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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Comments
This is exactly the reason
By morris (not verified) on 28 Jan 2008 at about 22:40.This is exactly the reason I'm dumping AT&T as my carrier when they shutdown their TDMA service. I refuse to allow them to continue to squeeze my wallet any further.
Sprint: SERO plan. $30!! :
By Paint Junkie (not verified) on 28 Jan 2008 at about 23:24.Sprint: SERO plan. $30!! : 500minutes, unlimited SMS, MMS, and data (accessed through the phone only, phone as a modem costs extra). With taxes and fees $36/month
There isn't one great provider that won't give you any problems. Every provider sucks for some reason or another, but if there's something important to you in a plan and everyone else can give it to you better than your current provider, leave that provider.
I would pay $30/month just for voice so I can figure my SMS costs to be $0 and my data to be $0.
@Jake: Actually, Sprint
By Sam (not verified) on 28 Jan 2008 at about 23:36.@Jake: Actually, Sprint raised the price of their SMS messages from $.15 to $.20 at the end of last year.
AT&T has text message plans as well, but this article deals with the raw per message costs - not the costs of some "unlimited" plan.
Also, you have a special plan - which can't really compare. And even the SERO plan doesn't have free texts anymore (As of Dec. 31 2007).
I feel like there needs to
By Dan (not verified) on 29 Jan 2008 at about 00:42.I feel like there needs to be a drastic change in the way mobile technology works. 4 years ago I paid like 30 bucks a month and had free texting and lots of minutes, now I have less and pay more.
hi guys.. im lucky that in
By hash (not verified) on 29 Jan 2008 at about 05:01.hi guys..
im lucky that in my country, one sms only cost about 10 cents.. thats about 3 cents u.s dollar.
In India, it now costs
By Anonymous (not verified) on 30 Dec 2009 at about 04:18.In India, it now costs 0.02-0.05 cents for an sms. MMS is much more costly at 5-6 cents.
you are comparing net
By Paul (not verified) on 29 Jan 2008 at about 05:17.you are comparing net bandwith (SMS) with gross bandwith (ISP). Won't change the ration much but to be correct you need to remove all that protocol overhead you're paying for (e.g. HTTP headers) but have no actual use of.
Front page of Slashdot!!
By Nathan Zohner (not verified) on 29 Jan 2008 at about 05:27.Front page of Slashdot!! Congratulations on a great article!
SMS messages work different
By jane (not verified) on 29 Jan 2008 at about 06:02.SMS messages work different with billing in different countries too remember. Just bypass the carrier altogether and use the internet to send them for free like onsmsfun.com.au for example. US is the only country im aware of that has INCREASED sms costs in the last 10 years.
about the character set in
By miika (not verified) on 29 Jan 2008 at about 06:05.about the character set in sms-messaging. iirc sms uses 'gsm 03.38' as it's character set - that is to say 127 different characters - so 7bit but not us ascii ;)
what about all the HTTP
By Matt (not verified) on 29 Jan 2008 at about 06:08.what about all the HTTP headers from the SMS? It's more than just the actual physical data of the words that servers need to parse and that is caught up in bandwidth. 20 cents does seem like a lot but think about it..... we (the users) have put carriers in a position where they don't need to lower the price.
This is why I love living in
By Renato (not verified) on 29 Jan 2008 at about 06:09.This is why I love living in Europe! Here in Portugal I don't pay a penny to receive messages. And my prepaid plan allows 250 free messages per day within my network (about 4 million users). To other networks the price is 16 euro cents a message!!
The U.S. might be great at al other technology but in cell phones it is seriously lagging Europe!
This is why I love living in
By Renato (not verified) on 29 Jan 2008 at about 06:10.This is why I love living in Europe! Here in Portugal I don't pay a penny to receive messages. And my prepaid plan allows 250 free messages per day within my network (about 4 million users). To other networks the price is 16 euro cents a message!!
The U.S. might be great at al other technology but in cell phones it is seriously lagging Europe!
I love India, Cost of SMS Rs
By allb (not verified) on 29 Jan 2008 at about 06:14.I love India, Cost of SMS Rs 1 depending on your plan (1USD = INR 40) that works out to be 2.5c. Incoming is free ...
In Serbia, it costs about
By Tomislav (not verified) on 29 Jan 2008 at about 06:32.In Serbia, it costs about 2RSD, which is about 0.04USD. No fee for receiving. Price may double if you send it abroad (depends where you send). But most of the plans include some amount of free SMSs. And I still consider that expensive.
