Verizon Wireless Massively Raises Rates For Text Messaging Services

from the margins?--you-have-no-margins? dept

Fri, Oct 10th 2008 3:03pm — Mike Masnick

It's no surprise that some things may be getting more expensive these days, especially as companies start dealing with the fallout from the financial crisis -- but it appears that some are going a bit overboard. There's a bit of an uproar among some, as Verizon Wireless is slapping a surprising 3-cents-per-text-message fee on top of every mobile terminated text message. That basically affects any company that provides some sort of SMS notification system or content service, massively increasing prices. As some have noted, most of those services bought text messages in bulk, where it cost around 1 cent per message. That means the cost of sending text messages just quadrupled. If you're already worried about the economy and working on tight margins, that could certainly put some companies out of business entirely.

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Filed Under: cost, text messages
Companies: verizon wireless

41 Comments

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some old guy, 10 Oct 2008 @ 3:10pm

speaking of margins
whats the margins on texting right now, before the rate hike? about 99.9% profit? So this raises it to... 99.999% profit?

Now if only they could achieve 5 9s of RELIABILITY, not 5 9s of GOUGING.
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- Dan, 10 Oct 2008 @ 3:56pm
  
  Re: speaking of margins
  You can make over 100% profit.
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  - some old guy, 10 Oct 2008 @ 4:11pm
    
    Re: Re: speaking of margins
    Not in the correct usage of the term as it relates to margins.
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Lucretious, 10 Oct 2008 @ 3:11pm

This is exactly why I don't bother with anything other than pay-as-you-go phones. For the monthly rates charged, Verizon should be including it as a freebie. Christ, how much does it cost to send a few bits of text info over the system?
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- CVPunk, 10 Oct 2008 @ 3:35pm
  
  Re:
  apparently now it is .03 for each msg.
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- Stuart, 10 Oct 2008 @ 5:31pm
  
  Re:
  It looks like the cost assuming that each message is the full 160 characters is around $200,000.00 per Gig.
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  - Anonymous Coward, 10 Oct 2008 @ 8:08pm
    
    Re: Re: (Stuart - $200,000.00 per gig)
    Good Call, Stuart.
    
    Let's look at competitive technologies:
    "At 10 cents each that's $776.50 per megabyte, or about 4.4 times more expensive than the 'most pessimistic' estimate for Hubble Space Telescope transmission costs."
    
    Dr Bannister was informed by Nasa that it costs $18.30 per megabyte for the transmission of data from Hubble to the Earth.
    
    Source:
    http://www.itnews.com.au/News/76011,sending-sms-costs-four-times-more-than-receiv ing-data-from-hubble.aspx
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    - Anonymous Coward, 12 Oct 2008 @ 7:00am
      
      Re: Re: Re: (Stuart - $200,000.00 per gig)
      So what you are really saying is that this pricing scheme is far above astronomical in its profit /cost ratio ?
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      - Yakko Warner, 13 Oct 2008 @ 10:02am
        
        Re: Re: Re: Re: (Stuart - $200,000.00 per gig)
        From http://www.quotationspage.com/quote/26930.html
        
        There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.
        —Richard Feynman (1918 - 1988)
        
        Yep, the pricing scheme is far above astronomical; it's economical. ;)
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Michael B, 10 Oct 2008 @ 3:50pm

Ah, Gordon Gekko is Right After All!
"Greed is Good". At least Gordon Gekko in the movie "Wall Street" thinks so... so, evidently, do the Verizon folks. After all, "It's the network", and anything you can do to increase profit with no bottom-line cost increase is, well, good. It's not like their network costs have risen becaue of fuel costs or raw material price increases.

Just another company out to screw their customers.
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Anonymous Coward, 10 Oct 2008 @ 4:00pm

solution: Don't use text messages!
DUH!
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- Mireah, 10 Oct 2008 @ 4:38pm
  
  Re: Solutions!
  "solution: Don't use text messages! DUH!" Don't use cellphone, they're not a necessity anyway (but are convenient, but at what cost will they become toys only for the rich?) $100 a month to carry a phone at all times...its stupid. Fine for using a cellphone while driving...(should be) priceless! (or greater than $500)
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- freediverx, 10 Oct 2008 @ 7:31pm
  
  Re:
  No, the solution is to switch to another service provider.
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  - Yakko Warner, 13 Oct 2008 @ 10:06am
    
    Re: Re:
    Which one?
    
    We have a pretty good family plan with T-Mobile. Two lines, $50/month, 400 shared minutes per month that we never come close to using up. Of course, they just raised their rates to 20¢ per text message sent or received (40¢, then, if we send a message to each other, since we get charged on both sides). So we go with option A: no text messages, thank you.
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Thomas, 10 Oct 2008 @ 4:56pm

only companies?
It sounds like it doesn't add to the cost if you are sending a txt message from 1 cell to another, just companies that send mass. Shouldn't that be cheaper? I guess they are really finding out that it's very popular, so why not charge more?
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Rob Friedman, 10 Oct 2008 @ 5:01pm

AT&T raising too!
AT&T sent me a "FREE" TXT the other day saying that on 2008.11.12 the Text/IM rate will increase from $.15 to $.20 per message sent or received. While their package rates will remain the same.

