Monday, October 10, 2005

Charging for Incoming Text Messages

This impetus for this interesting question comes from Chris Hellmann:

Why do mobile phone companies charge for incoming text messages? For instance, according to the Cingular website, you are charged $0.10 per text message whether you sent or received the message and whether the message was solicited or unsolicited.

Looking at this from the perspective of the mobile phone companies like Cingular or T-Mobile, why would they price text messaging like this? Would there be a difference if they charged $0.20 to the sender of the message and charged nothing for receiving? Why do they choose the first option?

Again, it is more useful to look at it from the perspective of the profit-maximizing cell phone company, not the consumer upset because you have to pay for unsolicited text messages.

15 comments:

Gregory Bylos said...

I think the reason for this is that they (the evil cell phone companies) would be making the same amount if they charged the sender only if the amount of messages sent stays the same, which it wouldn't. People would be less likely to send a text message for $.20 than for $.10. However, when the bill for that message is split, the sender would be more likely to send it.

Daniel Hanison said...

I totally agree. In Europe, you do not pay to recieve text messages (but the price of sending a text message is around the same). By charging you to receive a message, the cell phone companies in America are making more money on text messages than those in Europe because even though you do not have to pay to recieve in Europe, you are not going to send more because you dont pay to recieve. I don't like it, but then again i'm not evil!

Nic Neinken said...

Chris Hellman, Amen my friend. For a long time have I pondered this question. Why would you be charged for recieving a text message? You don't choose to have it sent to you. What if people only sent you text messages and you didn't send them back becuase you didn't want them to be sent to you in the first place? How do the phone companies know that? They don't. So they charge you anyways. It is an unjust system. Also what if someone accidentally sends a text message twice? You would be charged twenty cents for the recieving two of the same message. I believe that this is not right. If someone sends you a message without your consent I beleive that you shouldn't be charged for it. I guess the problem with this is that the giant phone companies don't really care if you want to recieve the text message or not. They're in it for the money anyways. So I am here today to suggest a new system. What if everytime you recieved a text message a screen popped up on your phone saying "Do you wish to recieve this text message from.." If you don't want the message then you don't have to accept it, this way people aren't being charged for things that they don't want. I'd love to hear feed-back. So just post another comment if you have any ideas about this. Thanks. (I am batman)

Anonymous said...

I agree with Gregory. I think that the reason why both parties are charged is because people would not send as many text messages if the price per message was doubled. I also think that it is a conspiracy that text message receivers have to pay to receive messages that they might not want. However, people cannot be too upset about this because they signed a cell phone contract in which they agreed to pay for both sent and received messages. So, people at least know about this charge from the beginning and it is not a surprise when they see their phone bill. I think that batman (who is that, by the way?) raises a good point that people should have the right to choose if they want to accept a text message or not. However, I don’t think that cell phone companies would ever agree to that because they would lose a lot of money.

- Jessica Monk

Anonymous said...

I disagree with Gregory about how people would less likely send a text message for $.20 than for $.10, because, doesn't the fact that you're charged for recieving a text message also lower your incentive to send a text message? The reason for sending a text message in the first place is asking a question or something which you obviously EXPECT an answer back. Therefore, you already figure in that you will be charged an additional $.10, therefore equaling a total of $.20. So, I don't think that charging people $.20 for sending messages and charging nothing for recieving them would necessarily decrease people's incentives to send a text message.
-Emily Freebairn

Anonymous said...

I agree with Gregory in the fact that when the price of sending a text message is raised from $.10 to $.20, people would send less messages even if there wasn't a charge for receiving a text message. It is true that if you send a text message and receive a text message in the first option, it would equal $.20, but people do not send the exact same amount of text messages received. Therefore, the phone companies would be profiting by charging received messages because if the price was raised to send messages, less messages would be sent.
Courtney Allen

Maria Guilbault said...

I agree with Gregory in that part of the reason for charging the customer for recieved messages is to split up the price and make it seem as though it is costing less to send messages. People may send more due to the fact that it is $.10 instead of $.20, but they may not. I think that another reason for charging to both send and receive messages is that whether you are sending or recieving, it is still putting traffic on the cellphone companies' networks. The more total traffic that exists on the network at any one time, the more capacity they have to have, and thus the more money they have to pay. That is probably one of the bigger reasons for charging for both outgoing and incoming messages.

Anonymous said...

Another reason for the charge on incoming messages is that people must pay the fee no matter what. People can choose to send fewer text messages in order to avoid the cost of outgoing messages, but they cannot choose to receive fewer messages to avoid the fee on incoming messages. It would be more logical for the company to charge 20 cents on incoming messages and none on outgoing ones because people would send more messages if there was no cost on outgoing messages, and the company would receive the same amount of money per message because of the increased cost of incoming messages. People would send more messages, so the company would make more money. I guess companies don't do this because people dislike the idea of being charged so much for incoming messages, so fewer people would use their service.

-Richard Murphey

Gregory Bylos said...

Emily, people don't always expect a reply on messages. Only if you plan on having a conversation with a person would your logic apply, and it doesn't make sense to have a text message conversation with your cell phone as you would be more likely to just call that person.

Anonymous said...

Another point might be that if you are going to be charged to recieve text messages, it will push people towards getting a "text messaging plan"-that would include a set price for all incoming and outoging messages. If the cell phone companies could create set rates for more people they would make more money
- kelly gaetnao

Brian Zabell said...

Batman is a pretty rich guy considering he lives in Wayne Manor so I'd imagine his economics views are pretty legit.

Richie Rich said...

I agree with gregory because contrary to Emily's idea which to a degree is true his idea seems more appealing to me. The only people that would really be affected by this is the overly chatty 12 year old girls (and guys) who run up the text messaging bill because they talk on that because they're too afraid to make a phone call. Raising the price to 20 cents for the sender would in their minds decrease the incentive most likely and would probably urge them to make phone calls. Although they are most likely the largest users of text messages because i know that i only use it when im in a situation where i can't talk cough* like in school cough*. This doesn't happen too often, so the major users of text messages are probably the people who have actual conversations meaning putting it to twenty cents would decrease the incentive to use them, making the cell phone company lose money. Although better for us, its worse for the cell phone company.

Therefore i agree with Gregory, sorry for the headache long entry, have fun reading this next poster : )

i drew that smiley in spite of you Mr. Arjona... haha

-Chase Croft

Anonymous said...

Garrison

I agree with batman, you should be asked if you want to recieve the message, i must get at least 10 duplicates a day, thats an extra buck. As for what Hanison said, Europe is crazy about cell phone bills. They charge you per minute, and its some insane amount. they have plans where you get numbers that only cost you 3 cents a minute to talk to, and the rest are like 20. So just be happy that we arn't them

Anonymous said...

I think that the cell phone companies charge for both incoming and outgoing messages because they know someone is more likely to send one for ten cents than for twenty. But they know that almost always the sender will recieve an answer to their message. Plus with a ten cent sending fee conversatins are probably more likely to continue for more than one exchange.
-David Hale

Bushbandit said...

I think that if I had a product that you did not want and I sell it to you anyway and demand you pay for it is the same as paying someone for protection like you see on TV when the protector comes in and just takes the money from you and then does you the favor of not trashing the place or maybe not breaking a few fingers..
If the cops catch that guy he goes to JAIL because it is illegal and just not right "Extortion anyone?"
even if you know about it or even signed some worthless contract...