They let customers pay for
By Matthias (not verified) on 29 Jan 2008 at about 06:39.They let customers pay for receiving sms!? How ridiculous is that?
The true cost of the SMS (to
By Goten Xiao (not verified) on 29 Jan 2008 at about 06:40.The true cost of the SMS (to the company) is zero (at least where GSM is concerned). Carriers have a certain amount of time-critical data channels, which is where voice traffic goes - but SMS messages don't. SMS messages are transferred over the non-time critical control channels, which cost the carrier absolutely nothing to use. The only downside is that they're low bandwidth; sufficiently low to preclude the use of voice over them, but high enough to handle ~1KB of data every now and then.
Which means that every single SMS you ever send is pure profit for the carrier.
I've heard that US users
By JP (not verified) on 29 Jan 2008 at about 06:44.I've heard that US users came late to the SMS Generation - as of a couple years ago, not many Americans were actually using SMS.
So I guess your carriers have just noticed - "hey, this looks like it's becoming popular and we can charge a premium for it".
But man, charging to RECEIVE a message - crikey!
[...] found this article
By Actual cost of your SMS messages — Mobspice - Spice Up You (not verified) on 29 Jan 2008 at about 06:45.[...] found this article give us more insight about the play behind this SMS business, Read More… Stumble [...]
If I'd send bytes over the
By FooBar (not verified) on 29 Jan 2008 at about 06:47.If I'd send bytes over the USPS, I'd probably stick em to a micro-SD first, and mail that...
2-4 GB in 10 grams, stick it in a envelope, put a single stamp on it and go ;)
Lot faster then re-typing those sheets of paper :)
The European Community hit
By Pointernil (not verified) on 29 Jan 2008 at about 06:59.The European Community hit some European Telcos over their roaming prices, and are going after the SMS and Data-services just now.
Just about time, not only in the US.
I'd never heard of having to
By Matias Korhonen (not verified) on 29 Jan 2008 at about 07:21.I'd never heard of having to pay for received SMS messages before I read this article. That must suck...
What Sam fails to point out
By Spav (not verified) on 29 Jan 2008 at about 07:30.What Sam fails to point out is the data worth and focuses simply on the cost per bit. Fat pipes low cost per bit, thin pipes high cost per bit.
But surely a bit is a bit? Recently in UK News it was reported that a CD was lost with personal data on, in the context of this article, the CD costs about 20 pence for about 800MBytes about 0.025 pence per MByte, so why did it make the news? Because of the nature of the data and to illustrate this point further, it is only the 1KBytes or so, of data that relate directly to you that is important.
What is the message worth that is sent 2 minutes after leavng your loved one, simply saying "I love you". Is this worth 4p or would you wait until you get home and send an email at a cost of 0.00000x pence, because it is cheaper.
SMS is for sending messages not downloading songs, it uses a finite resource and shares that resource with the control traffic in the mobile network. It is a thin pipe!
I am not defending high prices simply pointing out that data is more than the 1s and 0s and the delivery method is significant. If you do not like the high price then do not use it or switch. But maybe it is too convienient to use on the move or the message is about now and will not wait.
Please keep the apples and oranges separate.
No, you're wrong. The pipe
By Anonymous (not verified) on 25 Jul 2009 at about 15:18.No, you're wrong. The pipe is thin, but the content of the pipe is so much thinner that the thickness of the pipe is arbitrary. Read the other comments in this article - it's been well explained. SMS is not considered time-sensitive, can share the control channel, and the content is far too small to overwhelm that channel.
In the UK we have a handy
By PaulieWomble (not verified) on 29 Jan 2008 at about 07:38.In the UK we have a handy piece of legislation called the 'Unsolicited Goods and Services Act' which probably stops carriers from charging users for receiving SMS. You cannot be charged for something which you have not specifically asked. However, we get charged up to 1 USD to send MMS!
Shucks! Never heard telco
By Kiwi Dude (not verified) on 29 Jan 2008 at about 07:57.Shucks! Never heard telco companies charging customers for receiving sms messages! In New Zealand its 20cents to send and free to receive.
Nice idea and good read
By Daniel (not verified) on 29 Jan 2008 at about 07:59.Nice idea and good read regarding the value for money comparison.
The bit from the "informed poster" on the cost of SMS might not be complete. Consider that there is at least one additional piece of equipment in the SMS and MMS transmission involved (SMS-C resp MMS-C) that is solely purchased, integrated, operated and maintained for the reason to do the forwarding of the messages. This is additional cost which might be low per message but you just can't say it is zero.
