What is the cost of SMS?

by Chris Josephes

Sam wrote a blog post about the cost of SMS messages. I admire the effort, but I'm not in 100% agreement with his conclusion.

I think the goal the author was trying to make is that SMS messages are overpriced, and consumers should be outraged. To support his arguments, he compares a price per byte breakdown between a SMS message, an email message, and a printed document with thousands of characters (whether binary, hexadecimal or base64, I couldn't tell you). Unfortunately, the comparisons seem a little weak, and a real cost breakdown between these two technologies is not fair.

Let's take a look at 3 points the author tries to make.

1. What is the value (and the cost) of an SMS message?

A SMS message typically originates from one user's cell phone and arrives at another user's cell phone. People use them for quick messages that either don't need an immediate reply, or do not require the receiver to have 100% of their attention on their cell phone. Everyone has sent one of these at one time or another: "I'll be late for lunch", "OMG! TTYL?", or "I never want to see your cheating face again".

You don't need to boot up a PC, and you have a higher expectation that someone will notice the message quicker, because almost everyone carries their cell phone with them. These aspects of SMS are features that carry a dollar value. Twenty cents may seem high per message when the technology cost is almost zero, but technology is not the only expense by a carrier.

First and foremost, people are needed to maintain the service. That includes systems administrators, engineers, and customer support personnel. Those costs need to be in balance with the total number of SMS messages that pass through a network. Every carrier out there has already measured their own cost per SMS message, and that includes transport, personnel costs, and billing costs. If SMS isn't profitable, people could lose their jobs, or the per message price could go up.

2. Ah, but SMS shouldn't have any cost, because the infrastructure is already in place, right?

Not exactly.

A per unit SMS charge could mean that you're actually paying less for your base service. If every customer is expected to send 25 messages a month, they could reduce the base price to be competitive, knowing they'll recover that cost with the add ons. If you send under 25 messages, the carrier hopes that the emotional teenager down the street will send 50 messages to cover your slack.

Alternatively, a carrier could reduce operating costs by offering unlimited messages for a base price, like $10 for unlimited messages; but that creates the risk that consumers would just forgo SMS altogether.

3. Apples and Oranges (Is email cheaper than SMS?)

The other aspect of this article that confuses me is the comparison between SMS and email. To put this in a better perspective, I'll make my own argument.

If I were to fly from Minneapolis to Denver, the price of a one way ticket would be $290.23 with a flight time of approximately 2.5 hours. If I were to drive the exact same trip, my gas cost would be $180 (assuming that I can get 350 miles for every full tank of gas), and I would get there within 17 hours.

With either solution, I end up in Denver. Why does the airline in this case feel justified in charging such a higher cost? And if you think about it, that plane is going to Denver anyways, so I should be able to just ride it for free.

My comparison is a fail of epic proportions, because both methods of transportation have different operating costs. Airplanes cost more than cars, automobile gasoline has a tax for maintaining roads, flight attendants need paychecks. In both cases I'm paying different amounts of money, with different service expectations, but getting the exact same result.

The comparison between email and SMS isn't fair because the author admits that there is no per email message cost. No ISP would ever want to deal with billing per email message, because the tracking of incoming and outgoing messages would only increase the price. You can use your bandwidth for web surfing, email, online games, or anything. SMS messaging does not offer these features.

Next, let's discuss the idea of sending a single MP3 file (much less 2,560) over the SMS protocol. This is totally unreasonable action due to the size limits of SMS messages. SMS was never designed to transfer files, so why compare a file transfer? Most cell phone offer other methods, such as Bluetooth, or dedicated data networks for sending files. And while I'm at it, email isn't the best protocol for file transfers either. If I had 2,560 individual emails of 4gb each, I would be looking at one mbox file of 10gb. Managing that mailbox would kill most mail clients, and probably a couple of IMAP servers as well.

Finally, the author is incensed that the person receiving the SMS message may also have to pay a surcharge. Unfortunately, he fails to point out that the recipient of the email message will very likely have an ISP charge as well.

Conclusion

If I'm coming across as harsh, it's not my intention. This analysis is simply a counterpoint to the claim that text messages are expensive. Yes, they do cost a consumer money, and they probably make a profit for the carriers. I do not think this means SMS messages are bad, or exploitative.

The best way for a consumer to determine the cost of SMS messaging is to see what benefits the service gives you. If they save time, improve communication, or reduce confusion, there's a value to that. If SMS does not do any of these, then you have the option of not using it.

10 Comments

chromatic
2008-01-29 11:39:55
If SMS does not do any of these, then you have the option of not using it.


