If you've been paying attention to mobile carriers' SMS pricing lately (and something tells us you haven't) you'd be surprised to discover a fairly disturbing trend amongst providers: price hikes. Over the past year or so, nearly every major carrier in the US has raised their per-price cost of SMS messages, with
Verizon and
Sprint jacking up the fee from $0.15 to $0.20 a message, and AT&T and T-Mobile adding another nickel to their $0.10 charge. Of course, this trend of rising prices accompanies a major spike in the use of text messages amongst customers, with some surveys marking a 130-percent jump over SMS use since June 2006 -- and telcos are taking it to the bank. What's most insidious about the inflated costs is the fact that SMS data is particularly low-bandwidth, and analysts say that the price increases aren't related to higher operating costs -- these companies are simply gouging customers for a service which they have embraced. Companies say the hikes are meant to encourage customers to go for more expensive "bundles," though we're confident they won't mention it when your Mom uses more messages than her plan allows and unwittingly pays a few extra bucks on her bill -- that stuff adds up, you know?
Reader Comments (Page 1 of 3)
John @ Jan 23rd 2008 8:40AM
If people will pay it, why not?
JustinM @ Jan 23rd 2008 8:43AM
If this were the only ridiculous thing cell carriers did to make their customers (and don't forget that...we're the customers, not them) pay more, we might be able to overlook it. But it's certainly not. It all adds up to one big steaming pile of...
lmondesir @ Jan 23rd 2008 8:51AM
Is it just me, but ever notice on att you can't NOT receive a text msg. A friend has t-mobile and when a text comes in he can ignore it, can don't pay, whereas on att I have no choice, once the text is sent I get charged whether I read it or not.
ntbsd @ Jan 23rd 2008 8:53AM
@lmondesir,
Man, you have to pay to receive SMS?
drakono @ Jan 23rd 2008 9:34AM
@lmondesir
I have the same problem on Verizon. I have to explicitly tell all my friends NOT to send me text messages, because there's no way to decline them -- and then a few of them still do. At least it's a way to weed out the more simple-minded people so I can stop being "friends" with them. But they still have my number. :(
Hax Or @ Jan 23rd 2008 9:49AM
Everyone raise your prices! They will be forced to pay it!
Cuz there's no one else.... muhahaha
- The Management
OneLove @ Jan 23rd 2008 11:01AM
like when your fiends and family send you invitations to social networking sites and use your private email address. :|
mylicon @ Jan 23rd 2008 11:38AM
People seem to forget fundamental business concepts. First and foremost a commercial business' primary goal is to make money. They are not a utility or the Red Cross so they're under no obligation to give away a product at cost or some designated markup. People don't seem to have qualms about paying a few dollars for WATER because it comes in a bottle. Second there's a neat little concept in economics: "price the market will bear."
Most cell phone carriers (in the US) are more than happy to turn data off to a specific line completely. I have done this with both AT&T and Verizon without much fuss.
Michael @ Jan 23rd 2008 12:16PM
@imondesir
That's incorrect. T-mobile, as with all nation wide carriers, can not see whether you've read the text message or not. You are charged for receiving it, not reading it. Unless your carrier has unlimited text included in their plan (Cricket, for example).
---
I work for a cell phone carrier in their customer care department. Honestly, cell phones can get really expensive if you don't watch your usage. This includes minutes used, sms, data, 411 calls, and downloads of games or ringtones. If you don't want to be charged for incoming SMS, you can call in and normally have it removed. If you like texting, you can opt for a plan that will give you a predetermined number for a far cheaper "per month" price. My carrier, Sprint, for example, let's you get 300 for 5.00, 1000 for 10.00, and unlimited for 15.00. Without the plan, 5.00 is only 25 text messages a month, 10.00 is only 50, and 15.00 is only 75 messages. So, you can see that at least having the lowest plan would save you quite a bit of money.
And, trust me, it does. I see cell phone bills with four hundred dollars worth of text messaging at least once a week.
ntbsd @ Jan 23rd 2008 8:48AM
If there's a way for them to rip you off, you can guarantee they are already doing it or have it planned.
Like here in the UK, Orange started charging to call 0800 numbers a while back.
nh @ Jan 23rd 2008 9:25AM
0800 numbers were never free from mobiles, were they?
