Financial theory says that the cost of an item should be the cost of producing one more unit. And the cost of SMS should be much more than the cost of sending email. So put it this way – if the telecom companies invited emails today – we would have been charged per email… but we’ll probably not have spam – as you could only email the people that had accepted you. But why does SMS still cost *a lot*?
Prices vary from company to company – and you get discounts and bonuses as in other countries. But a competitive price for one SMS is 0.5 kroners equal to 0.08$. A MMS costs about 2 kroners (0.33$). Cost of data traffic (3G/GPRS) on my subscription is limited to 10NOK per day as long as I use less than 200mb. The days I don’t use it I don’t pay anything – and if I have more traffic than 200mb the connection rate will be reduced – or I can decide to pay for an upgrade. The point is that you can send data traffic equal one SMS a lot of times within 200mb of data. One standard SMS contains 140 bytes (1120 bits) of data. As mobiles use 7 not 8 bit characters you can chose between 128 characters (8 bit characters would have given 256). With 1120bits divided on 7 the total space in one SMS is 160 characters. This equals 0,13671875Kbytes. So if a SMS was priced as data traffic … the cost per SMS would be:
0,13671875Kbytes = 0.0001335144mbytes
Price per MB is 20kr, giving us the price per sms (in data traffic): 0,00267kr. So how can we explain the difference between almost nothing and 0.5 kroners? It is premium data. It is one two one communication – and you are guaranteed that the receiver will see it (if everything works). But the price point isn’t fare. The price point should go down equal data traffic.
So what can consumers do?
We can choose between two strategies; and as long as we all chose the same we’ll win. One way is that we all change provider to the cheapest SMS provider. If we show that we are price sensitive we’ll drive down the price. Great competition has always been a good way to drive down the price.
Or we can replace SMS with a trusted data-based platform (like your inbox on Facebook). The point is that we want the technology to be easy. In these days this can be solved by applications installed on our mobiles. But we’ll need everybody to adapt to this new way – or find a hybrid that makes it possible to convert some of us first. I have been testing Google Voice, and as they provide SMS this can be an option for many. If somebody created an application for the different mobile platforms – we could easily send the SMS via a service like Google Voice, let us call this SMS 2.0. If the receiver is using Google Voice (or a compatible service) the message is routed cost free to the user via this network – if the user is a SMS 1.0-user (basic SMS) you pay best price the SMS 2.0 provider can give you.
My
RyghSMS service provide an option for people to receive SMS when somebody sends a Direct Message (DM) to them via twitter. I buy SMS bulk from
clickatell- currently the price is quoted as 0,288kroners per SMS (however the price is different cross the networks). If somebody buys a lot of these bulk messages and include them in the application - we'll drive down the price of SMS also for the "classic" way of sending SMS.