Apple Bids Farewell to Outlandish Pricing for Text Messages

With the new iPhone operating system, people will be able to send texts over their data connection for a much cheaper rate

Part of iOS 5, announced today, is a new version of iMessage, the iPhone's texting app. It's got a cunning twist -- messages sent from one iPhone to another do not use the cell phone network's standard SMS protocol. They use the 3G data connection instead, which means the user pays a data rate rather than a text message rate.

So what? Well a text message costs 20 cents to send or receive. (I'll be using AT&T as an example, though most of the carriers charge similar rates.) This only sounds remotely reasonable until you calculate how much data is actually in a text message, and how the charge compares to regular voice and data rates. After all, while we're charged differently -- very differently -- for them, text messages are just like all data that travels to and from a mobile phone.

While most text messages are much shorter, their maximum length is 160 characters, which means they're up to 160 bytes. Compare to a three-minute song, which is around four megabytes, or 25,000 times as much data. An average web page is 697 kilobytes, or 4,300 times as much data. A photo taken with the iPhone is around 1.2 megabytes, or 7,500 as much data. But when you send any of these over a cell phone carrier's network, you're using their regular data network.

AT&T charges $25 for their 2 gigabyte per month data plan (other carriers are similar). That means you could transmit about three thousand of our hypothetical web pages. Or your could transfer 12,500,000 of our 160-byte text messages: a cost of $.000002, or 1/5000th of a cent.

In other words, AT&T charges 100,000 times as much for a text message as for the equivalent amount of any other data sent to or from their phones. They also offer a $20-per-month unlimited texting plan. You'd have to send 10 million text messages in a month for that to be equivalent to the data plan.

But don't text messages cost more for the carriers to transmit? They have to open and close each transmission, don't they? Actually, cell phones are constantly communicating with the towers around them, transmitting their location status. Text messages are just added to those data packets. They are, in essence, free for the cell phone carriers.

Apple's iMessage is part of a trend that includes BlackBerry Messenger and other more recent services which convert "text messages" to simple data, bypassing the text message protocol and its associated fees. While for now each system only works with other phones of the same type, there are signs that in the near future the systems will interoperate. Samsung recently introduced ChatOn, a service that is compatible with the other systems.

Cell-phone carriers argue that with the competition they face over voice and data rates, charging for extra services is the only way they can maintain their profits. Similar to the sea of airline fees and banking charges, these arguments only work when the prices are meaningfully related to the service begin provided. When you look at the math, that hardly seems true of text messages, and the loss of that revenue seems entirely fair.

It's quite different in Europe and the rest of the world. Most cell-phone calls there are charged by the minute, and paid by the person placing the call. Text messages are charged, but are comparatively inexpensive. So texting there is considered frugal, which helps conserve the carrier's bandwidth.

But we've got plenty of bandwidth. We should be able to choose to make a phone call or send a text message based on what's more convenient and logical for the message and situation we're in, not based on how the cell phone carriers choose to structure their pricing. With iMessage and similar systems, that's finally going to be the case.

Image: Reuters.

About the Author

Alesh Houdek lives and works in Miami. He writes occasionally at Critical Miami.

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