When developers started marketing cellphone services, did they ever think that the real money spinner would be the humble sms service? I’m one if the many that only glance at my invoice from my cellphone provider every month to see if the bottom line is in line with what I think it should be.

When I had a closer look the other day I was amazed to find that the price of sending a sms in peak traffic hours costs almost One Rand. The costs for the various cellphone service providers is Vodacom R0.80, Cell-C R0.80, MTN R0.75 and Virgin Mobile R0.60. I do not want to have any discussions about 5 or ten cents up or down, and to make everyone happy i’ll use a sms cost of R0.60 per sms.

A standard SMS message contains up to 140 bytes (1120 bits) of data – this takes care of the 160 characters allowed in your text message. This might not make sense at first, until you realize that SMS uses 7 – not 8 – bit characters – leaving you with 128 possible character values instead of the normal 256. So 1120bits/7bits = 160 characters.

So our total message length is about a tenth of a kilobyte (.13671875 Kbytes). That gives us 7 messages on a kilobyte. There is 1024 kilobytes on a Megabyte that gives us 7168 messages on a megabyte. Again there is 1024 megabytes in a Gigabyte that gives us 7340032 messages on a gigabyte. Our sms’s will then cost us R4.404.019-00 per Gigabyte.

Let us assume that all these messages get sent in off peak time and halve the sms cost. The cost for our gigabyte of data would then be R2.202.009-00

Let us assume that half of the messages that you sent, you get for free through some scheme or contract. The cost of a sms would then be R1.101.004-00.

Big questions asked:

Why are we being ripped of by the cell phone providers? the argument in favour of the data providers usually alludes to the costs of maintaining the network, but here is the facts:

The marginal cost of a SMS is 0. SMS messages are sent on the control channel. Initially SMS were implemented in the GSM standard as a control system, just like the ICMP protocol of the IP stack. Then NOKIA though to implement a actual instant message function using SMS. The Contol channel is the channel that your mobile listens to in order to receive calls. So for receiving a SMS a control signal is sent. Since bandwidht is somehow limited on these channels it could happen that in a situation of massive usage of texting the control channel gets saturated and normal voice protocol initiation is disrupted. To prevent this carriers nowadays apply a kind of QoS delaying SMSs until there is no risk of congestion. So we can state that the marginal cost is 0 and the cost/opportunity is also 0.

There is a case for opportunity cost, where a provider charges a premium for the opportunity of making our lives easier, and that is true for a sms. I’m surely not advocating that there should not be any premium for the cellphone providers given the nature of the sms, I’m just asking for a fair price. That is all.

Regards

AJ.