The true cost of an SMS: operators dodge issue

Vodacom, MTN, 8ta, Virgin Mobile and Cell C all dodged questions about what it really costs to send and receive SMSs.
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They're like ''white-collar criminals'', except the tables are turned, and they're stealing from the public.
 
Safe to say that the mobile operators will never make the cost price of anything they sell public!
 
so AKC was quick to say how the other networks bullied cellc, but when asked about true costs he has nothing to say anymore?
 
The government and ICASA are also to blame for this. They have let these guys rape the public for years. One way to address inflation. Get these thieves under control, allow communication to grow at true wholesale costs and not just for SMS. Data and voice.
 
There definitely reaping us off, thnx to social networking, nolonger sending sms that much otherwise every time you do it costs a fortune, ;)
 
The issue is of course that it is not just the operators, but bulk SMS companies that have relied for years on the artificially high cost of SMSs will take a tremendous hit in profit if the cost of an SMS falls significantly. And especially on the bulk SMS side of things there has been a significant investment of time and money to get these services into place, market and support them.

So current margins on Bulk SMSs are justifyable I believe. If SMS were to die then there is a whole new set of problems. In the end it really boils down to standards. SMS is a communications standard supported by all cellphones as far as I know. This is why companies that need to reach their current or potential customers don't rely on whatsapp or skype for instance, because phones do not come preloaded with it and it isn't even supported by older phones.
 
There is no 'true cost' of an SMS because (as I have previously stated) a single text message is essentially free to send (it just moves around a few electrons). The cost comes from provisioning the hardware and bandwidth on the network to give acceptable response times even when the network is busiest.

Firstly, one needs to provision the sms server, customer database and billing servers for peak traffic, but this is just a couple of servers and computing power is constantly getting cheaper. Then one has to provision the core to switch the SMS-related messages - this should be a few routers and some fibre. Getting to the actual base stations, there must be spare capacity at tens of thousands of sites around the country to handle extra capacity, plus the links from these back to the core. I suspect that modern 3G sites prioritise SMS over data, so data users simply experience slightly slower usage, rather than there being actual increased capacity.

Such measurements are difficult: a casino may have messages peaking at 1am on weekends, needing extra wireless but no extra core. A busy freeway may lead to wireless congestion on Friday at 4pm. The backhauls costs in the USA would be very different from SA, etc etc.
 
SMS is a communications standard supported by all cellphones as far as I know. This is why companies that need to reach their current or potential customers don't rely on whatsapp or skype for instance, because phones do not come preloaded with it and it isn't even supported by older phones.
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That's why it is a brilliant move for FNB putting out a phone app that displays the 'in touch' messages from each transaction. That way they replace millions of SMS's (which they pay to send) with cheaper data bursts to customer (which the customer actually has to pay to receive as data).
 
There isn't a single cost as there is demand management. It operates on a signalling channel which is a limited resouce and thus the demand management price at 11am is higher than at 2am.
Averaging out the cost doesn't help. E.g. if the peak cost is 10c and at 2am it is 0.1c this is an average of 5c. No one wants an sms at 2am so the price there should also be 10c. Also if the peak is congested then the price is higher than 10c. The price will increase to a level were there is no congestion.
 
entrepr said:
That's why it is a brilliant move for FNB putting out a phone app that displays the 'in touch' messages from each transaction. That way they replace millions of SMS's (which they pay to send) with cheaper data bursts to customer (which the customer actually has to pay to receive as data).
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That was an extremely savvy move yes.
 
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