It is a real shame to be increasing the costs of SMS like that. Seems to me they're just pissed 3G and all the expensive/complicated services didn't catch on.
ntbsd @ Jan 23rd 2008 9:43AM
They were free on Orange and O2 and then I know Orange started charging for them. They put a message on there at the start of the call announcing that the call was chargeable when they did it too. We're probably going back 5 years or so when they didn't charge though.
I know the Orange PAYG service didn't charge for 0800 numbers at one point, even though contract users did.
Either way, Orange find a way of screwing me out of more money each month.
It's quite sad really that whenever you try another provider, you normally end up going back to the original, purely cus they screw you over as much as the provider you came from, if not more.
w00t @ Jan 23rd 2008 10:15AM
They started doing this because people (myself included) bought a cheap PAYG sim card and a good freephone calling card and then essentially paid landline rates for mobile calls, which back then were very expensive!
This I can understand, as orange is still paying for part of that call but the profit is going to someone else.
What did annoy me is the recent sneaky renaming of Local Rate (0845) to Lo-Call Rate so they can get away with charging you more than local rate!
A couple of months ago o2 announced like other providers they will no longer count towards your minutes but run up your bill... :/
Red Nicholson @ Jan 23rd 2008 8:50AM
I post this from little old New Zealand (Flight of the Conchords, anyone?) with a smile on my face, which is quite a rarity given our ludicrous mobile pricing.
Here in NZ we can send up to 2000 on-net (or 500 to any network) SMS for $10/month, which is about US$7. However, this is balanced by our stupid calling rates ($1.39/minute!!)
And as a result, we have an entire nation of teenagers growing up addicted to "txting", and hu nw typ lyk dis al da tym, evn in englsh esayz. So in some ways, be thankful that your carriers are charging more, it may be saving you from future generations of illiterate kids...
Peter @ Jan 23rd 2008 9:29AM
Too late for that.
MARSHAK @ Jan 23rd 2008 12:39PM
@red
this isn't new to us over here in north america. I'm a canadian college student and we get lectures from our profs who are quite angry everytime they see this kind of writing. In a sad way it could (some may argue it is) an academic epidemic.
Neeko @ Jan 23rd 2008 9:02AM
Yupp we the customers get abused DAILY. But as a long time sprint customer i was just able to upgrade from $15/m internet and $5 for 300 text messages to a newer cheaper $7/m for unlimited internet and unlimited texting. Iam sure in the life of my contracts ive been over charged but hell this plan will save me a ton of $$ now.
So everyone in my contacts list be prepared to receive plenty of texting. Yeah i know really sad but whatever.........WHEN IN ROME.
Red Nicholson @ Jan 23rd 2008 9:06AM
$7/m for unlimited mobilet net?
*swears profusely*
I pay NZ$15/m for 3mb. Yup, megabytes. It hurts, I tell ya.
oli @ Jan 23rd 2008 9:04AM
I think in the UK, we have more of a 'txting' culture than in the US. Most people have bundles with their tariffs (I have unlimited txts with Orange) although this was not always the way - hopefully for you guys, the more people that txt, the more the networks will reduce individual costs and create bundles. Then again...
jperry2010 @ Jan 23rd 2008 9:20AM
More of a texting culture than the US? Are you being serious? I don't know, maybe it is just the people I know, but my friends and I regularly send between 20,000 and 30,000 texts a month. Not only that, but everywhere you go, you see people texting.
Matt @ Jan 23rd 2008 11:41AM
You don't send 30,000 texts per month. That's a thousand text messages a day. I'd venture to bet that even you are not that prolific.
Derry Quinn @ Jan 23rd 2008 12:06PM
Apparently the UK and Ireland are the largest texters in the world, I know for a fact that there the highes mobile:person ration is in Ireland, with 102 phones to every 100 people at the last count.
jperry2010 @ Jan 23rd 2008 12:13PM
@ Matt
Just because you don't send 1000 text messages a day, doesn't mean other people can't. Being in class tends to get boring after a while. Especially on days when you are in class from 8 to 5.
Daza @ Jan 24th 2008 1:11AM
It's impossible to regularly send 1,000 text messages a day. That's one message every 1m 26s. All day. Every day. 24/7. You tell me 50 or even 100 a day and I might believe it. I don't care if it's "possible" to do 1,000 a day, no one does it habitually.
NHAnimator @ Jan 23rd 2008 9:05AM
"Companies say the hikes are meant to encourage customers to go for more expensive 'bundles'"
Does that mean that they won't then hike the price of these value "bundles"?
