Happily paying R1.5-million per GB

If you compare the costs of mobile services according to the amount of bytes you are able to send for the money you pay, Short Message Service (SMS) is by far the most expensive.

Where South Africa’s ad-hoc mobile data rate is typically between R1 and R2 per Megabyte (MB) depending on the network, an SMS works out to around R1,500/MB (or R1.5-million/GB).

It is important to note that SMS messages and mobile data services do not use the same systems, so this type of cost comparison would not indicate whether operators are “overcharging” for SMS.

This point is further illustrated when looking at the cost of SMS as calculated by Srinivasan Keshav, a professor at the University of Waterloo in Ontario. Through a detailed analysis he showed that the cost of an SMS message to an operator is less than 0.3 US cent (3.12 SA cents at the time of writing).

Even at this comparatively low cost, the effective byte-related price is about R214/MB.

The table below summarises the comparative prices of SMS, voice, and data when converted to per-Gigabyte rates:

Service Price Normalising variables Converted per-GB price
SMS 21c/SMS 140 bytes/SMS R1,500,000
SMS (cost?) $0.003/SMS R10/$; 140 bytes/SMS R214,286
Voice (effective, all Vodacom) R1/min 12kbps R11,111
Voice (effective, prepaid Vodacom) 72c/min 12kbps R8,000
Data (most expensive) R2/MB 1000MB/GB R2,000
Data (effective, Vodacom) 40c-50c/MB 1000MB/GB R400-R500
Data (effective, MTN) 20c/MB 1000MB/GB R200

The primary purpose of the table is to illustrate one thing: there are far more cost-effective ways to transmit a text message over a mobile network than using SMS.

To make this point, some decisions had to be made on which values to use to convert all pricing to a single unit of measure that could be compared; in this case, cost per-Gigabyte.

The 21c/SMS price is derived from the cheapest stand-alone SMS bundles that are available for purchase in South Africa. While most operators do offer subscribers a blend of minutes, SMS, and data on contracts, it is tricky to use these blended bundles as the basis of a comparison.

For this reason, the “cost price” of SMS as calculated by Keshav is also shown.

A single SMS is able to carry 160 characters, but this is only when it uses a 7-bit character set. There are 1120 bits available to encode an SMS, which at 8 bits/byte comes to 140 bytes.

It was also decided to use the conventional SI meanings of the “kilo-”, “Mega-” and “Giga-” prefixes rather than the definitions based on binary that are sometimes used.

As indicated in the table, this means that the convention where 1,000 bytes = 1KB, 1,000KB = 1MB, and 1,000MB = 1GB was adopted, as used by the IEEE.

The “effective” prices of voice and data come from recent statements made by Vodacom and MTN regarding what the effective rates of these services are on their networks.

How cost effective is conventional mobile voice compared to VoIP?

An interesting anomaly in the table caused by the decision to normalise in terms of bytes is that voice calls look very expensive.

However, it must be viewed in light of the fact that current-generation mobile voice networks operate very differently from data networks.

Mobile operators are able to provide a fairly good quality voice service despite using low bitrates.

To see if their own efficiency in this regard is counting against them it is necessary to do a second comparison, this time normalising VoIP service to a per-minute rate.

Service Normalising variables Per-minute price
Voice (effective, all Vodacom) Nil R1.00/min
Voice (effective, prepaid Vodacom) Nil R0.72/min
Skype (minimum) 60kbps @ R0.50/MB R0.23/min
Skype (recommended) 200kbps @ R0.50/MB R0.75/min
Viber 240KB/min @ R0.50/MB R0.12/min

The bitrates and estimated data usage of the VoIP services above come from their own websites, while the data price is the upper-end of Vodacom’s most recently stated “effective data rate” range.

This shows that despite the higher bitrates needed, particularly by Skype, VoIP calls can be made cheaper than conventional calls when just considering the data cost.

The discussion becomes even more interesting (and intricate) when one starts considering cheaper data such as capped or uncapped ADSL, and codecs that can offer lower bitrate VoIP such as Speex and Opus.

However, it should be kept in mind that when making calls to telephone networks, a VoIP provider will typically also charge you a per-minute rate.

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Happily paying R1.5-million per GB