Randall Stross wrote an interesting article for the NY Times [“What Carriers Aren’t Eager to Tell You About Texting” published Dec. 26, 2008] about the revenue AT&T, Verizon, T-Mobile and Sprint generate from text messages. In a nutshell, Stross reports that it costs the carriers virtually nothing to transmit the 2.5 trillion text messages that were sent worldwide in 2008.
Text messages are transmitted through a control channel, a tiny sliver of the wireless spectrum that is used to send continuous information between the cell phone tower and your handset. The primary purpose of the control channel is to keep you connected to the wireless system and let you know when you have an incoming call. The control channel has to be in use for your wireless phone to function.
The reason text messages are limited in size to about 160 characters is so each message will fit within the data packet exchanged through the control channel. Thus carriers can transmit billions of text messages worldwide with very little additional cost.”It doesn’t cost the carrier much more to transmit a 100 million messages than a million,” says Srinivasan Keshav in Stross’ article. Keshav is a computer science professor at the University of Waterloo in Ontario.
This doesn’t mean the carriers are engaging in any wrong doing. Quite the contrary. They’ve found a way to deliver a very popular service through their existing infrastructure without increasing operational expenses.
However, that $20 monthly fee for unlimited text messaging doesn’t seem like such a good deal now that you know almost all of the fee is profit.
BTW, the first commercial text message was sent by Neil Papworth on Dec. 3, 1992. The message was “Merry Christmas.” To listen to a radio interview with Papworth follow this link, then click the subhead “Radio Live interview with Neil Papworth.”
For more on text messages, also known as Short Message Service or SMS, check out “How SMS Works” from the Web site “How Stuff Works.”
Also, this is an interesting article about how SMS is helping rural farmers in Africa.