…generating more than $20 billion in revenue for the wireless industry.
Verizon Wireless alone generates as much as $7 billion a year from texting, or about a third of their operating income. It’s almost pure profit since no new spectrum or hardware is required from mobile operators.
AT&T recently started requiring new subscribers to choose between two texting plans: pay $20 a month to send unlimited text messages or pay 20 cents for each message sent and received. The company will no longer offer a plan that charged users $10 a month for 1,000 text messages. This is apparently aimed at pushing customers toward a pricier plan.
Srinivasan Keshav, a professor at the University of Waterloo who studies mobile computing, estimates it costs the carriers about a third of a penny to send text messages. Considering that the major carriers charge 10 to 20 cents to send and receive them, “it’s something like a 4,090 percent markup,” he said.
A lot of other text-like apps are available defining a close user group of texting communities but all those apps they need data plan. Only carrier can offer true Text environment to subscribers and off course they will bill accordingly.
Apple will introduce a new service called iMessage. It lets iPhone owners send messages with text, photos and video to other iPhone owners free. The service, part of an IOS-5 update, will automatically handle messages sent between iPhone, iPad and iPod Touch users who have upgraded to the latest software.
Other downloadable apps like TextPlus, WhatsApp, Kik and Pinger, avoid the costly carrier fees but all of the above requires data plans. Pinger says it has 19 million members in the Unites States alone. The company says it has handled more than 15 billion text messages since it began offering its service in 2009. Facebook recently launched a messaging app, Messenger, following its earlier acquisition of group messaging company Beluga.
Carriers will likely respond to free texting services by bundling texting with data plans, analysts say. The Wireless Association says U.S. text messages rose to 1.8 billion June 2010 from 1.3 billion the year earlier.
Wireless Association: US Wireless Quick Facts.
New York Times: Free Texts pose threat to Carriers.