AT&T CEO's "Only Regret" is Offering Unlimited Data Packages

[rjohnstone]

Originally Posted by BL4zD

You are correct that they are not internet data but it should be noted that they do not cost anything for the company to send/receive. The information is sent and delivered in the unused portion of voice data packets. That doesn't mean they aren't entitled to charge customers if that's how they want to do business but it is not correct to claim they incur any additional cost over regular voice communications for texting.

Not to get all nit picky, but to say a text message costs nothing to send is absurd.
Electricity is not free and neither is the equipment required to send or receive the message. The routers that handle the traffic and locate the target device so it knows which tower to send it to is not free.
The logging and billing systems that track those messages are not free either.
There are very real costs involved in sending that tiny 160 character message.
Is it $0.10 per message? I highly doubt it, but it does actually cost something.

[BL4zD]

If you two want to shill for the carriers that's your right to do so.

But the facts are that the infrastructure is being paid for by the voice plan and regardless the text is being paid for *twice* since carriers charge to send and receive the same text.

I'm not going to argue the point any more than I've already done so.
Others have already done the actual research:

TEXT messaging is a wonderful business to be in: about 2.5 trillion messages will have been sent from cellphones worldwide this year. The public assumes that the wireless carriers’ costs are far higher than they actually are, and profit margins are concealed by a heavy curtain.


Stuart Goldenberg
Senator Herb Kohl, Democrat of Wisconsin and the chairman of the Senate antitrust subcommittee, wanted to look behind the curtain. He was curious about the doubling of prices for text messages charged by the major American carriers from 2005 to 2008, during a time when the industry consolidated from six major companies to four.

So, in September, Mr. Kohl sent a letter to Verizon Wireless, AT&T, Sprint and T-Mobile, inviting them to answer some basic questions about their text messaging costs and pricing.

All four of the major carriers decided during the last three years to increase the pay-per-use price for messages to 20 cents from 10 cents. The decision could not have come from a dearth of business: the 2.5 trillion sent messages this year, the estimate of the Gartner Group, is up 32 percent from 2007. Gartner expects 3.3 trillion messages to be sent in 2009.

The written responses to Senator Kohl from AT&T, Sprint and T-Mobile speak at length about pricing plans without getting around to the costs of conveying text messages. My attempts to speak with representatives of all three about their costs and pricing were unsuccessful. (Verizon Wireless would not speak with me, either, nor would it allow Mr. Kohl’s office to release publicly its written response.)

The carriers will have other opportunities to tell us more about their pricing decisions: 20 class-action lawsuits have been filed around the country against AT&T and the other carriers, alleging price-fixing for text messaging services. Timothy P. McKone, AT&T’s executive vice president for federal relations, told the senator that the suits had been filed “since your letter was made public” and said that he was “eager to clear up any misunderstanding.”

T-Mobile and AT&T contended in their responses to Mr. Kohl that the pay-per-use price of a message is relatively unimportant because most messaging is done as part of a package. With a $10 or $15 monthly plan for text messaging, customers of T-Mobile, AT&T and Sprint can effectively bring the per-message price down to a penny, if they fully use their monthly allotment.

T-Mobile called Mr. Kohl’s attention to the fact that its “average revenue per text message, which takes into account the revenue for all text messages, has declined by more than 50 percent since 2005.”

This statement seems like good news for customers. But consider what is left out: In the past three years, the volume of text messaging in the United States has grown tenfold, according to CTIA — the Wireless Association, a trade group based in Washington. If T-Mobile enjoyed growth that was typical, its text messaging revenue grew fivefold, even with the steep drop in per-message revenue.

The lucrative nature of that revenue increase cannot be appreciated without doing something that T-Mobile chose not to do, which is to talk about whether its costs rose as the industry’s messaging volume grew tenfold. Mr. Kohl’s letter of inquiry noted that “text messaging files are very small, as the size of text messages are generally limited to 160 characters per message, and therefore cost carriers very little to transmit.”

A better description might be “cost carriers very, very, very little to transmit.”

A text message initially travels wirelessly from a handset to the closest base-station tower and is then transferred through wired links to the digital pipes of the telephone network, and then, near its destination, converted back into a wireless signal to traverse the final leg, from tower to handset. In the wired portion of its journey, a file of such infinitesimal size is inconsequential. Srinivasan Keshav, a professor of computer science at the University of Waterloo, in Ontario, said: “Messages are small. Even though a trillion seems like a lot to carry, it isn’t.”

Perhaps the costs for the wireless portion at either end are high — spectrum is finite, after all, and carriers pay dearly for the rights to use it. But text messages are not just tiny; they are also free riders, tucked into what’s called a control channel, space reserved for operation of the wireless network.

That’s why a message is so limited in length: it must not exceed the length of the message used for internal communication between tower and handset to set up a call. The channel uses space whether or not a text message is inserted.

Professor Keshav said that once a carrier invests in the centralized storage equipment — storing a terabyte now costs only $100 and is dropping — and the staff to maintain it, its costs are basically covered. “Operating costs are relatively insensitive to volume,” he said. “It doesn’t cost the carrier much more to transmit a hundred million messages than a million.”

UNTIL Mr. Kohl began his inquiries, the public had no reason to think of the text-messaging business as anything but an ordinary one, whose operational costs rose in tandem with message volume. The carriers had no reason to correct such an impression.

