Wireless carriers are gouging us on SMS text message costs

It seems that every year or so we see a “new” article that claims to have the scoop on wireless carriers’ SMS text messaging costs. A The New York Times piece rehashes the idea that carriers are out to gouge the wireless-consuming public with SMS text message prices that are disproportionately higher than what it costs the carrier to send them.

The reason carriers are able to get away with charging higher-than-necessary prices for their SMS text message service is that most people are unaware of what it actually costs to send a text message. Coupled with wireless operators’ practice of hiding their text message costs from public view, it makes sense that most people are apt to pay whatever the carrier wants.

You see, it costs a carrier virtually nothing to ferry that 160-character text message across its network and onto your friend’s handset. SMS text messages are not sent alongside voice or even data traffic. Rather, they are sent down a reserved portion of the spectrum known as the “control channel.” The control channel is used to coordinate network operations, and takes up the same amount of bandwidth regardless of traffic volume. Since carriers are going to have their control channel bandwidth used for operational communications, it cost them little extra to send text messages through the same pipeline.

On top of costing almost nothing for a carrier to send a text message, research has shown that global text message volume has increased some ten times in the past few years. So, not only are carriers charging more per text message, they’re also seeing more text messages pass through their network – a win, win for carriers. So, when carriers tell us that their per-text revenue has been cut in half in the same time period that saw text message prices double from $0.10 to $0.20, keep in mind that they’ve still seen text messaging revenue increase a handful of times.

The most intriguing idea, however, in this article is the notion that wireless subscribers with a text messaging plan may be getting gouged the worst. Unlimited text messaging bundles that cost upwards of $20 a month generate essentially free revenue for the carrier, even if the customer uses up their monthly allotment of text messages.

You still think you’re getting a great deal on your unlimited text messaging package?

[Via: NYT]