A truly embarrassing truth for wireless phone companies

A recent story in the New York Times (which I learned about by way of an entry in Techblog) exposes quite a bit about how wireless carriers transmit text messages (SMS). These articles (the NYT article in particular) are good reads for the terminally curious. I’ll summarize the main points for those readers who lack the time, however:

• Text messages ride the control channel, space normally used to control operation of the network (hence its name).
• Thus, text messages cost very little, in fact almost nothing, for the wireless carriers to pass along.
• The 160-character limit comes from the length of a call set-up message.

Now, combine these points (particularly the first two) with the fact that all wireless carriers which charge separately for text messages, have doubled the rate for casual use messages over the past three years ($0.20 now versus $0.10 before). If anything, this rate should have gone down with time, due to advances in technology, not up.

I have always smelled a very faint odor of bovine excrement even during the dime-a-message era. Something told me it can’t possibly cost the wireless carriers this much per message, even with an allowance for a reasonable profit margin. Turns out I had a pretty good hunch. Unfortunately it took the greed of the wireless carriers to turn the right heads (Senator Kohl) and trigger a closer look.

The profit margin today is anything but reasonable. This makes the long-distance rates of the AT&T monopoly era (often a full order of magnitude what they were after the deregulation of telephone long distance) look like the convenience store clerk keeping the penny when you’re owed change of $0.71 on a soda. If the phone companies were selling gasoline, we’d probably be up to $8/gallon, with station owners scrambling to prepare for an inevitable $10/gallon (most current signage only goes up to $9.999).

Am I going to cancel my text messaging plan? Of course not. I will, however, follow this closely and hope we at least get reform, if not some of the money back.

(All currency amounts are US dollars.)