[PCWorld]

Post your comments for Verizon, AT&T: Buy a Texting Plan and We Won?t Rip You Off here

[rpa52]

Of course the PPU is a rip off. I have a pre-paid T-Mo account and was shocked when the cost/message went from 10 to 20 cents. The bigger issue however is the entire cell system is open to cartel-like pricing.
I split my time between Hong Kong and Seattle. In Seattle, I use a pre-paid T-Mo account as I got tired of paying a monthly fee when I am out of the country much of my time. In Hong Kong, where there is true competition between carriers (unlocked phones, number portability, no contracts), I pay about US$8.50 per month for 800 minutes. The cheapest T-Mo plan I had was about US$50 per month (including taxes) for 300 minutes. The text message rip off is only the tip of the iceberg.
I could go on about corporate America ripping off consumers on high speed internet (I pay about US$15 per month for high speed including VoIP phone service in Hong Kong compared to a slower connection in Seattle at about US$60 per month including voice) but then I digress. De-regulation of the telecommmunications sector in the US was a myth as the telcos control the politicians who wrote the legislation.

[smax013]

rpa52 said:

Of course the PPU is a rip off. I have a pre-paid T-Mo account and was shocked when the cost/message went from 10 to 20 cents. The bigger issue however is the entire cell system is open to cartel-like pricing.

I split my time between Hong Kong and Seattle. In Seattle, I use a pre-paid T-Mo account as I got tired of paying a monthly fee when I am out of the country much of my time. In Hong Kong, where there is true competition between carriers (unlocked phones, number portability, no contracts), I pay about US$8.50 per month for 800 minutes. The cheapest T-Mo plan I had was about US$50 per month (including taxes) for 300 minutes. The text message rip off is only the tip of the iceberg.

But you are likely neglecting that a phone you would buy through one of those Hong Kong provides will not be subsidized...you will pay full price for it. This is part of the price we pay in the US for our desire to have a nice low, "upfront" cost when we get a new phone.

I am not saying that will certainly cover all the pricing differences in the plan, but you certainly can not gloss over than fact.

In addition, you also have to factor in that the coverage area that Hong Kong providers deal with is WAY smaller than what US national carriers deal with. If you only worry about local coverage in the US, then you start to get a lot more competition due to Tier II and Tier III (i.e. regional providers)...and prices for those regional providers a typically MUCH better. But, you pay a price for that...you might lose some ability to make calls outside the region or might have to pay a lot more for calls outside the region.

Quote

I could go on about corporate America ripping off consumers on high speed internet (I pay about US$15 per month for high speed including VoIP phone service in Hong Kong compared to a slower connection in Seattle at about US$60 per month including voice) but then I digress. De-regulation of the telecommmunications sector in the US was a myth as the telcos control the politicians who wrote the legislation.

Now, DSL/cable/broadband services is DEFINITELY an area of rather limited competition in the US. But, again you need to look at everything. How much area does a broadband provider need to cover here vs. the likes of Hong Kong? That can effect their costs in terms of laying cable to reach everyone. Since Hong Kong is a relatively high density of people in a small area, a broadband provider can "serve" a specific number people for a lot less than a broadband provider here in the US might be able serve that same number of people since those people will typically be spread over a much larger area in the US (i.e. more cable would have to be laid to reach them). How do the governments there deal with such cabling? Is it a government utility that companies than pay to provide services through? Or is it all private enterprise, which means each company lays their own cable? The later is true in the US. I suspect that in many other countries, the former might be true.

[smax013]

From the article:

{quote}
If you're not buying a monthly text-message plan from your wireless carrier, you're getting ripped off.
{quote}

Yes and no.

If you do more than 24 text messages a month, then yes, you are getting hosed if you pay per message. But, then that is likely you own fault for not signing up for a plan.

If you do less than 24 messages a month, then it depends on how you are looking at it. If you purely look at the per message cost, then yes, it sucks and you could say you are getting ripped off. But, it is still cheaper than paying for the monthly plan (i.e. if you pay for the monthly plan and only use 10 messages, then you are essentially paying 50 cents a message compared to 20 cents if you paid per message).

Would it be nice to only pay 2 cents or so per message? You betcha. I would love it (I do not do a plan...I pay per message because I typically only have about a half dozen or so per month). But, if the 20 cents per message REALLY bothers me, then I could just not use text messages and they would not be ripping me off at all.

Now, that does not mean that Congress or the FCC should not look at it. After all, it is rather suspicious that all four carriers charge the same rate per message under the PPU plans. You would think that competition would drive it down...but I guess that so few people do PPU AND actually care about texting, even if it is only a few each month, that there is little to no competitive pressure. There is likely more competitive pressure on the pricing of the monthly plans (which is likely why you see the different number of messages allowed per month for the $5 fee of the lowest prices plans).

[oldschool68xx]

I dont want any part of texting, hell turn it off even.
Sorry sir we cant do that its 20 cents per text message (Per Random Spam)or $5 a month.

[rpa52]

Let's look at the 2 points you raised.