I have a statement in return for these phone companies: "Don't insult my intelligence."
Dano @ Jan 23rd 2008 10:17AM
30000 text a month? Do you realize how many that is? If you were awake 24hrs a day you would be texting 42 mins for every hour. By no means do I mean to stick up for the phone companies but they are a business not a charity. I don't think their intention is to price gouge, they want people to pick up text bundles. Seriously, even if it were only 5 cents a message and you send 30000 like the users on this forum, that would be $1500 in pay-per-use! Get a text plan. Also, I'm surprised I keep hearing people bring up Europe and how incoming calls are free and they are amazing for it. Ask them how much they pay to make calls. Ask them if they can make unlimited calls and txt for $55 like Lizeth, on this board posted. The bottom line is, the phone companies wouldn't be able to charge any of these prices if you the user didn't use these features and didn't pay it. Some of you guys are starting to sound like my Grandpa, "I remember the days when a hamburger and a Coke were a quarter."
jeremy @ Jan 23rd 2008 9:14AM
Yep... take at&t for example...
$.01 (1 cent) for each kilobyte of data transferred and $.15(15 cents) for 160 bytes (one text message).
so mathematicians, what's the mark up???
nh @ Jan 23rd 2008 9:29AM
I think the markup is approximately $.15 per message. I imagine a single message costs them next to nothing.
drakono @ Jan 23rd 2008 9:36AM
I know it's a rhetorical question, but the number you end up with is shocking. That's about 100 times the price of the data.
T-Bone @ Jan 23rd 2008 1:51PM
You are comparing apples to oranges. Data and SMS don't use the same system.
StrangeBum @ Jan 23rd 2008 9:19AM
That's why I was more than happy to sign on with the Sprint SERO plan. 1250 minutes, unlimited data, unlimited messaging services for $50 a month. Not too shabby on my part I think.
Granted, I picked up a RAZR, which is not the best phone in the world. But I hope to be upgrading to an HTC Touch before long.
Though I'm still waiting diligently for the Android OS to really roll out and pick up the best plan for whatever phones are utilizing that.
pewhite @ Jan 23rd 2008 10:54AM
This.
SERO is the best deal around. If you don't need 1250 minutes you can get 500 mins with all the same extras for $30. Unless Sprint just doesn't exist in your area I don't understand why someone would go with anyone else.
OneLove @ Jan 23rd 2008 11:05AM
How does one get this SERO you speak of?
what @ Jan 23rd 2008 11:18AM
I love SERO. I tell everybody about my plan:
500 minutes (I typically only go to 300)
Unlimited texting, roaming, internet
=$30 -10% loyalty -$10 in "misc. credits ;) =$20 a month
I tell all my friends/coworkers about it, but when their contracts expire, they always renew their contracts. Well, I tried to help, but some people just like getting raped in the butt.
StrangeBum @ Jan 23rd 2008 12:05PM
@ OneLove
Find the Sprint SERO site, quick google search because I don't remember it.
It asks for a Sprint Employee email. So just type in savings@sprint.com and gain your newfound happiness. I hardly ever use my 1250 minutes, but it's nice to know that I have them. Best deal around, I can't hardly understand why people pay outrageous amounts for similar with other services.
Joel I. Johnson @ Jan 23rd 2008 9:21AM
Last time I checked Cingular would not allow one to have both an unlimited text plan and an unlimited data plan. I'm not sure about the new AT&T.
Something else I noticed is that the contract terms on most cellphone companies no longer have an early termination fee that diminishes with time. It just seems to be a flat fee of $175 to $200.
At one point in time if you had your own phone equipment then you could get it activated without a contract. Now it also seems that even with your own equipment a 2 year contract is required. A couple of days ago I tried to pay the full MSRP for a phone to see if I could get it without a contract (something else one could commonly do in the past) but it appears that being able to do this is also less common.
derX @ Jan 23rd 2008 1:07PM
Are you being serious here? You do realize the opposite of everything you said exists, right?
Unlimited Text and Web- $35 (crazy, I know)
http://www.wireless.att.com/cell-phone-service/services/serviceDetails.jsp?LOSGId=3977510881&skuId=sku1160058&catId=
Prorated ETF
http://www.engadgetmobile.com/2007/10/16/atandt-moves-to-prorated-etfs-too/
Contractless Activation
http://www.engadget.com/2008/01/22/atandt-says-sim-only-service-available-contract-free-2-year-plan/
Joel I. Johnson @ Jan 23rd 2008 3:50PM
Wow! This is new [to me]. When I last spoke with a sells rep asking for unlimited text and data service I was informed I could have one or the other but not both.
