You might be paying $1,000 per MB of SMS

[David Farber <dave () farber net>]

Begin forwarded message:

From: "David P. Reed" <dpreed () reed com>
Date: July 29, 2007 3:00:24 PM EDT
To: dave () farber net
Cc: ip () v2 listbox com
Subject: Re: [IP] You might be paying $1,000 per MB of SMS

The idea that the cost of operations of a network or the price of a  
network service is largely determined by the number of bits  
transmitted is widely assumed to be true.   However, it is absolutely  
false.

The cost of an SMS at the implementation level largely consists of  
maintaining the HLR (home location registry) as users move around the  
network.   It has very little to do with the number of bits transported.

And some careful thought about networks would suggest that the  
infrastructure cost is a fixed cost that can be allocated in a  
zillion ways, highly dependent on depreciation/amortization and on  
other assumptions.   This is not amenable to a cost/bit notion of a  
"fair price".


David Farber wrote:
> Begin forwarded message:
>
> From: Debi Jones <debi.jones () gmail com>
> Date: July 29, 2007 1:55:08 PM EDT
> To: dave () farber net
> Subject: You might be paying $1,000 per MB of SMS
> Reply-To: mojo () mobilejones com
>
> Most mobile phone subscribers love texting.  And they love that it  
> saves them money over making phone calls.  Ten to twenty cents for  
> a communique versus $.10 per minute for voice is seductive, indeed.
>
> But have you ever gone through an exercise to determine how much  
> per MB SMS is costing you?  This comparative cost exercise  
> demonstrates why carriers/operators continue to receive the lion's  
> share of their data revenue from SMS.  At $600 - $1,000 per MB,  
> what is standard margin for the telcos is a web company's wet dream.
>
> http://mobilejones.com/2007/07/27/you-might-be-paying-1000-per-mb- 
> for-sms/
>
> for IP if you wish
>
> ...Debi Jones
>
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