1. Phone subsidies. I paid $300 for a smart phone in Hong Kong and over a 2 year period paid a total of $504 for the phone and monthly service. At T-Mo, I got a "free" dumb phone and paid $1200 over the 2 year contract. Just where is the "subsidy"? The cell carriers aren't subsidizing anything.



2. Geography. You have a point about the density of Hong Kong's population. With 7 million people in a small area, the cost to provide cell service might be lower than in the US. So, compare the US to China then. In China, our staff pay about $16 per month for 750 minutes. You may argue that labor costs are lower in China, and they are, but is the labor cost differential for a cell network enough to justify the price I paid in the US (3x China's rate) for 40% of the minutes?



Sorry but you have not convinced me that the US cell operators are not ripping everyone off.

[aterianus]

I think its pretty obvious that if your paying 20 cents per message that you would only use text messaging when you absolutely had to, or someone sent you a message that you hadn’t solicited, so the 1% number is totally meaningless.

Pierre

[cmaurand]

A doubling of the price and all of the companies matching probably had little to do with costs or demand. To them, its a cash cow. It would be hard to prove collusion.

[nafhan]

I hear your frustration. I got the $5 plan, because people were sending ME enough text messages per month that it was pretty much break even to start paying for the cheapest text plan. At this point, I end up using about 100 of my 250 messages each month.

[CelticDaddio]

One options that I haven't seen mentioned is to block the txt messages. When my daughter when over her text allowance by almost $500, we called Verizon and said block all txt/data. They did... no more going over. Now we have unlimited text plan.

[smax013]

rpa52 said:

Let's look at the 2 points you raised.





1. Phone subsidies. I paid $300 for a smart phone in Hong Kong and over a 2 year period paid a total of $504 for the phone and monthly service. At T-Mo, I got a "free" dumb phone and paid $1200 over the 2 year contract. Just where is the "subsidy"? The cell carriers aren't subsidizing anything.

That is likely true....but there is still a subsidy in there for your "free" dumb phone. Phones are not free. They cost money. And they have to be paid for somehow....and that somehow is as part of the $1200 you paid to the carrier.

Now, I cannot say how much subsidies may or may not enter into the price different there overall. Actually, in theory, if all other things are equal (which remains to be seen), then the total cost of a subsidized phone and plan should be the same as a non-subsidized phone and plan. The difference would be in how much you pay upfront and how much you pay each month. But, not all things are equal (see below).

Quote

2. Geography. You have a point about the density of Hong Kong's population. With 7 million people in a small area, the cost to provide cell service might be lower than in the US. So, compare the US to China then. In China, our staff pay about $16 per month for 750 minutes. You may argue that labor costs are lower in China, and they are, but is the labor cost differential for a cell network enough to justify the price I paid in the US (3x China's rate) for 40% of the minutes?

OK, let's compare to China.

First, let's first assume that both the US and China have similar national cell phone coverage and have similar types of national cell phone providers (I have no clue about China in this regard, thus the assumption) and similar density pockets/distribution. You still run into density issues. China and the US are roughly the same size in terms of square miles, but China has roughly 4 times the population of the US. If you keep it simple, then you could claim that for the same $1 that a China phone provider might spend compared to a US provider, they can get access to potentially 4 times the number of customers than the US company. So, again keeping it simple, you could multiple that $16 amount by 4 to get a "comparable" US price...i.e. $64. Personally, my Sprint bill for 750 "anytime" minutes is $40 a month (now, that is a grandfathered, "special" plan that I got a while ago for being a "valued" customer...the closest available current plan is 900 minutes for $60). The point is that it is comparable.

Now, I will be the first to admit that analysis is GROSSLY simplified and could be wildly inaccurate...either way. But, the key point still remains...China still has a much higher population density than the US...so phone companies get more "bang" for their buck, which means they can keep prices lower.

Second, there is cost of living issues. How does that $16 a month equate in to "adjusted for cost of living" dollars? While you as a US business person working in China might sneeze at $16 a month, if that is not an adjusted amount to account for cost of living differnces, it is possible that could be a HUGE amount of money in other countries (I have no clue how China compares in cost of living to the US, but I seem to recall that it is way less in China). The point is that while $16 a month to you might not be a rip off, it could be a huge rip off to the typical Chinese citizen.

Quote

Sorry but you have not convinced me that the US cell operators are not ripping everyone off.

And I did not intend to necessarily to convince you of that...more was pointing out that it might not be as clear cut as you might claim it to be. I certainly do not know all the factors to really know whether I am getting ripped off or not, but I do know that I cannot just look at the easy to see things (i.e. comparing monthly plan rates in two different countries) to make that determination...there is more than just the "face value" stuff (i.e. support and network build costs, cost of living adjustments, whether there are phone subsidies, etc).

[free2speak]

I agree with you Jeff. I don't use my phone much, and I don't want to pay for services I don't use. I don't care about texting, or surfing the web on my phone. I want reasonably priced phone service and that is all. Texting costs these companies next to nothing, but the profits are high. Most customers have texting turned on by default so they have to opt-out, and they don't think it is an issue until they get over-billed. Don't feel too bad what this really means is most customers are getting ripped off.