Joel I. Johnson @ Jan 23rd 2008 9:25AM
We sure do! So in theory a phone company gets to charge twice for a single message sent from some one on their network to someone on their network.
Avian00 @ Jan 23rd 2008 9:28AM
Why is this suddenly an issue now? I have known for YEARS how much of a ripoff SMS messages are! People should have been up in arms the instant they climbed above 5 cents! As the author so accurately stated, an SMS is has extremely low operating costs to the carrier.
CG @ Jan 23rd 2008 9:28AM
Its always funny to meet people who forget that:
a, the World is not fair
aa, not even outside the US
b, cell phone provider companies want to make $!!
c, you can always choose not to use them(or less)!!
d, stop whining about text prices when at the other side of the world people have similar costs but with half, third or a quarter of your salary
e, I know I was unfair and its generalizing but hey...read point a...
zounds Padang @ Jan 23rd 2008 9:29AM
So glad i'm with Helio! But in all honesty, this really stinks especially for my verizon-bound family. Guess I'll be restricting my texting to them to a minimum!
HektikLyfe @ Mar 10th 2008 6:33PM
Too bad they're going under eh?
N. Holzschuch @ Jan 23rd 2008 9:31AM
What is truly amazing is that US cellphone companies are billing both ends for the service: you pay 20 cents to send a SMS, and the person you're sending to pays 20 cents to receive it. 40 cents per message.
European cellphone companies, who are no philantropists themselves, have balked at the idea, and are only billing the sender (15 euro cents per message, which is still a rip-off). I had never even heard of the idea of billing both ends until I crossed the Atlantic. To our friends who live in the Old Continent: the Americans also pay to *receive* calls on their cellphone. Yep. I kid you not. The number of minutes in you monthly plan include both incoming and outgoing minutes. Again, never heard of in Europe.
brian welch @ Jan 23rd 2008 10:01AM
This is exactly the way it used to be at AT&T (pre-cingular-acquisition) and then cingular. When I moved to a multi-line plan on cingular, I found out (by myself, mind you) that they now charge both sending and receiving. Absolutely ludicrous considering (as someone else mentioned) we cannot refuse the reception. It isn't going to break the bank, but I hate the concept behind it.
z0idberg @ Jan 24th 2008 8:55AM
WT-Freaking-F ?!
you have to pay to receive texts and pay to receive phone calls? charging at both ends?
Now I understand where ISPs get the idea for a tiered (i.e. double charging) internet service. They see the sweet deal mobile providers are getting and want a piece of that action.
How is it that this became a normal and accepted charging model?
OneLove @ Jan 23rd 2008 11:07AM
In some countries when you run out of minutes people can still call you.
juanegg @ Jan 23rd 2008 9:32AM
these are the times i love living here in the Philippines.. a third world country that loves technology... even if we have one of the most expensive internet rates and really bad internet service for home users, our SMS- txt charges on average is only 1 philippine peso, last i checked it was 41 pesos to $1, and our telecos have unlimited services for txts within the network going for less than a US$1 per day... not sure about the numbers but i think there are about 1 billion txt sent a day here in the philippines... not bad for a 3rdworld country hehe
and we do have data services also video calls etc. for my network i think its .15 philippine cents per kilobyte hehehe
Zach @ Jan 23rd 2008 9:33AM
I have long been saying that sms was the biggest rip off in wireless. It costs them practicly nothing to service. Think of it this way. Cell phones are already running through digital communication, which means they are converting your voice into 1s and 0s and sending that data accross their towers. So, text messages and voice are transmited in the same way. I would assume they are encoding at something like 32 kilibites per second (just a guess, don't know for sure). A text message is 160 characters or less, and each character is only one bite. I can't see it being more than a coupe of kilibites.
So basically, a text message uses less bandwith than one second of voice communication!!! That's the gist and it's a scam!
lizeth @ Jan 23rd 2008 9:41AM
I got tired of paying extra for everything. I used to have a $60/m plan, but ended up paying about $150/m. Finally I switched to a local unlimited company. Now I pay $55/mo and get unlimited minutes, internet, and sms.