Text Messaging = Price Gouging? OMG! WTF?

Get the WebProNews Newsletter:

[ Business]

In comparison to the other ways in which consumers spend money, sending a text message seems relatively cheap. The truth, however, is that mobile users pay 7314% more to send a text message than they actually should.

You don’t have to look very far to see the impact that text messaging has had on the way that people communicate these days. Take Twitter for example. People are going crazy for the service, which basically is just at mass text messaging platform to let everyone know what you’re currently up to. Mobile providers, however, are using the service as yet another method of price gouging their users.

Over a year ago, my colleague David A. Utter brought to light some very interesting numbers comparing the cost of providing broadband service to users to what consumers actually end up paying, and the gap is ridiculously huge.

So, it really shouldn’t be any secret that mobile providers would employ similar tactics in pricing ancillary services for their own users.

First, let’s look at the standard rate of $0.15 cents that Verizon charges per text message for users who haven’t purchased a text package. It seems like a small figure at first glance, but in truth it represents a gargantuan markup compared to what most other data transfers cost.

Ben Popken over at Consumerist has a great write-up on this. When he did all the figuring between how much it costs to send a text message kilobyte versus a data kilobyte (which would be handled exactly the same by the network) he came up with these numbers:

That’s $.015 per data kilobyte versus $1.09 per text message kilobyte. In other words, a markup of 7314%. Other cellphone companies charge comparable rates.

You read that correctly. Verizon text messages cost 7314% more to send per kilobyte than an equivalent amount of data.

So why the enormous difference in pricing? One possibility is that mobile providers such as Verizon would rather that customers purchase a text messaging package rather than pay on a per-use basis, so that the company could enjoy a guaranteed monthly revenue stream. And when you’re only looking at $0.15 cents a text message, it’s pretty easy to disguise the markup.

Verizon had not responded to requests for comment at the time of publication. 

Text Messaging = Price Gouging? OMG! WTF?
Top Rated White Papers and Resources
  • steve campbel

    i use www.create-ringtone.com to create and send FREE custom ringtones, wallpaper, mp3 and video files to cell phones around the world

  • Tim

    Dude, you’re so right, cell phone companies are gouging us again! I use Alltel and I’ve watched their rate go from $0.08 last year to $0.15 as of April 20 according to my latest bill. The bastards just want to force us to pay for a package, which I really don’t need. I HATE cell phone companies!!

  • Guest

    cingular oh i’m sorry at&t is going up to 20 cents thats  wrong i have my internet with them also i guess they want me to switch back to dish tv

  • Guest

    Its a major rip off. On top of it, txt messages could be compressed, allowing much more be sent for the same amount of bytes. However, the truth is, the cell phone companies want to make as much off of txt messagers as possible, which means making them send as many txt messages as possible – so, txts are limited to 160 uncompressed characters per message.

    Unfortunately, most people don’t realize how big of a rip off it is, and accept these outrages prices.

  • Johan

    Perhaps the government could help with this issue? http://www.mindreign.com/en/mindshare/Technology/SMS-Fat-Cats-Ripping-Us-Off/sl21528576bp309cpp10pn1.html seems to think so… But I agree, it is a complete rip off – where does it stop?

  • Join for Access to Our Exclusive Web Tools
  • Sidebar Top
  • Sidebar Middle
  • Sign Up For The Free Newsletter
  • Sidebar Bottom