Life is like Code, you never know what you will create next

The Actual Cost of Texting, Short Codes and a 7314% Mark-up

7. May 2008 17:25 by Scott in   //  Tags: , ,   //   Comments (0)


Two weeks ago, I went to Dev Connections in Orlando for Microsoft.  It was a blast and I must say if you ever get a chance to go, then do it!  One of the nights there, AT&T had a Developer party where they wanted developers to start developing on their network, because they can see a lot of income come from it.  I agree now knowing the total cost of Text messaging.

At this party, AT&T gave out free Tilts which is currently the best mobile phone on the market if you ask me owning one my self.  They also gave out free large HD LCD screen monitors for a group of six. Oh and lets not forget about the free food of course.

Sending a text message to another person can only take 160 characters of text. For the phone companies, it is not compressed data. It is 160 characters only.  Why such a weird number you ask? Well let me tell you. When phones are on and waiting for a phone call or any type of data retrieval, they are ALWAYS connected to the cell phone tower.  The phones and cell phone towers exchange little packets worth of information back and forth so when ever a call comes it, they can find you straight away.  Cool huh?  That is the way they designed it when they did.  Can anyone guess how big the packets are that are sent between cell and tower?  If you guess 160 characters, you are right.  So to recap, a task that already needs to be completed by cell phone companies, they make back by charging an astronomical of money to the consumer.

If you look at the per Text message cost, lets take Verizon Wireless which charges 0.15 for every text message that gets sent. The figure is small enough, but when you think of it on a kilobyte level it cost the cell phone companies 0.015 cents and it costs us $1.09 per text message Kilobyte.  The markup for costs is 7314%. If you think of it like this, they markup the cost by 7314% when it reaches you, the consumer.  If it were me, I would think of it as pretty arrogant of them to do this.  I am on a plan and only get charged $5.00 per month for 1000 text messages. If I were to use their rate at which it costs them I should be able to send over 33000 text messages a month!

2nd Part:

Short Codes, you know the ones that when you send a text message to shows like American Idol which can cost the developer anywhere from $15,000-$30,000 a year for their company. That's right, the current costs are estimated at $5,000 a month to hold a dedicated number and a REQUIRED $1,000 a month for a testing number.  So when AT&T threw this developer party, I decided to go up there and ask them.  But sadly to say they were only third party contractors.  So as a Developer you can spend around $20,000.00, and then the cell phone companies charge the consumer another astronomical markup. If your still reading this, can you please leave a comment if you have ever seen a higher markup on a particular item.

These kinds of costs need to be regulated.  The companies are charging an extreme amount of money for very little and we are buying it up.  Someday's, I wish I could just start a company that would be able to compete with companies like these.  I do know that I think I will probably invest some stock into AT&T seeing that they bring a pretty good rate of return.

If you liked this post, please be sure to subscribe to my RSS Feed.