Comments on: Cell Phone Providers Dirty Little Secret: Cashing in on SMS Text Messages http://www.theinternetpatrol.com/cell-phone-providers-dirty-little-secret-cashing-in-on-sms-text-messages/ Internet Safety, Windows Updates, Internet News, and More Sun, 22 Nov 2009 00:00:17 +0000 http://wordpress.org/?v=2.6.3 By: Bill Cole http://www.theinternetpatrol.com/cell-phone-providers-dirty-little-secret-cashing-in-on-sms-text-messages/#comment-926336 Bill Cole Tue, 30 Dec 2008 20:34:47 +0000 http://www.theinternetpatrol.com/?p=2158#comment-926336 While the bandwidth margin for SMS text messaging is indeed almost infinite (because it is bandwidth that is deployed as part of the regular calling infrastructure) there is a much more complex cost basis for SMS, because it requires that the switching infrastructure can handle all those essentially null calls. Because the phone system (even the mobile phone system) is still circuit-switched at the edges, a growth in SMS that outpaces normal calls can overwhelm systems that were designed to handle a few long-duration calls per day per phone. If you land in an overloaded location (like an airport having weather issues) you can experience such overloading as difficulties getting both SMS and regular calls through. This is a reality *today*, and is ultimately bottlenecked by the radio spectrum available for each carrier in each location. A carrier can't just stack more cells into a limited high-use area to handle more calls/messages because they only have so much spectrum to use. Of course, that's really hypothetical for now. carriers are not charging absurdly high prices because they need to keep a lid on demand and/or build out denser infrastructure and/or buy more spectrum, they are doing it because the market will bear their prices, and they have created an oligopoly to prevent real competition. Until there's some alternative to SMS that can be provided ubiquitously by companies who have not invested billions on spectrum and infrastructure, the phone carriers will have no problem charging whatever they can get people to pay for messages. While the bandwidth margin for SMS text messaging is indeed almost infinite (because it is bandwidth that is deployed as part of the regular calling infrastructure) there is a much more complex cost basis for SMS, because it requires that the switching infrastructure can handle all those essentially null calls. Because the phone system (even the mobile phone system) is still circuit-switched at the edges, a growth in SMS that outpaces normal calls can overwhelm systems that were designed to handle a few long-duration calls per day per phone. If you land in an overloaded location (like an airport having weather issues) you can experience such overloading as difficulties getting both SMS and regular calls through. This is a reality *today*, and is ultimately bottlenecked by the radio spectrum available for each carrier in each location. A carrier can’t just stack more cells into a limited high-use area to handle more calls/messages because they only have so much spectrum to use.

Of course, that’s really hypothetical for now. carriers are not charging absurdly high prices because they need to keep a lid on demand and/or build out denser infrastructure and/or buy more spectrum, they are doing it because the market will bear their prices, and they have created an oligopoly to prevent real competition. Until there’s some alternative to SMS that can be provided ubiquitously by companies who have not invested billions on spectrum and infrastructure, the phone carriers will have no problem charging whatever they can get people to pay for messages.

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