[crossuab]

There are several ways cell phone companies are ripping us off. Text messaging is only one of them. If only 1% of cell phone users don't have message plans, why did they increase the price for those who don't? Do they ever answer the reason for increasing the price to $0.20/message. Maybe increasing the price is what forced people into those messaging plans in the first place. Which is what they wanted. They know most people like the author of this article won't be using their allotted messages. AT&T for instance has the 200 message plan for $5 and the next plan is 1500 messages for $15. 200 isn't enough for me, but 1500 is way too many. Why can't I buy 500 for $7 or 1000 for $10? And to the argument that most cell phones are subsidized and provider recoup their cost during the length of the contract, why isn't my monthly plan reduced when my contract comes to an end? They've already recouped the cost of my phone, right? Why not give customers a choice? Either let us pay a higher price for the phone along with a lower monthly premium or pay a lower price for the phone and a higher monthly premium. And for those who do the latter, their monthly premium should decrease once the provider has recouped the cost of the phone.

[RobertCar]

If you are paying 20c per text you definitely being ripped off. Whether you're on a plan or not doesn't matter, does it? I mean the only reason to charge that much more for out-of-plan texting is to force customers to go onto texting plans. It's not like there is an actual difference in cost for the provider between one text and the next. And in all likelyhood the actual cost of a text is less than a penny. But I just realized, it's not just those people preferring not to buy a text plan that are being cheated, it's also anyone going over their plan...

I'm now even more glad I'm on a prepaid plan that gives me 1000 minutes and 1000 texts for just $30. (It's called StraightTalk from Tracfone) That works out to 2c per minute talk and 1c per text. Without the contract. Quite decent, I'd say.

[glnhp]

Look, if you're not on any sort of texting plan (I'm not), of course there will be some premium to pay. But, consider this - I heard when the congressional hearings began that it costs the carriers an average of $0.003 (that three tenths of a penny) per text message. That means that the carriers are reaping more than a 6000% markup on each text message sent off-plan or more than 12000% if the message is between two off-plan parties. Imagine, making forty cents for a service that costs less than one third of a penny.


Like touch-tone dialing on land-lines in the past (as opposed to pulse dialing), text messages are cheaper than voice calls for the phone company, but a premium is charged. Voice uses much more bandwidth than text does. Text messaging should be included free of charge on all cellular plans. If more people texted instead of making voice calls, imagine the amount of valuable bandwidth that could be freed up.

[tman]

I would just like to add a comment...throughout SE Asia--when you make a cell call or send a text--only the caller/sender is charged--not the receiver--in the US both receiver and sender are charged--Why do we accept/put up with this ?(rhetorical).

[smax013]

crossuab said:

Why not give customers a choice? Either let us pay a higher price for the phone along with a lower monthly premium or pay a lower price for the phone and a higher monthly premium. And for those who do the latter, their monthly premium should decrease once the provider has recouped the cost of the phone.

The point is that phone companies make their money with the plans...whether voice or data...not with the sale of phones...and actually lose money with a subsidized plan. They are not going to lower the plan rates if you get a non-subsidized plan...they just will not make you sign a contract. The contract is to ensure that you stay long enough with them so that they make the subsidy back and then actually make some profit from you being a customer.

Thus, you do have a choice...buy a subsidized phone and have to stick with them for some period or time...or buy an unsubsidized phone and leave whenever you want.

Granted it is not the choice YOU would like them to provide, but then they are not obligated to do whatever we want...and if we do not like it, then we do not need to do business with them.

[smax013]

glnhp said:

Look, if you're not on any sort of texting plan (I'm not), of course there will be some premium to pay. But, consider this - I heard when the congressional hearings began that it costs the carriers an average of $0.003 (that three tenths of a penny) per text message. That means that the carriers are reaping more than a 6000% markup on each text message sent off-plan or more than 12000% if the message is between two off-plan parties. Imagine, making forty cents for a service that costs less than one third of a penny.

I would bet those numbers are only for that actual direct text costs...i.e. the cost to deal with the text but NOT the costs for the network in general. But, what about their costs to build and maintain the network? Were those costs included in that number? My guess is if that stuff needs to be added into the mix, then that number will increase.

[smax013]

tman said:

I would just like to add a comment...throughout SE Asia--when you make a cell call or send a text--only the caller/sender is charged--not the receiver--in the US both receiver and sender are charged--Why do we accept/put up with this ?(rhetorical).

This is potentially a very valid point...but, we would first need to know if the price per cell call or text in SE Asia is twice what it would be if both parties were charged. If they are charging twice what they otherwise would charge, then it is no different other than who foots the bill.

Note: I am not saying this is what is done...but merely suggesting that we may not have the full picture.

[kohenkatz]

Why can't the carriers do what almost all of Europe does; i.e. free to receive text messages.
Why should I pay because someone sent me a message?