This is just an effort to sell packages. What gives I went prepaid to get away from packages. It makes me want to use Text even less, and pisses me off more when I receive them from Random people. At least I can choose to ignore a wrong number if someone is calling me.
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Sam I Am, 10 Oct 2008 @ 6:06pm

SPAM
Verizon raises their rates, that is their prerogative.
However, to charge for incoming SPAM which is not within the users control, is unconscionable. It is possibly criminal if they are also selling your cell phone number to the spammers.
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Steve, 10 Oct 2008 @ 7:03pm

Not Quadrupled
1 to 3 is Tippled
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Anonymous Coward, 10 Oct 2008 @ 7:38pm

yes Quadrupled
Steve,

1 plus 3 is 4. The rate went up 3 cents. 4 is one quadrupled. Stop with the George W Bush math.
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- Anonymous Coward, 29 Jun 2009 @ 10:47pm
  
  Re: yes Quadrupled
  It beats the hell out of the Barrack Obama math.
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Emilio, 11 Oct 2008 @ 5:35am

Of course, we adults can make decisions like "Don't text, it's too expensive", or "Switch to a less expensive carrier", but the massive number of school kids this fee is really targeting don't care how much their folks have to fork over to Verizon each month. And of course, since NOTHING is more important to parents than their precious, spoiled little brats, they'll go right on forking over the money (they so hate hearing the brats whining about anything, after all...)
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- j, 11 Oct 2008 @ 6:05am
  
  Re:
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Jack_Frost, 11 Oct 2008 @ 7:32am

Crooks
The crooks have sifted to the surface.

And they are coming out in all segments of the business world. Here I thought AT&T were the worst of the bunch, but now Verizon is proving to be as much of a violator. They go on my list of cell providers I won't consider after my contract is up with AT&T.
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Jeff L, 11 Oct 2008 @ 9:08am

Let's get the facts straight
First, this isn't Verizon charging more to individual consumers, at least not directly. This is Verizon charging application providers (like CNN sending breaking news alerts) $.03/ message.

Let's remember that many municipalities and other first responder agencies use SMS as one of their communication channels for urgent/time sensitive alerts. Verizon's move (especially if it is echoed by other carriers), makes it untenable for those critical services to be offered.

Also, you should note that Verizon announced on 10/11 that this policy (which they officially announced was in effect starting 11/1) was actually just floated to 'stimulate discussion among their business partners'. Such a crock!

If Verizon's position on this creates a problem for you, make your voice heard so that the 'stimulated discussion' doesn't end up resulting in anything like a $.03/message charge.
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Since when ?, 11 Oct 2008 @ 12:48pm

SMS is reliable ?
"many municipalities and other first responder agencies use SMS as one of their communication channels for urgent/time sensitive alerts."

Is this a good idea ?
How reliable is SMS ?
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- Anonymous Coward, 11 Oct 2008 @ 10:13pm
  
  Re: SMS is reliable ?
  Agreed. So maybe I'll just SMS my local 9-1-1 instead of just calling calling 9-1-1 because some Oracle named Jeff L came from the sky and said so.
  
  Now, before you just laugh and brush it off, understand your exact proposed worst case situation happened to me.
  
  If I would have pulled off on the other side of the road, I would have enjoyed the services of a Fire department 2 blocks from me, and it's quite possible my insurance company wouldn't have had to total my car for fire damage. But, because I decided to pull over and not block traffic, being the kind citizen I am, the other fire department was 4 miles away, and the car literally exploded before they could show up.
  
  I ended up doing quite well, actually on the total payout of my car putting me ahead, but still. You have a great idea! I wonder how this would work with SMS.
  
  Would I have had the fire department 2 blocks away showed up?
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Jeff L, 12 Oct 2008 @ 5:14am

You've missed my point
I'm not referring to an individual sending an SMS to 911, I'm referring to municipalities sending text messages to residents when major events (such as fires, street closings, subway outages, etc) take place. At a federal level, we see the same thing. For example, Homeland Security communicates via SMS (among other channels) with air marshals.

Any serious municipality will also use other communication channels (email, phone, web), because SMS is not always perfectly reliable. It is however, a very effective way of providing timely information to a large number of people in a small amount of time.

Beyond municipalities, many people receive lots of other types of important information via SMS. Weather from the weather channel, stock quotes and news from CNN, etc. These services are untenable as well under this proposed pricing.
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- Ads that you pay to see, 12 Oct 2008 @ 7:15am
  
  Re: You've missed my point
  "municipalities sending text messages to residents when major events (such as fires, street closings, subway outages, etc)"
  
  and who pays for the SMS ?
  