Professor Keshav, whose academic research received financial support from one of the four major American carriers, discovered just how secretive the carriers are when it comes to this business. Two years ago, when he requested information from his sponsor about its network operations in the past so that his students could study a real-world text-messaging network, he was turned down. He said the company liaison told him, “Even our own researchers are not permitted to see that data.”

Once one understands that a text message travels wirelessly as a stowaway within a control channel, one sees the carriers’ pricing plans in an entirely new light. The most profitable plan for the carriers will be the one that collects the most revenue from the customer: unlimited messaging, for which AT&T and Sprint charge $20 a month and T-Mobile, $15.

Customers with unlimited plans, like diners bringing a healthy appetite to an all-you-can-eat cafeteria, might think they’re getting the best out of the arrangement. But the carriers, unlike the cafeteria owners, can provide unlimited quantities of “food” at virtually no cost to themselves — so long as it is served in bite-sized portions.

--http://www.nytimes.com/2008/12/28/business/28digi.html?_r=3&partner=rss&emc=rss

[kdarling]

Originally Posted by BL4zD

If you two want to shill for the carriers that's your right to do so.

Correcting technical mistakes is not shilling, but nice attempt to divert attention.

But the facts are that the infrastructure is being paid for by the voice plan and regardless the text is being paid for *twice* since carriers charge to send and receive the same text.

The first "fact" is made up, especially since the voice plan does not cover SMS related costs. As for each message being paid for twice, that seems like a valid point within the same carrier. Not if crossing between carriers.

Others have already done the actual research:

Hardly. That article even repeated the same bogus myth:

"Once one understands that a text message travels wirelessly as a stowaway within a control channel, one sees the carriers’ pricing plans in an entirely new light."

As pointed out many times above, that occurs in just a small piece of the final part of an SMS' journey.

The rest of the article is the same kind of pseudo-research as the above.

Again, we know carriers make money on (most) texts, but not because they're "free" or even close to free. Debate the price, but use facts.

[Roy G Biv]

I'm reminded of George W. Bush's hardest moment as president being when Kanye West called him a racist. Worse than 9/11.

[badmac78]

Originally Posted by Giuly

The other way around.

Guily ... Electricity is priced based on demand ... during peak demand, electricity prices are higher than at non-peak.

So as I was saying ... why wouldn't internet pricing be the same way?

[AxeluteZero]

Originally Posted by andyone

Well, if you don't want to pay for texting, prepare to pay more for data. The money for the infrastructure has got to come from somewhere.

I hear you there. I mean, I can see a day when voice, text and what we call "data" is all one bill.

My hope is that it's billed appropriately. If I don't use any "voice data", I don't want to be charged for it. But that's just a dream of mine.

[anthonyvulgamor]

Has anyone signed on with Straight talk. They say all you can eat for $45, hows the service and anyone have any comments or compaints on Straight Talk?

[JoeG4]

Technically an SMS, an IM, and a minute of phone call are all different, sure - but they all cost the same to transmit. At the end of the day, the deployment and maintenance of the network & towers is the real cost.

Oh yea, and the maintenance people, the installers, the stores, the CSRs (however useless they may be), and the phone labyrinth known as the billing department.

Also marketing, and royalties to Apple for the privilege of selling the iPhone.

What does happen is that when you go from having 100 users in 1 area to 1000 users, you need to increase the capacity of the towers. That can cost some serious money, so AT&T would rather do some tricks (QoS, throttling, kicking users they deem abusive off), than expand. That, and wireless bandwidth is indeed finite. It's probably not possible to give everyone 30Mbit/sec if there's 50,000 people at a stadium all trying to connect at the same time.

[Powrie]

I cant use my phone to its fullest capacity because I cant bring myself to pay so much for data.


So, Up Yours AT&T

[SpyderBite]

Originally Posted by Powrie

I cant use my phone to its fullest capacity because I cant bring myself to pay so much for data.


So, Up Yours AT&T

"Learn to use WiFi more efficiently"

Sincerely,

AT&T

[okwhatev]

Originally Posted by anthonyvulgamor

Has anyone signed on with Straight talk. They say all you can eat for $45, hows the service and anyone have any comments or compaints on Straight Talk?

I've had Straight Talk for about 10 months now. You get the exact same service as post-paid AT&T (full HSPA based 4G speeds) and it they do give you unlimited data. However, if you use more then 200MB in a day and/or go above 2GB in a month they will absoutely throttle your speeds down to edge speeds until the month is up. But unlike AT&T, a friendly phone call to them can result in them UNthrottling you for the rest of the month. If they throttle you again, a nice phone call will get you unthrottled yet again. I myself average 10GB a month. I don't teather my Internet and I don't sling video from home as that is against their TOS. But I do watch a lot of Netflix and utilize streaming audio services which they've gotten better at allowing once you point out that using such services is actually in their advertisements. So if you can handle the occasional snag of calling them, you can definitely get fantastic service with straight talk. It's awesome. Or, if you live in a Tmobile area that has been reprovisioned for the iPhone, getting a Tmobile straight talk sim can get you near LTE speeds. Also totally unlimited.

[Powrie]

Originally Posted by SpyderBite

"Learn to use WiFi more efficiently"

Sincerely,

AT&T

I use Wifi almost exclusively.

But when you are away from a signal you have to use the Data Plan.


And I find I have to limit myself ALOT to what I do when iam not on a Wifi Signal.