so how long before the mobile operators lobbyists come crawling out of the wood work, doing their damnedest to get some thick politician to introduce another bill, this time to protect their business from collapsing, whilst stopping an innovative company from doing the same thing as the big boys but for next to nothing. i suppose you could say they are trying to get away from ‘free speech’

Just to clear up a misconception, SMS is not entirely free. The bandwidth used by SMS is free, but it is non-trivial and non-free for the carriers to store the SMS until it can be delivered and to manage routing the information to your phone. And they aren’t overcharging — they’re charging what the market will bear, which is exactly what free market economics says they should charge.

Now that the technical part is done, on to my regularly scheduled rant.

SMS messaging has been a cash cow for them, since they can charge far more than it costs to implement the service. To give the carriers the benefit of the doubt, I must admit that it is possible that some of their SMS profits may have been invested into expanding the network, and perhaps the profits from SMS were used to allow them to keep the prices low on other services.

That said, they seem be making one of the classic blunders, which is to assume that a cash cow will live forever. That is perfectly contrary to the laws of the free market. In a free market, any highly profitable scheme will attract competition. That’s how today’s luxury becomes tomorrow’s commodity and next week’s trash. A box of Cinnamon was once unobtainable, then superbly expensive, then expensive, and now cheap.

Cell service will inevitably become a commodity, and finally will be superceded by the next great thing. The only question is how long it will take. Eventually your cellular service bill will look like this:

1. Monthly service and regulatory fees: $8.00
2. High priority data: 264MB x $.05: $13.20
3. Bulk data: 4234 x $.005: $21.17
4. Monthly phone service: $3.00
5. Equipment payment: $8.00
6. Phone-based purchases: $34.23

So they charge a standard monthly fee for account maintenance. High-priority data (phone calls or real-time video games) is charged at a higher rate than bulk data (web browsing, Netflix). Phone service (i.e. the phone number) is an optional part of the package, and may even be provided by a separate company (e.g. Skype, Google Voice, or Vonage). If you buy a phone from the carrier, you can pay up front or be charged a monthly fee to pay them back for it (again, optional). And finally, you can bill things to your cellular account if you want, and that will show up on the cellular service bill.

(Ideally, they cell carriers will also share towers and spectrum as a kind of co-op or joint venture, though I can’t be certain of that ever happening. The current redundancy of service and waste of spectrum is ugly, but the carriers don’t seem to want to work together to reduce costs since it would also even the playing field and force them to compete on costs instead of competing on coverage and lock-in.)

No because while that is a huge draw. I really think my service with verizon is better, compared to friends who use sprint. I know sprint uses verizon networks if you have no sprint service but sprint has decent coverage and I don’t think their network really competes. I am grandfathered into an old everything unlimited plan with verizon but if they don’t let me stay that way when I get my new phone I will be heading to sprint.

However this is making me drag my feet about getting a new phone.

I can hear the arguments now “the car is going to kill our industry! think of the chinese slave labor!”

Beyond Sprint there are several regional carriers who have offered this for years, Cricket, Boost (prepaid), MetroPCS, etc..

Everyone seems to think that people actually care what service they use. In reality people are lazy they stick with the status quo until they get a huge bill or are inconvenienced in some way.

I personally have an “unlimited” data plan, but I have never even come close to approaching 2GB (I had 1GB one month in the 4 years I have had unlimited data, the rest of the time I average about 600MB). I am a heavy data user but I use WiFi when I can because I know the traffic on the cellphone infrastructure affects ofter mobile users. I am a good steward of mobile data etiquiet, unlike some of these jackasses who use their wireless phone as a mobile hotspot and hog the radio spectrum.

I beg to correct you. The railroads did, and still do, practice monopolies, when they have the knowledge and leverage to do so. The difference was that the most premium railroad traffics tended to be anonymous to the railroad, in the sense that the railroad did not have need-to-know for the contents and ultimate destination. This inherently tended to limit the railroad’s scope for discrimination.