Everyone who says the cost
By Free SMS (not verified) on 29 Jan 2008 at about 08:00.Everyone who says the cost to send an SMS is 0, its not. there are now interconnect fees between many (most?) networks, so thats a few cents/pennies right there. in the UK we pay between 0p (im on 600 free messages a month) and 10p-12p on pay as you go (even then most have free messages)
the US system of paying to send and recieve is just crazy!!
I can see why SMS has never
By Seb (not verified) on 29 Jan 2008 at about 08:01.I can see why SMS has never taken off in the US if they charge you to receive as well as send! Here in the UK the typical cost is 10p per message ($0.20), and MMSes are 4 times that. I'm just about to switch to Orange actually because they do an unlimited-free-SMS tarriff now, about time too.
If it actually doesn't cost
By Pixels (not verified) on 29 Jan 2008 at about 08:12.If it actually doesn't cost extra on the network to transport the SMS messages, then the logical conclusion is that the leadership behind the US telcos does not have honorable intentions to the welfare of society. They should not be trusted to be around government officials and law makers. And I'm not in favor of government control, but considering their size and monopoly tendencies maybe the deserve it.
Ideally they should be offering cheaper prices as more users join their networks to share the cost. Drawn to it's logical conclusion the mobile telcos should transition into a wireless ISP where voice/data are one and the same at a flat rate. Unless perhaps an analog conversion is needed.
Every other industry retires old features into the base package and then develops something new to draw a new purchase or a new customer. But the telco industry never seems to reduce the price of anything. So we are still paying monthly for caller ID plans like they are something hard to implement. Does this always happen in a monopoly situation?
For the mobile carriers, we should have seen this coming when the first locked cell phones arrived ... back in the day.
[...] interesting figures
By US SMS can be pretty expensive at Rage on Omnipotent (not verified) on 29 Jan 2008 at about 08:15.[...] interesting figures for US SMS costs vs standard internet. I wonder what the picture is like in the UK, where far more people have SMS bundles as part of [...]
Great article, I have been
By B (not verified) on 29 Jan 2008 at about 08:20.Great article, I have been saying this for years. It is one thing to pay both way for text messages, but remember also that here in the US we also pay both ways for our cellphone calls. When I make a peak time call to another cellphone that is not on my network we are both paying for that phone call!
Russia: 0.95 RUR per SMS,
By Free Researcher (not verified) on 29 Jan 2008 at about 08:33.Russia: 0.95 RUR per SMS, near 24.5 RUR per USD (outgoing, all incoming for free and there is a law about 'double pricing', you'll never pay for incoming calls or SMS/MMS).
Its really bizzare practice - 20 c. per SMS!
that is an insane amount of
By darklooshkin (not verified) on 29 Jan 2008 at about 08:41.that is an insane amount of money to spend for an sms service. I think that the best idea would be to hammer in cheap wireless and then voice-skype instead.
I guess you never considered
By steve (not verified) on 29 Jan 2008 at about 08:47.I guess you never considered the fact you can get unlimited SMS msg's for a price. Which is what these companies are trying to get people to do. They want each person to pay 20 bucks extra per month for unlimited text. So by jacking up the cost of each indiv msg, it will push people to changing their plan.
That's why there are
By geekborj (not verified) on 29 Jan 2008 at about 08:53.That's why there are internet-based SMS and MMS services for low low fees recently.
It is not possible to compare the price against snail mail or door-to-door delivery of messages since time is not taken into consideration. For example, it takes you few minutes to receive the SMS while, at best, you get your door-to-door delivery in hours.
The US is so advanced in so
By iceman (not verified) on 29 Jan 2008 at about 08:58.The US is so advanced in so many ways but it is hopelessly backward in the SMS business. The premium value of SMS is what get layered over it. Every other developing country has free or low cost SMS and these create huge market penetration.
oh, i also forgot. i think
By geekborj (not verified) on 29 Jan 2008 at about 08:59.oh, i also forgot. i think we should also take into consideration the idea that you can receive messages ON THE GO. That's another variable there. You have to also consider power consumption on emitting the EM signal (24/7) plus the continuous maintenance of connections and services. Thus, so far, you have considered the gross income but not the NET INCOME.
Even so, i really think you have a good point here. Maybe they are charging too much. But i guess not that too much.
