R5992 per MB
A recent article on ZDNet questioned the pricing of SMSs considering the very small amount of data an SMS uses.
According to the article, AT&T charges 20c US$ per message, amounting to roughly $1 310.72 per megabyte of data used in SMS traffic.
A single SMS message consists of 160 characters where a single character equates to 1 byte. According to Gthing Science Project a standard SMS message contains up to 140 bytes (1120 bits) of data.
“This might not make sense at first, until you realise that SMSes uses 7 – not 8 – bit characters – leaving you with 128 possible character values instead of the normal 256. So 1 120bits/7bits = 160 characters,” Gthing Science Project states.
The rest of the calculation on the actual data cost for SMSs is not difficult. With 1 048 576 bytes in a megabyte around 7490 SMSs makes up one megabyte. At a peak rate of 80c per SMS it equates to R 5992.00 per MB of data – a far cry from the standard mobile data rates.
Considering the very small size per SMS it is maybe not surprising that SMSs were initially free in South Africa. This was stopped as volumes increased and SMS traffic is currently a significant revenue stream for mobile operators.
In the last financial year Vodacom South Africa’s data revenue – of which a significant portion came from SMS traffic – amounted to R 4.7billion. MTN South Africa made 2.8billion from SMSs and data over the last of which is big portion comes from SMSs.
Backend systems
The typical argument from mobile providers is that the systems needed to make sure SMSs are delivered as expected are neither trivial nor cheap.
This argument is partly valid as cellular messaging systems are not seen as best effort services and is associated with high availability and low failure rates.
Many different network elements are needed to support SMS systems and ensure quality of service, but according to one commentator the additional cost to carry SMSs in a traditional cellular network is not significant.
“SMS messages are sent on the control channel. Initially SMS were implemented in the GSM standard as a control system, just like the ICMP protocol of the IP stack. Then Nokia thought to implement an actual instant message function using SMS. The Contol channel is the channel that your mobile device listens to in order to receive calls,” he said.
“So for receiving a SMS a control signal is sent. Since bandwidth is somehow limited on these channels it could happen that in a situation of massive usage of texting the control channel gets saturated and normal voice protocol initiation is disrupted. To prevent this carriers nowadays apply a kind of QoS delaying SMSs until there is no risk of congestion. So we can state that the marginal cost is 0 and the cost/opportunity is also 0.”
He continues to argue that MMSs may even be more profitable “since they run almost entirely on GPRS thus using most bandwidth on normal data channels. Thus a MMS with pictures sounds and maybe video SHOULD cost less than a SMS.”
Vodacom, MTN and Cell C was questioned on why SMS prices are so much different from standard data prices, how the price per SMS is calculated and how it is possible for Virgin Mobile to provide free SMSs.
MTN and Cell C did not provide any feedback on this issue, and despite the fact that Vodacom promised comment by Monday no feedback was received by the end of business on Tuesday.
SMS pricing has long been under fire and it will be of value to hear from the mobile providers how these costs are justified. It would however seem that questions regarding the pricing of SMSs are a touchy issue and rather ignored than answered.
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