The True Price of SMS Messages
I just found out that AT&T (A-fee&fee?) is raising their text message pricing. When I first signed up for AT&T 6 or so years ago it cost 10 cents to send an SMS message, and it was free to receive them.
When AT&T switched to Cingular the price of sending a message dropped to 5 cents, but they started charging for incoming texts - also 5 cents. Assuming you send a message for every message you receive, this works out at about the same price as before.
AT&T came back online and phased out the CIngular brand name, and prices were again changed. This time to 15 cents each way.
More changes have taken place that I can't quite remember. At one point text messages were 10 cents either way, and at another point they even included MMS (multimedia messages) at the same price as SMS.
As of March SMS messages on AT&T will cost 20 cents and MMS will cost 30 cents - both to send a receive.
So let's do some math here, and figure out how much this simple transmission is actually costing us.
A standard SMS message contains up to 140 bytes (1120 bits) of data - this takes care of the 160 characters allowed in your text message. This might not make sense at first, until you realize that SMS uses 7 - not 8 - bit characters - leaving you with 128 possible character values instead of the normal 256. So 1120bits/7bits = 160 characters.
So our total message length is about a tenth of a kilobyte (.13671875 Kbytes). In terms that the iPod generation would understand - if you had an iPod with a tenth of a kilobyte you could fit 1/4000th of a song on it. I assume here and for the rest of this article that 1 song = 4 Megabytes.
If you divide 140 (the total number of bytes available to you) by 20 (the cost per message), you find that you are paying 1 cent for every 7 bytes of data. This leaves you with a cost of $1,497.97 for the 1024Kbytes contained in a single megabyte. iPod users: It would cost you $5,991.88 to transfer - not even to buy - a single song via SMS.
By comparison, I pay $50 a month for a soft bandwidth limit of 500 gigabytes through a local ISP. That comes out to 512,000 megabytes or 10,240 megabytes to the dollar. This allows me to transfer 2,560 songs for the same price as a Junior Bacon Cheeseburger off the value menu at Wendy's: $1. I will use this my standard measurement for the rest of this article.
So far I can make the following statements concerning the costs of bandwidth:
Cost to transfer 2560 songs:
From my ISP: $1
Via SMS messaging: $15,339,212.80
But wait, there's more!
When calculating SMS charges, most people don't take into consideration that the message is really being paid for twice! If I send a message to another AT&T user, I am paying to send it AND they're paying to receive it! This should probably be illegal, but that's for another discussion.
So how much does an SMS message actually cost? Not 20 cents - but 40 cents! This doubles all of my numbers above.
Furthermore, my above figures estimate that people actually use all 160 characters available to them. Say people on average actually only used half of that (which is still being generous) - then their price of data has again doubled from the numbers I gave above!
Making adjustments for both of the above statements, we realize that our above number isn't even close to correct! Corrected, the comparison looks more like this:
COSTS OF TRANSFERING 2,560 MP3s:
via my ISP: $1
via SMS: $61,356,851.20
Phew! THAT is premium data! It's no wonder that SMS texting alone is a 100 Billion dollar a year industry!
How big is that? Take all of hollywood movie box office revenues worldwide. Add all of the global music industry revenues. And add all of videogaming revenues around the world. Even all those three together, we don't reach 100 billion.
Let's even go more premium - how much would it cost to hand deliver data?
The U.S. Postal service is currently charging 41 cents for this privilege (hmm.. only one cent more that AT&T charges to automatically handle an SMS message). So how much written data could we send in a letter?
Google says 250 is considered the standard words per page measurement, and a sheet of paper weighs about 4.5 grams. The U.S. postal service allows your letters to weigh up to 1 ounce before charging you more, which is just over 28 grams. So you could send 6 sheets of paper, minus 1 for the envelope. If you write on both sides that gives you 2500 words (10 pages x 250 words).
According to this page, the average english word is 5 characters long. Add in a space for every word and you have 6 characters per word or 1500 characters for page for a total of 15,000 characters.
Now we are not limited in any way in the types of characters we can use, but let's assume we are using a 256 character (8 bit) set.
