An article over on ABCnews.com talks about the high cost of text messaging and calculates some interesting comparisons based on AT&T Wireless’ upcoming increased charge of 20 cents per text message and 30 cents per MMS message. Based on the assumption of a cost of 1 cent for every 7 bytes (characters), AT&T’s text messaging will cost about $1,500 per megabyte. Sure, you can pay for an unlimited text message plan. But, how many people require unlimited text messages.
Why does AT&T charge so much for text messaging? Does it really take that much to manage and maintain the service? Do they hate text messaging and only keep it alive because they are forced to? And, they are not alone…
Let’s look at another US mobile carrier: Sprint PCS. Sprint is in big trouble. They are bleeding customers losing 100,000 subscribers in the last quarter alone and recently laid off 4,000 workers (see this PC World article for details). Their basic plan provides something 5 or 7 (or some other really small number) of free text messages per month. You jump from single digits to 300 messages per month for a $5 monthly charge. 1000 messages bumps the cost to $10/month. And, unlimited is $15/month. Here’s a free tip for Sprint’s new CEO. Want to reduce your customer churn rate? Give them something of value that doesn’t cost you much. Reduce your text messaging rates. 300/month for free, 1000 a month for $5/month. Unlimited for $10/month. This will make parents more likely to let their kids text a bit more freely. Next, get some cooler looking phones to appeal to the younger crowd directly. Reduce the new phone cycle from full discount every two years to annually. Kids ask for new phones all the time. Parents (like me) might be more likely to replace them on an annual cycle if they were fully discounted.
Text messaging is probably on the tail end of its life cycle curve. The richer mobile presence services, like Twiter, Jaiku, and Pownce, that depend on packet (Internet) services will probably send text messaging off to visit its older cousin the venerable pager within the next couple of years. But, in the meantime, cell phone companies could probably retain customers and reduce churn by being competitive in provide text message services.