from the it-will-work-itself-out dept
Last week, Slashdot linked to an entertaining analysis of the cost of SMS messages. Noting that many carriers are raising their SMS prices despite increasing demand for the service — demand which should be spurring competition — the author of the post figures out the number of bits in a text message and concludes that transmitting data by SMS is about 15 million times more expensive than doing so over a commodity internet connection.
But of course this isn't really a fair comparison. A commodity internet connection doesn't afford the ubiquity that a cellular network does. Comparing the data rate and price of voice traffic is probably more instructive (although the two types of messages are admittedly not transmitted in the same manner across the network). Taking AT&T's overage charge of $0.45 cents/minute and 13kbps as a plausible bitrate for a GSM call, my calculator says that SMS data is a mere 316% more expensive than voice traffic.
That's still not great, though. And there's no question that SMS prices are going up even farther — in the past year or so the Consumerist blog has been full of posts encouraging various carriers' users to escape their contracts thanks to those contracts' newly-increased SMS fees. It's an unfortunate situation: very few consumers select a carrier on the basis of its SMS offerings, and few will leave their carrier over them, either, blunting the consumer response to price increases. Plus, as the technology has gained popularity the mobile operators have lost the need to encourage its adoption through cheap rates. It's not very surprising to see them conclude that the most profitable price point for SMS is higher than the one they had been offering.
Fortunately for the rest of us, this state of affairs doesn't seem likely to last much longer. Although there's little reason to have faith in the mobile market's ability to bend the carriers to consumers' will, new technologies are going to inevitably dry up the SMS bonanza. We're on the verge of the iPhone SDK's release, and Google's Android seems likely to find its way into many cheaper handsets. These and other technologies mean that the average customer will have access to bulk data services on their handset soon if they don't already. And once bulk data can be consumed, so many options for short message communication become available that SMS's specialized role will disappear almost immediately. Between web interfaces, widgets, IM clients and email apps, there are a vast number of ways to send short strings of text. Services like Twitter that offer a variety of input modalities will no doubt help to stitch together this looming surplus of communication options.
Given how few bits are required to transmit those messages (and the generic nature of those bits), there'll be no way for the carriers to keep short message transmission as expensive as it currently is — not without without pricing web browsing, email and other mobile data services into oblivion. I wouldn't expect SMS to disappear, but it seems safe to assume it'll start getting cheaper soon.
Tom Lee is an expert at the Insight Community. To get insight and analysis from Tom Lee and other experts on challenges your company faces, click here.
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