Our letter therefore gives us ~14Kbytes for 41 cents. To transfer an MP3 using this method, we would be looking at about $119.95. To transfer 2,560 MP3s, that comes out to only $307,072. We would also need to take into consideration the bulk rate, but for the sake of argument (and because I don't feel like figuring it out), let's leave it where it's at.
The cost would drop dramatically if we compressed the data onto, say a DVD and our cost would be something more like $1.20.
Updating our chart from above:
COSTS OF TRANSFERING 2,560 MP3s:
TCP/IP: $1
TCP/SMS: $61,356,851.20
TCP/USPS: $307,072.00 (Bits written out on paper)
So getting a SMS delivered is bit for bit 200x more expensive than getting a message hand delivered to your doorstep anywhere in the United States.
What exactly justifies making SMS messages sixty one million times more expensive than ISP data and 200x more expensive than TCP/USPS? How come technology, communication, and infrastructure is getting cheaper while the costs of SMS messages are increasing exponentially? My theory: SMS messages are transfered over air made of solid gold.
edit: A few readers pointed out that from the title, this article sounds more like it's about the carrier's internal cost for transmitting SMS messages. For that, we turn to an informed slashdot poster:
I know the true cost of SMS messages!
I made a paper for the univeristy some years ago. The marginal cost of a SMS is 0.
They do have a little cost/opportunity. As a matter of fact SMS messages are sent on the control channel. Initially SMS were implemented in the GSM standard as a control system, just like the ICMP protocol of the IP stack. Then NOKIA though to implement a actual instant message function using SMS. The Contol channel is the channel that your mobile listens to in order to receive calls. So for receiving a SMS a control signal is sent. Since bandwidht is somehow limited on these channels it could happen that in a situation of massive usage of texting the control channel gets saturated and normal voice protocol initiation is disrupted. To prevent this carriers nowadays apply a kind of QoS delaying SMSs until there is no risk of congestion. So we can state that the marginal cost is 0 and the cost/opportunity is also 0
Another story is for the MMSs. Their cost/opportunity is even lower since they run almost enterely on GPRS thus using most bandwidht on normal data channels. Thus a MMS with pictures sounds and maybe video SHOULD cost less than a SMS.
So you wonder, why do I pay so much for a SMS or a MMS or even a Call: after the debts for the initial hardware infrastructure have been paid by the carrier you are still paying because of market segmentation (You won't change the carrier on the fly) and a little monopoly (Almost impossible to start a new carrier from 0).
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Thanks!
Thanks for the post!
+905388807108
ERKAN NBR
Why not
just get an unlimited texting bundle? thats what i got, its 10 dollars a month, but i send about 50 a day so its a deal for me:D
I wonder if any of you have
I wonder if any of you have heard of US cellular??? I have US cellular - and NO they do not charge for incoming text - and you can get different text packages as needed. i keep seeing all this whining about the cost of text but apparently people have not done their homework.
@ Admin: I like your
@ Admin:
I like your comparison between Exxon and Acision. Never looked at my company like that... :-)
I admit that my view on this topic is to some extend biassed (as a I working for the #1 vendor of network messaging equipment). Quite frankly, my point was not to deny that there seems to be (or was) an unbalance in the price for an SMS compared to its direct related cost. Even I buy that one; especially when my private operator plan gives me another bill shock. ;-)
But that's just one side of the story. Let's also take into account indirect costs here: operators (big and small) appeared to have made huge margins with SMS. At the flip side though, those operators would not have survived without it. The tremendous cost of call centres, UMTS licenses, radio network equipment and branding cannot all be allocated to voice (especially when the price of voice has been dropping immensly for quite some time). An average internet service provider is not challenged with this type of costs (Ever tried to call Microsoft or Yahoo?).
These indirect costs cause many operators to struggle with profitability ever since they started of. In fact, I predict that from a financial point of view, many operators could still be regarded as greenfield operations that need to reach a return on investment.
