The real cost of an SMS

The true cost of an SMS

Industry players highlight that SMS pricing in South Africa is highly inflated, which may come to light if a cost based SMS interconnect rate is introduced

I'm super curious as to how they price the cost of an sms, assuming that you have the infrastructure in place the cost of an incremental sms is negligible.

160 characters (and lets say another 100 characters for overhead) gives you 260 bytes. So if my calculations are correct then more than 4 million SMSs will fit in a GB. At 5c that works out.... R200 000 per GB of data. Eish - Can it be???

Cyberdude said:

160 characters (and lets say another 100 characters for overhead) gives you 260 bytes. So if my calculations are correct then more than 4 million SMSs will fit in a GB. At 5c that works out.... R200 000 per GB of data. Eish - Can it be???

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Good point that.

Cyberdude said:

160 characters (and lets say another 100 characters for overhead) gives you 260 bytes. So if my calculations are correct then more than 4 million SMSs will fit in a GB. At 5c that works out.... R200 000 per GB of data. Eish - Can it be???

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R206488 to be exact

Cyberdude said:

160 characters (and lets say another 100 characters for overhead) gives you 260 bytes. So if my calculations are correct then more than 4 million SMSs will fit in a GB. At 5c that works out.... R200 000 per GB of data. Eish - Can it be???

Click to expand...

Looking at the track record of some of our mobile operators, definitely.

Well I use whatsapp now so no more milking me with ridiculous sms rates, bringing down sms rates now won't benefit most smartphone users anyway

I really hope justice will be served on these price fixers one day.

I'm glad this is in the news but it's still tempting to say "how is this news", because it's blatantly obvious and always has been that there is an insane markup on the cost of an SMS.

If you were one of the operators you would look for the cheapest way possible to send that data, and that is to send it as exactly that, a few bytes which cost next to nothing, literally nothing if it stays without their own network.

This could so easily turn into a long rant about how this country does little to nothing to protect the consumer from such price fixing but frankly I don't care personally because to me SMS is dead and has been for years.

It's only good for 1 thing today and that is to get spam, the only reason I got an android phone was to block all SMS messages other than those on my white list and I never send one on principle due to the rip of.

I doubt anything will be done about it and there are far more important things to be concerned about such as so called termination fees which as far worse by effectively blocking any startups in the sector and putting a burden on any new entrants even if they have big funding behind them.

Even if you consider the fact that SMS is a hack of the GSM standard and requires some special fidgeting with the signal (Special hardware) there is no sane way it can cost that much.

At least on MTN I just cash in a few loyalty points now and again to maintain my free smses balance. Those points aren't good for much else.

We as the consumer will always be getting the short end of the stick and they will always make up a story or have an excuse why their tariffs are reasonable

what? some essential service in south africa has a markup of 4000%!! i'm shocked*!!!

*i'm not shocked

The same could be said about the cost of voice and mobile data. The true cost of these services is also way below what the public are being milked for.

Well there's a suprise/not

Gentlemen's agreement vs collusion to remain out of the regulator's vision?

It would be great to have clarity and ensure that bulk messages actually accrue a charge when going on to the terminating network which will hopefully slow down some of the SPAM. I wish they would introduce forced, verified sender details for some of the international SPAM that comes through.

It's a mistake to base pricing on a cost-plus model. And while I don't like paying the price of SMSs here or anywhere else, I would even less approve of using political or legislative pressure to interfere with the way businesses price their goods and services.

If you were a programmer or consultant, how would you like it if the government regulator said you had to price on cost-plus?

Think about it for a millisecond: The incremental cost of producing another copy of software is virtually zero. Cost-plus regulation would mean you'd have to sell the first 5000 copies at say R1000 each, and then drop the price to 5 cents thereafter. But almost no-one would buy at R1000 a licence. They'd rather wait, expecting the price to drop ... and that wouldn't happen because the publisher could never sell enough to recover cost. The market gets severely distorted, and soon the range and quality of software drops dramatically because no-one can price freely and make their own choices about cost amortisations.

Same holds for telecommunications and data services and all others goods and services.

The real problem is that we don't have a free and open market in telecommunications and data, but a tightly-controlled cartel protected by the state. Neither you nor I can start up our own telecoms company and compete with the incumbents - we have pay vast "licence" fees upfront and annually to Caesar (the state) for "permission" to operate. This is deeply unjust and an unwarranted intrusion in the free market.

And if you think an unregulated market will lead to chaos, you need to think again. Do you know which country in Africa has the best, fastest and cheapest telecommunications services on the continent? The only one with an unregulated market - Somalia! Google it if you don't believe me. (Edit: here's an old article from eight years ago, on the BBC (which is very suspicious of private enterprise) - since then prices have dropped much further, and services improved.)

Rather than push for yet more regulation and control, we should be pushing harder for less state interference and the abolition of all administrative controls, licence fees and barriers to entry by other players. It's the only real and sustainable way of getting sanity into the pricing models.

Arthur said:

Rather than push for yet more regulation and control, we should be pushing harder for less state interference and the abolition of all administrative controls, licence fees and barriers to entry by other players.

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Cute argument and I am all for government getting out of the way and focussing on fostering a conducive market useing regulation to tune things. You forget a very important part where the businesses have colluded to maintain high prices to rent seek. While rent seeking is the primary objective of most businesses, that is where regulation comes in to even the playing field for consumers. If the current players did not collude, it would not be necessary. If the current players did not charge such ridiculous prices regulatory pressure wouldn't be needed. See interconnect prices for a perfect example - after all the "it will make prices go up" from VC etc all I have noticed is the average cost of calls going down and guys like VC and MTN still posting MASSIVE profits.

What you are forgetting in your rush to condescend is that collusion would mean nothing if the market was truly open and free. In a truly free market, any attempt at cartel formation that drives up prices would instantly open the gap for competitors to step in and undercut them to take market share.

By the way, your use of Marxist terminology like "rent seeking" is a give-away. It's bunkum economics, frankly. Profits are what businesses must make in order to survive - their highest and primary social responsibility is to make profit, and that is good. What is deeply unjust is using the state to erect barriers that prevent competition or make it very difficult and expensive, thereby creating cover for fleecing consumers because lower-priced competitors are illegal.

Let me repeat: profit is good. It is simply producing more than one consumes, and it's something we should strongly encourage and foster. Anything else leads to decline and collapse, because growth, development and infrastructure replacement can only come from the surplus (profit) left over after consumption.

I'm not too worried about the true cost of SMS. If SMS becomes cheaper the spam floodgates will open even wider.
With Whatsapp around who still use SMS as a means of communication? On CellC you can talk for almost a minute for the cost of one SMS!
There was a time when my business was on VC every employee had an SMS bundle, 500 at least. When I last checked the total SMS cost for the month was less than R50. That is on 16 phones. My own cost is the highest, I use SMS to switch geysers on and off in two self catering units.