Saturday, September 12, 2009

The Real Cost of SMS Messaging

Time Magazine has an interesting article on their website this week. The article, titled "Guess What Texting Costs Your Wireless Provider?" dumps a bucket of cold water on wireless subscribers.

According to the article, American teens have a combined average of 2,899 messages (sends and receives) a month; which I find a mind numbing number. SMS messaging, works over a cellular carrier's voice network, not the data networks that provide Internet access to smartphones like Apple's iPhone or Palm's Pre. Yankee Group analyst Christopher Collins states that because of the limiting nature of SMS messages, 160 characters at a maximum, the carriers have been able to route the traffic over the existing voice network infrastructure. "They cost the mobile carriers so little that you could argue that they're free," says Collins.

Time's article also sites the work of University of Waterloo in Ontario professor Srinivasan Keshav.
"He showed that the wireless channels contribute about a tenth of a cent to a carrier's cost, that accounting charges might be twice that and that other costs basically round to zero because texting requires so little of a mobile network's infrastructure. Summing up, Keshav found that a text message doesn't cost providers more than 0.3 cent."
If SMS messaging costs carriers less than a penny to process, why are wireless customers paying on average $0.15 - 0.20 per message sent or received? That's what Wisconsin Democratic Senator Herbert Khol wants to know. Senator Kohl, "chairs the Senate Judiciary Committee's subcommittee on Antitrust, Competition Policy and Consumer Rights, [and will be holding] hearings on the matter in June."

You can read the full article on the Time Magazine website.

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