U WILL LIKE THIS ARTICLE
U WILL LIKE THIS ARTICLE
[...] Critics say the basic
[...] Critics say the basic price of text messages is excessive compared to other cell phone data-related charges. Because they carry only 160 text characters, text messages consume a tiny amount of bandwidth — about 1/4000th as much as a typical song, according to the blog GThing.net. But downloading a 4-megabyte song costs only about $1 on a standard cell phone data download service — or roughly five times the price of a single text message. At test message prices, music downloads would cost almost $6,000 each, the site argues. You can double-check the Gthing.net math here. [...]
In general I like to be
In general I like to be positive in my comments posts (call it my, don’t wake the trolls policy). But honestly I find some of the negative responses to this article silly and annoying.
To the all who say switch to an unlimited plan, I say: Did you really read the article? Part of the point is telecoms’ use the per usage fees to blackmail customer into unlimited plans.
To the apples and oranges crowd: It’s a data to data price comparison. Yes, not every tiny detail is accounted for, but that doesn’t change the overall argument that SMS fees are ridiculously high compared to other data. Oh, and for those with a serious lack of imagination out there, it was a theoretical data conversion of snail mail to price per character, not an actual one.
To thin pipe versus fat pipe: Did the telecoms have to set up a messaging service on thin pipe? No, but they did because it was an already available back channel they could exploit with very little cost to themselves. Should the customer absorb the cost now that these channels are getting congested? No, that is the cost of the telecoms lack of foresight. Plus one of your already mandated monthly fees is set aside for the upkeep and improvement of the telecommunication infrastructure. At its worst putting data on a thin pipe and asking people to pay more for it, is nothing more than manufactured scarcity. Manufacture scarcity is bad, bad, bad economics (i.e. energy companies creating rolling blackout so they can charge more for power consumption).
To the value added folks: Yes, a text saying ‘I love you’ gives me warm fuzzies, but lets not forget they are charging a fee for ANY text message received. Sorry, but I find no value to the 40 text spams or 100 ‘I hate you’ messages from an ex-girlfriend. Please, let’s keep the ‘fuzzies’ out of pricing plans.
[...] An iPhone 3G doesn’t
[...] An iPhone 3G doesn’t come cheap, in fact, most monthly plans are pretty expensive. Yet bloggers are constantly writing about ways to save some money with the shiny object - such as VoIP calling (and not having to buy an iPod or GPS system). This morning I stumbled on a money-saving plan that concerns the most unfairly priced mobile technology of our time: SMS texting. It’s ridiculous how much we have to pay for transferring such a small amount of data. If we had to download a song from iTunes for SMS data costs, we’d pay €3,770 (based on calculations by Sam from a gthing science project). [...]
Also the individual
Also the individual messenging rates are ridiculous because of how much more expensive they are than the messenging plans. With Verizon I get Unlimited messages to Verizon customers and 500 other messages for $10 a month. That means even if I know noone else with Verizon I still get 500 messages a month. If I did not have the plan and sent/received 500, it would cost me $100, at $.20/message. I understand the higher rate for not getting a messenging plan but I think the fact that it is At Least 10x higher then a plan is ridiculous, especially when you consider how much of a rip-off the plan is to begin with.
What if you had to pay for
What if you had to pay for every letter that you received thru the postal service or every package you received by UPS, while the person who sent them to you also had to pay just as much?
[...] higher bandwidth
[...] higher bandwidth services are charged differently. Good thing, too. According to Sam over at a gthing Science Project, if the same per-byte rate was applied to the other cellular data transmissions we’d freak: [...]
[...] Just another way the
[...] Just another way the US wireless industry is sticking it to us. Reading This article about the rising cost of texting just makes you sick. One blogger has done the math. [...]
[...] aol.com - replace #AT#
[...] aol.com - replace #AT# with @ ] 1. http://news.cnet.com/8301-10784_3-9982251-7.html?tag=nefd.top 2. http://gthing.net/the-true-price-of-sms-messages/ Popularity: unranked [?] Listen to this podcast Print This Post Tags: OMG Did U [...]
[...] blogger in January
[...] blogger in January begain to “do the math” on the price of text messages when text messages went up from $.10 each. He compared the [...]
