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The real cost of SMS.
hardware : by Corey - December 28th 2008, 10:26PM
Our good friend ltd posted a link to this story in The New York Times concerning how wireless carriers are essentially screwing over the consumer when it comes to the charge for text messages. While that point is more true than any carrier would like you to know, some of the details provided as a basis for this claim are incomplete.

But first, some nomenclature! The technical name for a text message is SMS (Short Message Service). It was designed and originally codified for use with GSM networks and devices during the 1980s. It consists of a short message, usually 160 total ASCII characters or less in length, transmitted between devices.

Another term thrown around is control channel. The control channel represents the very small piece of RF spectrum that is always active and serves as the, "always on" link between your device (usually a phone) and the network. All network information is transmitted over the control channel, including what RF channel to use and at which power setting to operate. Additionally, it is used to transmit paging messages, which is also why the control channel is often called the paging channel. Those page messages include alerts about incoming calls, outgoing calls from your device, incoming call waiting calls, network alerts, and other network/device communications. The other channel is called traffic channel, and is utilized when a call is made (either voice or data).

With that in mind, the central point of most of the articles published about this story is that SMS utilizes the control channel of the network, which does not require a traffic channel connection to be made that takes up valuable spectrum on a particular sector of a cell phone tower.

This point is flawed. Specifically, SMS messages are designed to roll over to the traffic channel any time the control channel is too busy to handle the additional traffic. This happens regularly in large cities during peak usage. Moreover, on non-US networks where the SMS size is greater than 160 characters, those messages are usually sent over a traffic channel. In CDMA, all devices have a setting that can force the device to send all SMS over the traffic channel if the carrier so chooses.

To be clear, most text messages are sent over the paging channel. But it is important to understand that SMS is not limited to use of the paging channel. The message must run through the SMS Concentrator (SMSC) and is then transmitted over wired networks, and often the Internet when sending messages from one network to the other. They are small, but they are utilizing network resources. And that does cost the carrier in terms of bandwidth and infrastructure. When that message has to be transmitted over the traffic channel, that message takes up a slot on that sector that cannot be used for other data calls or voice calls. That doesn't seem like a big issue when looking at a single sector, but if you weigh in the traffic on a national network, it does start to add up.

Now, carriers are of course screwing over the customer at any possible turn. Though the carriers do have some costs, the economies of scale they enjoy from a network infrastructure standpoint render those costs infinitesimal at best. So why have they doubled their rates over the last year? Simple: to pay for everything else.

Voice networks are not generating the revenue they used to. They used to make a lot of money off ringtones and pictures, and while that is still a viable market, it isn't what it used to be either. The real issue here is data usage. The amount of data used by subscribers is very significant, especially for EVDO Rev. A users on Verizon and Sprint. Both of those carriers have rolled out ridiculous limits on the service, such as Verizon's limit of 5GB per month for $60. Prior to these limits, they were virtually no gauges on data usage, and it was the same price. The huge margin they enjoy on SMS helped offset the loss of margin in voice and data services.

Another reason is that the consumer is willing to bear the cost of the service as offered. If people didn't use it, they would lower the cost, but text messaging is (lamentably) growing in popularity. That's a classic example of supply and demand at work.

Without a doubt, carriers are screwing over the consumer. They charge outrageous fees for services in order to maintain margins. That's right boys and girls, not revenue, but margins. The revenue continues to cover operational costs, but margin has been adversely impacted. A synonym for margin is profit.

They're all greedy jerkfaces. and I'm all for Congress investigating these companies for failing to compete, but the problem with that is that the only body we have responsible for this is Congress. I suppose time will tell, but I don't expect anything to come of it that favors the consumer. What say you?


+ Tommy G.
  Dec 28, 2008 23:30
Yes, it's a book. Sorry for the font size, dear readers.

But, Mackieman hit the nail on the head by saying "the consumer is willing to bear the cost of the service as offered".

Why are carriers charging so much? Because they can.


+ Dan F.
  Dec 29, 2008 07:29
Thanks for the detailed explanation Mackieman. I certainly didn't understand texting in this detail before. I thought of it in terms of simple bits and bytes; transmitting the character "1" takes significantly less bandwidth than transmitting the sound of someone saying "1".

I do not currently subscribe to a texting plan, at the point I am not "willing to bear the cost" and I realize that I am a minority in the cell phone world. I am trying to grapple with the idea that it won't cost me too much more as it will allow me to reduce my number of voice minutes. $480 per year for unlimited texting for 2 lines is hard to swallow when it seems that I am really conserving bandwidth for the carrier.


--- Tommy G.
  Dec 29, 2008 10:43
At that price, it doesn't make sense. Texting is more useful than calling at times.

I can't find the link, but it's also been suggested by the gov't to use in times of great emergency like 9/11. Why? Because it uses less bandwidth - go figure.

I think if there's going to be any discussion in Congress on the pricing of texting, the Dept of Homeland Security will bring their panic-inducing, fear-mongering ideas to the table. (Which in this one, rare case will actually benefit us to this end.)

+ Cory D.
  Dec 29, 2008 14:02
I despise "texting" in general, then again I have never really been into all the stupid "trends" that seem to come out. My thoughts are as follows....it is a phone...use it as such.

If you have to text message me, the importance of the message must not be very high.

If it was of some dire importance then we (you) clearly have a problem, becasue 9.9 x out of 10 I will not respond. CALL ME not that difficult is it now?

crap kids get off my lawn :argh:

Back to eating Tomato Soup, and watching M.A.S.H., or Matlock, hell I may just fall asleep with my soup.


--- Tommy G.
  Dec 29, 2008 15:59
Well, there are times that texting is useful. When you know the other party is unable to talk on their phone (in a meeting or in class for example), but you need to get them some info they asked for, or for giving someone an address to meet you at, someone's phone number. Those are legit uses.

Endless conversations via text is stupid and that's who's probably who is affected the most by the price gouging.

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