  I read recently that CA is considering ads on the highway overhead displays. Would they extend their ads to this also ?
  
  I can see it now ...
  Attn: accident ahead, expect delays. Uh oh better get maaco
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  - anonymous, 16 Oct 2008 @ 4:26pm
    
    Re: Re: You've missed my point
    actually, those types of texts are free--to verizon wireless customers, anyways.
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Rob, 12 Oct 2008 @ 7:08am

Guess what, it's a phone, use it to call people. Texting is stupid, sp. those people that text and drive
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Verizon User, 12 Oct 2008 @ 7:41am

My wife and I have been on Verizon for years and would never switch. They have by far the best coverage. But, the text charge is certainly gouging at it's finest.

We pay a lot for our "unlimited text" package but it's well worth it for all of the other very cool features that come with it including the Navagation feature. The Nav feature is almost indispensible.

Overpriced? Yes! Gouging on texting? Heck yes! It can't cost anything really to send a few bits of data through the system... But if you want the big features, your gonna pay for it month by month. And pay, and pay...........
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Ed Franco, 12 Oct 2008 @ 12:29pm

NO WAY WILL I PAY. Sprint offers a Simply Everything plan 4 $99.00
I will not pay for more Verizon greed. They are one of the most expensive cell phone carriers on the market. They claim it's because they have the best network (I don't think so).

I'Ve posted a link where you can research dead zones for all carriers.
Verizon has the most complaints see for your self and judge.

(The red ones are on Verizon's Network)

http://www.deadcellzones.com/
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Bob Bent, 12 Oct 2008 @ 1:43pm

Text Message Rate Hike
Most mobile marketing programs will now have to block Verizon customers. If the other companies raise their rates accordingly, it puts a serious crimp on an emerging industry.
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CharlieBlix, 12 Oct 2008 @ 10:11pm

Twitter?
So what does this mean if I have my Twitters sent to my phone. I pay for unlimited texting but since the twitters are coming from an online site and not another phone will I be charged for each twitter I get on my phone? God I hope not.
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Twinrova, 13 Oct 2008 @ 3:53am

You all sound surprised.
You shouldn't be. With all these phone companies sleeping together, Verizon's just taking a step in which the others will eventually do as well (should the increase happen).

Our contract with Verizon is up in 2 months, and after that, we're done with cellphone companies who do nothing but destroy the foundations on what got them popular to begin with.

Hell, you can't even find a plan for $39.99 anymore. Gone. Poof. Add all this "extra" stuff they charge for and it's no wonder they've fallen out of the COMMUNICATION business and have entered a PLATFORM business.

Screw this. It's just another prime example of big business changing the rules as they see fit, screwing its customers. This blog points out the customer isn't just "Joe and Jolene America", but small business as well.

Until consumers fight back, get ready for a whole new set of rule changes coming. Think SMS message increases is the last?

Just wait.
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Anonymous Coward, 13 Oct 2008 @ 7:04am

Texting has become the communication standard for those under 25, many of them send literally hundreds of text messages every day. I have seen usuage rates as high as 15,000 per month for a single phone (and that person wasnt even using the automated services others have mentioned). I have heard stories of people having more than 30,000 in a single month. Even if you assumed an average of only 20 text messages/day per phone, that is an enormous amount of traffic.

I know it's popular to side with the consumer and "stick it to the man". But companies can only raise prices as high as the market will tolerate. As price increases demand decreases and this is true for B2B transactions as well as consumer transactions (arguably even moreso).

For example at this point Verizon is making money from Google for SMS messages, but if the rate increase is more than Google is willing to pay Verizon could actually decrease its revenue. If the market isn't willing to pay the price Verizon will relent and adjust the price lower.

Verizon has an obligation to its stake-holders to maximize earnings. They are attempting to increase profits by raising the rates paid by services as opposed to charging customers more.
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USCellularFan, 13 Oct 2008 @ 8:00am

Now I'm switching to USCellular for good!
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Kathy Canavan, 13 Oct 2008 @ 1:22pm

Don't deal with Verizon. They tell you one thing and then charge you another thing. I just wasted an hour on the phone with them trying to straighten out a charge their store employees (2) both told me I wouldn't be charged.
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CMRSlawyer, 16 Oct 2008 @ 1:38pm

Texting rates
A lot of comments seem to misinterpret the article. Unless I'm mistaken, the rate hike is on companies that use SMS for notification or content services, NOT on subscribers' texting. They are making it more expensive for those businesses to text you, not for you to text your buddies.
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bob, 1 Dec 2008 @ 2:30pm

text fees
I find it interesting you mouth off about verizon while they sponsor your site/blog
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money, 10 Feb 2009 @ 9:24am

ugly
u have got to create a new phone with better service
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