[...] Woah - when you
[...] Woah - when you compare it to other services - texting is expensive! One Blogger did the math. [...]
[...] realm of text
[...] realm of text messaging. Maybe this will force them to look at dropping those ridiculous rates of $1,497.97 per megabyte (no exaggeration — have you read this?). addthis_url = [...]
[...] reading: gthing, cdb
[...] reading: gthing, cdb Posted in headlines | Print Post | Email [...]
China: Depending on carrier
China: Depending on carrier a single sms is .05 Yuan
Exchange rate Equals .0072 USD per sms message
When I got here I was genuinely surprised that most peasant farmers and rickshaw drivers have mobiles. I thought there would be now way they can afford it but when things are resonably priced every one benifits.
come to india people... SMS
come to india people...
SMS costs
Outgoing Varies from Rs 1 to Rs 0
Incoming - Rs 0.0 (Even while Roaming)
Call costs
Outgoing - Varies from Rs 2 to Rs 0 ( Rs 0 on same network throughout the country)
Incoming - Rs 0 (Roaming - Varies from 2 to 0)
[...] CNET, gthing var
[...] CNET, gthing var disqus_url = 'http://www.datanneal.com/2008/07/02/text-message-price-gouging/ '; var [...]
[...] it to us.
[...] it to us. Reading This article about the rising cost of texting just makes you sick. One blogger has done the math. If the same pricing was applied on a per-byte basis to downloading one 4MB song it would cost the [...]
[...] must be aware of the
[...] must be aware of the real cost of sending an SMS and this price is just T-Mobile pulling the wool over its customers eyes. Share [...]
I worked in a (European)
I worked in a (European) mobile telco and one of my colleagues was doing an analysis on the network. In terms of the network (GSM at the time) sms costs 1/90,000 the capacity of voice. That's practically nothing. So the profits are phenomenal.
The infrastructure for SMS is already built when they build the voice network, it's a back channel, spare, and it's a huge profit centre for telcos. In terms of infrastructure, they need a couple of servers and a load balancer to handle traffic, but who doesn't?
[...] Inspired by this
[...] Inspired by this article. [...]
[...] some things need to
[...] some things need to change. These companies already over charge us for these services. See GThing’s blog on the True Price of SMS Messages for more of what I [...]
Tanha tanha se rahate
Tanha tanha se rahate hai.
Dard hota hai to chup hoke sahate hai.
Gam k0 yaha dikhaye kise,
Dhokha to apane hi dete hai.
[...] way of followup to my
[...] way of followup to my SMS Texting article, it seems a few readers are taking it seriously and have filed a class action lawsuit [...]
[...] discussion on Hacker
[...] discussion on Hacker News and on the linked article go in to more detail about the issue. All I wanted to say that my original statement was wrong and I [...]
[...] this, of course, is
[...] this, of course, is not the case. I want to go one step further in the same spirit as my “True Cost Of SMS” article and do some really elementary math (as it is all I am capable of) on the [...]
wow, that was great post..
wow, that was great post.. thanx for sharing the same...
Mobile Social networking
[...] the pricing of text
[...] the pricing of text messages interests you, check out this article on the “true price” of SMS messages, revealing in a different light how expensive they [...]
@Martijn Brouns Well that
@Martijn Brouns
Well that whole diatribe is nice and dandy, but I can't say it means much coming from someone working at Acision ("The messaging and charging company of choice for over 300 network operators and service providers worldwide.")
That's like Exxon telling us that hybrids and electric cars are evil.
Nice try though, seriously, I would have done the same thing.
[...] For those of you that
[...] For those of you that don’t speak in British Pounds, that’s $732.17 per MB! Want to text message your music collection? It’ll cost you a cool $61,356,851.20. [...]
Making a comparison between
Making a comparison between SMS and IP bandwidth is similar to comparing a San Pellegrino mineral water with plain tap water.
To be more specific: $2 per 750 ml San Pellegrino against $0.000537 per 1000ml tap water. This makes a drop of San Pellegrino almost 5000 times more expensive than a drip of tap water.
Question: will you start drinking less mineral water because of that? No!