Imagine that in the year 1925, you took a first-class sleeper car from New York to Chicago. The sleeping car porter might have done some rudimentary valeting services, like shining your shoes, and ironing your suit, but since you would have been wearing a suit and tie like every other businessman, there was no great information in that. When you arrived at Chicago Union Station, you left your suitcase in the Left-Luggage Office, but took your briefcase with you. At the station entrance, you hailed a cab, and it was only when you were inside that the cabdriver asked you: “where to, sir?” The New York Central Railroad had no way to know whether you were going to visit the Corn Exchange, or the McCormick Harvester Company, or the University of Chicago, or Al Capone.

Alternatively, suppose that it was the year 1921, that you were a Chicago meat-packing baron, and your Polish workers were on strike. Your response might be to take a trip down to a rural county in Georgia. Once there, you entered into negotiations with the local sheriff for contract labor, in the form of African-American field hands. Money changed hands, and the process was only incrementally different from buying slaves. You then rented a special train from the railroad, probably consisting of railroad dormitory cars, or maybe just boxcars. The railroad hauled this train up north to Chicago, and then hauled it out to your meatpacking plant. The train crossed from railroad property to your property without going over public property, and you housed your strikebreakers in a warehouse on the premises, in order to keep them isolated from the strikers. This was a form of business travel which the railroad knew all about.

Now, let up consider sending things instead of people.

First class mail traveled in mail cars which were hauled by the railroads, but crewed by postal employees. Railroad employees were not allowed to look at or touch letters. By 1870, the Post office had started carrying parcel post, for collection at the post office, at the rate of a [gold backed] penny per ounce (sixteen cents per pound, or about an hour’s average wage), up to a limit of four pounds. In 1913, this was brought into conformity with international [ie. German] standards, by increasing the limit to eleven pounds at eight cents per pound. Rural Free Delivery had begun in 1896. The parcel express companies such as Wells-Fargo and American Express, of course, conformed broadly to postal standards by force of competition. By contrast, railroad freight rates in 1909, quoted in a Sears catalog, ranged from about twenty cents per hundred pounds (Chicago to Indiana) up to nearly four dollars per hundred pounds (Chicago to Arizona or California). Varying rates applied according to the class of merchandise. What this worked out to was that if you were buying a cast-iron stove or a horse buggy by mail-order, the railroad would know all about it; If you were buying a Winchester rifle, they probably would not know about it, and they would certainly not know what books you bought, or what newspapers you subscribed to.
(1900 and 1909 Sears Catalogs, reprint editions; James H. Bruns, _Motorized Mail_, 1997).

The kind of traffic the railroad really know about was the kind of traffic which was so heavy that the railroad had to deliver it to an industrial siding adjoining the place of use. The railroad knew all about coal, for example, and was prone to play favorites between different coal mines, and steel mills which used coal.

Times have changed somewhat in the railroad business. There is much less passenger traffic. What there is, is in the form of Amtrak, with a government agency buying transit rights for its trains. If someone wants to ship migrant farm workers in large quantities, he uses a bus, probably an old school bus. A large section of the railroad’s business is inter-modal freight, in which the railroad ships containers and truck trailers for shipping lines and parcel services without knowing what is inside them. However, there is a core of the old railroad business, involving things like coal, feed grain, and iron ore. These kind of products can only stand a rail fare of thirty to fifty dollars a ton, over a thousand-mile haul. Given the weight limits on trucks, the railroad is still the only game in town.

The knowledgeableness of the internet and telecommunications runs a bit differently. Monopolistic ISP’s know that small quantities of data going to and from Amazon are likely to involve a good bit of money– and they want their percentage. Of course, a customer can resort to encryption, virtual private networking, and address cloaking, but the ISP would be attempting to sabotage such techniques, Great Firewall of China fashion. However, what makes the telecommunications network really knowledgeable is an application which is very time sensitive, where it becomes a problem if packets get routed indirectly, or an application which requires an unusually good subscriber loop. Videoconferencing, in short.

Consumers really need to demand that SMS be dropped from their monthly bills.

It’s ridiculous to charge $20 for 1500 messages.

To be fair, 200 MB is more of a bucket than an ocean if you’re talking about an 8 MB ‘drop.’