I have the option of not sending SMS messages, and I don't.


To my knowledge, I don't have the option of not receiving SMS messages at $0.15 per message. This is my concern.

Jason
2008-01-29 12:16:14
You definitely have a valid point. And yes, the SMS network is additional hardware to be maintained. On the other hand, chromatic has a valid point, too. SMS spam is quite annoying and can be expensive - if you don't have an unlimited plan like I do.


Perhaps noting the cost of SMS isn't the proper way to look at the problem. Most carriers are rolling out mobile data networks. While Verizon charges $0.20 USD to send a text message (under 200 characters). As of last September (the last time I was paying by the kb for data) Verizon was charging $0.0149 per kB. How can there be such a discrepancy between data and SMS networks?


If the problem is that SMS networks are so costly to run, how about figuring out an IP-based service (hey, how about email with a customized client that forces short messages and the minimum possible size?) to replace SMS. Most carriers already have data networks, and it's as simple as SMS <-> email gateways to keep legacy customers in the loop until old handsets (or software) are phased out. Additionally, this would theoretically allow picture and video messaging to be combined in the same protocol, and would work across network/wireless-to-email boundaries.


Though, it seems to me, wireless providers are doing the same thing broadband providers are doing - charging outrageous rates for mediocre service. Rates which do not at all reflect their operating costs or the level of (far superior) service the rest of the world gets. And I thought that the Sherman Antitrust Act passed...

Chris Josephes
2008-01-29 12:37:42
I don't have the option of not receiving SMS messages at $0.15 per message.


That's the one aspect of SMS that still stinks. Theoretically if you are charged a line item on your bill, you could dispute it. That takes time and money from both you and the carrier.


I can think of a couple of options (and there are probably other wireless geeks that know more).


1. Without knowing who your provider is, try some searches for "Cancelling SMS with 'Carrier_Name'". Also refer to sites like EngadgetMobile, or The Consumerist.


2. Openly chastise the sender of the message, telling them never to send you another SMS message again. I actually have a friend that does this.


3. In some cases, texting *35*0000*16# will disable incoming SMS .


4. Increases in SMS charges are fee increases, and it could be useful as a way of leaving your contract. Find another provider that offers no fees on incoming SMS messages, and port your phone number over.

Chris Josephes
2008-01-29 13:01:18
And I thought that the Sherman Antitrust Act passed...


To be fair, that's a little bit outside the scope of this article, (and the original article as well). Plus, I'm sure that a lot of our European readers are having a couple of laughs at the current state of the cell industry in America. De-regulation and consolidation have not turned out to be the consumer benefits that everyone initially claimed it would be.


SMS Spam is just as much of an annoyance as Internet spam, the big difference is you immediately see the cost; while you only see a trickle down effect as your ISP makes efforts to block spam from hitting their networks.


If you do get SMS spam, complain about it loudly. Make sure the charges are reversed. If enough people complain, the carriers will do something about it. Talking to a live person to dispute a 20 cent charge totally eliminates any profit they may have made from that message.

Record Man
2008-01-30 08:56:21
are SMS and texting the same thing?
kam
2008-01-31 09:53:37
if you were being roasted at the stake you'd probably find a good reason why your being so.
Chris Josephes
2008-01-31 15:56:56
are SMS and texting the same thing?


Texting is the process sending a message, usually through the SMS protocol, but not exclusively through SMS. Some other pager systems use different protocols.

Bonafide
2008-02-02 23:16:14
Fairdinkum RUBBIS


Time april 2000, place SAS flight from Stockholm to JFK, source R and D head of Telia Sweden.


FACT: the cost of an SMS sent by Telai Sweden to any mobile anywhere in the world - 0.000000001 of 1 SEK.


SPIN: all the lies you want to read and this was before any american company allowed SMS. on their networks.


Get your bloody facts right.


Sick to death of SPIN mungers. Do the the real research got into the real technical data. FORGET SPIN!!!!


Ralph Corderoy
2008-02-07 10:03:07
That the recipient is charged for an SMS is indefensible. It doesn't work like that in the UK. Would you pay the postman for every letter he delivers to you, whether you requested them or not?
joel
2008-04-02 14:52:07
In regards to the 'cost' of sending a SMS vs. email there can be zero difference between an email and SMS. Same is true with MMS vs. email. I am only talking about the send side expenses, not the recipients expense.


You can send SMS/MMS messages as email messages to most U.S. cell phones by emailing the recipients phone via the relevant email gateway server. The carrier specific restrictions on the messages still apply, e.g. max SMS length.


If you are using a WAP/SMS gateway, then there is a difference.