Now back to SMS. Why has reached the value of SMS the status of a bottle of Italian mineral water?
- Because it works every (internet doesn't, ask your mom)
- Because you can reach over 3 billion people with it day and night
- Because it offers a simple and unique means of highly personal communication that IP cannot (yet) mimic.
- Shall I go on? Nah,.. guess you catch my drift...
I'll stay with SMS and so do most of you complainers I am sure...
[...] plan. D’oh! But my
[...] plan. D’oh! But my colleagues at my job and my vendor’s project manager have taken to texting me about 10 times a nanosecond, so I guess I shouldn’t be surprised. (Do you know at&t [...]
[...] plan. D’oh! But my
[...] plan. D’oh! But my colleagues at my job and my vendor’s project manager have taken to texting me about 10 times a nanosecond, so I guess I shouldn’t be surprised. (Do you know at&t [...]
[...] Lacy is surprised by
[...] Lacy is surprised by the international ubiquity of Twitter (maybe because text messages are so expensive in the US): My in-laws asked my husband if it was an invasion of our privacy to “follow us” and [...]
most expensive SMS are in
most expensive SMS are in germany! :( 19 cent for one SMS! :(
[...] Why isn’t AT&T
[...] Why isn’t AT&T focusing their efforts on more worthwhile causes, like I don’t know, unlimited Voice and Data plans for reasonable prices or SMS for something a bit less that highway robbery (The True Price of SMS)? [...]
[...] inflammation, which,
[...] inflammation, which, in turn, is ahttp://www.eurekalert.org/pub_releases/2008-04/esoc-abl040808.phpThe True Price of SMS MessagingHow much do you think it would cost you to move a single average-sized MP3 via [...]
Ur ryt about AFee& Fee. They
Ur ryt about AFee& Fee. They dnt usuly chrg mch way bk. I rmmbr my wyf sndng me unlmtd txt msgs 3 yrs ago whn thyr still Cingular bec they dnt chrg evn a penny. i go to websites dat snd free txt msgs anywhere 4 free. in the philippines txt msging is only $0.03/txt msg (160 characters/msg) and $0.30 to other countries. its probbly d hype that these mobile companies are taking advntage of.
Ur ryt about AFee& Fee. They
Ur ryt about AFee& Fee. They dnt usuly chrg mch way bk. I rmmbr my wyf sndng me unlmtd txt msgs 3 yrs ago whn thyr still Cingular bec they dnt chrg evn a penny. i go to websites dat snd free txt msgs anywhere 4 free. in the philippines txt msging is only $0.03/txt msg (160 characters/msg) and $0.30 to other countries. its probbly d hype that these mobile companies are taking advntage of.
Just pay the $10.00 and get
Just pay the $10.00 and get their unlimited sms.
Just pay the $10.00 and get
Just pay the $10.00 and get their unlimited sms.
From where I sit, Google is
From where I sit, Google is poised to strke at the mobile phone industry. Evidence can be seen in the development of Android, the acquisition of several chat and call routing services and reported negotiations with Ebay for Skype.
With all factors combined, I see a web capable device that leverages Wi-Max to provide Voip phone service, video conferencing and teathering in our future. All of this with an open platform for developers to create for.
Things will be changing soon. :)
From where I sit, Google is
From where I sit, Google is poised to strke at the mobile phone industry. Evidence can be seen in the development of Android, the acquisition of several chat and call routing services and reported negotiations with Ebay for Skype.
With all factors combined, I see a web capable device that leverages Wi-Max to provide Voip phone service, video conferencing and teathering for laptops. All of this with an open platform for developers to create for.
Things will be changing soon. :)
Awesome post! Luckily I only
Awesome post! Luckily I only send like 10-20 SMSs per month, and they're covered on my iPhone plan.
[...] The True Price of SMS
[...] The True Price of SMS Messages » a gthing science project COSTS OF TRANSFERRING 2,560 MP3s: TCP/IP: $1; TCP/SMS: $61,356,851.20; TCP/USPS: $307,072.00; Marginal cost born by cell service and SMS provider - $0. (tags: sms mobile business pricing data phone messaging) [...]
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