The lucrative business of text messaging

December 29, 2008 What’s fair and reasonable pricing behaviour in business? There’s an excellent NYT article entitled “What Carriers Aren’t Eager to Tell You About Texting” which might encourage you to think about this next time you send a text message. The cost to the Telcos of sending text messages is negligible because the space-limited texts ride for free inside a control channel reserved for operation of the wireless network - so every cent of the 20 cents you pay for a text message is profit to the Telco. Gartner reports there were 1.9 trillion text messages sent in 2007, 2.5 trillion in 2008, and an anticipated 3.3 trillion in 2009. Our normal concept of fair pricing considers products whose costs rise proportionally to volume. Author Randall Stross points out that the cost of text messaging in the United States has doubled in the same period.

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