebook a lot. He has a $25/month plan with Virgin Mobile with unlimited texting and, I think, unlimited Internet. So, unless you’ve just got to have an iPhone, it pays to compare plans from different carriers. We picked Virgin Mobile for our son, but, at the time, there were several other carriers that had low-cost plans too.