Cell-Phone Bills: Is Text-Messaging Too Expensive? - TIME

[Dave Farber <dave () farber net>]

Begin forwarded message:

> From: Gerry Faulhaber <gerry-faulhaber () mchsi com>
> Date: September 13, 2009 18:02:09 EDT
> To: dave () farber net
> Subject: Re: [IP] Cell-Phone Bills: Is Text-Messaging Too Expensive?  
> - TIME

> Dave [for IP if you wish]
>
> And this is interesting...why?  All electronic  products/services  
> have essentially zero marginal cost: telephone calls (wired or  
> wireless), software, movies, etc.  For all these products/services,  
> costs are largely fixed costs (of one form or another) not marginal  
> cost per unit sold.  Pricing must cover the total costs, not just  
> the marginal cost, so relating price to marginal cost in electronic  
> markets is simply not relevant or  interesting.
>
> Read the excellent book "Information Rules" by Carl Shapiro and Hal  
> Varian at http://www.amazon.com/Information-Rules-Strategic-Network-Economy/dp/087584863X/ref=sr_1_1?ie=UTF8&s=books&qid=1252879275&sr=8-1-spell 
>  , about the economics of information markets, especially pricing.   
> It's an oldie but a goodie, and still spot on.
>
> Gerry Faulhaber
> ----- Original Message -----
> From: David Farber
> To: ip
> Sent: Sunday, September 13, 2009 3:50    PM
> Subject: [IP] Cell-Phone Bills: Is Text-Messaging Too Expensive? -  
> TIME
>
>
> http://www.time.com/time/business/article/0,8599,1921373,00.html
>
> "At those hearings, Srinivasan Keshav, a professor at the University  
> of Waterloo in Ontario and an expert on mobile computing, presented  
> a detailed analysis of all the expenses that carriers incur in  
> handling SMS messages. He showed that the wireless channels  
> contribute about a tenth of a cent to a carrier's cost, that  
> accounting charges might be twice that and that other costs  
> basically round to zero because texting requires so little of a  
> mobile network's infrastructure. Summing up, Keshav found that a  
> text message doesn't cost providers more than 0.3 cent."
> Archives        



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