SMS is a huge profit center
By Ardent (not verified) on 29 Jan 2008 at about 08:59.SMS is a huge profit center for telcos. It's about like extended warranties in profit. SMS uses the voice channel that transmits the "ring" signal, hence the small size limit. This is also why some older phones that do not have web capability can still send and receive text messages. It is indeed obscene to wring that sort of fee out of a tiny bit of bandwidth that is necessary for voice service, but only used in short bursts. To get that great Sprint SERO deal mentioned in an earlier post, all you need is a Sprint employee's email address.
The excessive cost for
By JM (not verified) on 29 Jan 2008 at about 09:03.The excessive cost for sending and receiving text messages may be reaching a critical point in my opinion as the text spam continues to spread throughout the country and affect more phones.
This is one of the web's
By purrl.net |** urls that purr **| (not verified) on 29 Jan 2008 at about 09:06.This is one of the web's most interesting stories on Tue 29th Jan 2008...
These are the web's most talked about URLs on Tue 29th Jan 2008. The current winner is .....
Quite interesting also is
By Rick S. (not verified) on 29 Jan 2008 at about 09:06.Quite interesting also is how I'm currently posting from my iOverpricedPhone on the unlimited data plan that you're required by default to have (19.99). I can browse the web, send email with pictures attached, and stream media as much as I want, but I can't send more than 200 of those little instant messages between phones.
[...] Read More [via] [...]
By How Come SMS’s Cost So Much? (not verified) on 29 Jan 2008 at about 09:12.[...] Read More [via] [...]
You made a mistake when
By Sean (not verified) on 29 Jan 2008 at about 09:19.You made a mistake when calculating transfers via ISP. The person you are transfering to ALSO pays an ISP so they have an internet connection. Therefore, your reasoning for doubling SMS costs, and not ISP costs, is false.
Still a very large number, certainly, but not 61 million times larger.
[...] gthing.net [...]
By Admit One / mental gymnasium » Hope you’re rich! (not verified) on 29 Jan 2008 at about 09:24.[...] gthing.net [...]
Don't forget about the
By Kyle (not verified) on 29 Jan 2008 at about 09:39.Don't forget about the headers in every SMS message. I'm not sure how many bytes this accounts for, but it does matter. Also, with Verizon anyways, when you send an text to another Verizon phone you get notification that the text was recieved. This means another SMS is sent from the recievering phone to the sending phone.
I think the prices were slight exaggerations as well. What about $10 or $15 / mo unlimited plans? I think it is still overpriced, but worth a mention.
I might do a similar study
By joe (not verified) on 29 Jan 2008 at about 09:49.I might do a similar study on the current SMS situation here in the Philippines. Thanks for the tip.
I Denmark where I live a SMS
By DaDane (not verified) on 29 Jan 2008 at about 09:52.I Denmark where I live a SMS costs between 5 øre and 25 øre, that is approximately 1-5 cents (US). It's free to receive.
You can get unlimited SMS'es for 60-100 kr. (12-20$).
One minute is 60 øre and up (12 cents) with no obligations, no minimum use, no per month rate etc.
You can have unlimited voice (well up to 48 hours/month), unlimited SMS, unlimited MMS for 500 kr/md (100$/md).
I think these prices are fair, - but of course it can (and will) be cheaper over time.
Biggest problem is unlimited data. Until recently one megabyte was 10 kr or more (2 US $). But this have changed now. One megabyte is now 1,50 kr (30 cents) or you can have unlimited from approximately 200 kr (40 US$).
That should be cheaper!
The problem is that SMS
By Szundi (not verified) on 29 Jan 2008 at about 09:52.The problem is that SMS messages are transferred on the signal channel in GSM systems. This channel transfers the call signals and used to coordinate the phones.
So, this channel is expensive, at the start this was the reason of the high price of 5 cents.
After that, came gprs, and you have phones that can be configured to send sms via gprs. But then it would be obvious that it costs nothing to the telco, so be it, use the simple sms service.
Telcos are evil.
The slashdot item about the
By Elmo (not verified) on 29 Jan 2008 at about 10:00.The slashdot item about the opportunity cost reminds me of something I heard from a former telecom CEO who was talking about "value added" propositions. He said that many added features like call waiting are, like SMS messaging, a no-cost proposition for the telco. So they not only get people to pay extra for something that costs the telco nada, they also wind up with more completed calls and billable minutes. Same for voice mail -- used to be we hung up after 10 rings and called back later. We had no charge for the incomplete call. Now the voice mail kicks in after 4 rings and the call is now billable.
And try to get a mobile phone without bells and whistles like SMS, cameras that take pictures of the inside of your pocket, and automatic voice mail services. Feh!
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