Mobile phones and The rising cost of texting

Mobile phones and The rising cost of texting

By Marguerite Reardon, CNET News.com

If you thought gas prices were rising too quickly, check out what's been happening to text messaging.

Since 2005, rates to send and receive text messages on all four major carrier networks have doubled from 10 cents to 20 cents per message. This percentage of increase is on par with similar price hikes at the gas pump as crude oil prices skyrocket. In 2005, Americans paid on average about $2.27 per gallon for gas compared with more than $4 a gallon today.

Last October, Sprint Nextel was the first to introduce the new price of 20 cents per text message. AT&T and Verizon Wireless soon followed with their price hikes going into effect this spring. And last week Engadget reported that T-Mobile USA will match the other big three wireless operators in jacking up SMS texting rates to 20 cents per message. The price increase goes into effect August 29.

On Tuesday, AT&T announced that texting will cost new iPhone users more than it had previously. The old iPhone plan included 200 text messages in the $59.99 voice and data plan. But plans for the new iPhone 3G that hits store shelves this week will cost $5 extra for 200 text messages, bringing the total price of a comparable voice and data plan on the new iPhone 3G to $74.99 a month. (This is with the $69.99 "Nation 450" bundle plus $5 for the 200 text messages.)

The new wave of price hikes comes just one year after all the major carriers raised individual text messaging rates from 10 cents a message to 15 cents per message.

So what's with the 100 percent price hike in two years? Well, there's nothing that has changed in terms of the cost associated with delivering this service. In fact, text messages cost carriers very little to transmit. And when compared with what carriers charge for transmitting other data services, such as music downloads or surfing the Web, the text messaging rates seem exorbitant.

Carriers limit the number of characters that can be transmitted in a text message to 160 characters. Each character is about 7 bits, which works out to a maximum of about 140 bytes of data per text message. This is peanuts compared with the size of an e-mail sent or an MP3 song downloaded over a cellular network.

One blogger has done the math. If the same pricing was applied on a per-byte basis to downloading one 4MB song it would cost the user almost $6,000 to download a single song via SMS texting.

One can easily assume that the markup on a text message is several thousands times what it actually costs carriers to transmit this little bit of data, considering that mobile operators are only charging $30 to $40 a month extra for mobile data plans that offer 5MB worth of data per month.

The reason that carriers are charging so much for text messages is because they can. Even at 15 cents and 20 cents a pop, people are willing to pay for it. The carriers are also trying to get consumers to sign up for text messaging packages and unlimited plans that vary in price from $5 a month extra for 200 messages to $20 a month extra for unlimited texting on AT&T's network, for example.

The massive price markup on texting and the growing popularity of texting have resulted in huge profits for mobile operators. Verizon reported that for the first quarter of 2008, its wireless customers spent $11.94 a month on data services, an increase of about 33 percent from a year earlier. The carrier didn't break out what percentage was spent on text messaging versus other services, but there's a good guess that a lot of the additional revenue from data came from texting. In total, mobile data accounted for about 20 percent of all wireless sales for Verizon's first quarter.

Unfortunately, it doesn't look like consumers have much legal recourse for getting carriers to adjust their pricing to a more reasonable rate. There's nothing illegal about charging as much as the market will bear for any service.

But that doesn't mean that consumers like it.

Best of the best iPhone Clones and iPhone Wannabes

iPhone Wannabes or Smart Alternatives? You Decide

By Marguerite Reardon, CNET News

Apple's iPhone 3G has hit store shelves, but if you haven't been struck with iPhone fever, don't fret. There are plenty of alternatives that offer similar style and features. And they may even be easier on your wallet in the long run.

To some Apple fans, phones such as the Samsung Instinct or the HTC Diamond are simply iPhone wannabes. But to others they are cool phones in their own right with unique features and capabilities. Below I've compiled a cheat-sheet that highlights key features and points out short-comings of seven possible iPhone alternatives. I've also thrown in pricing information, not only for the phone, but also for the service plans that go with them.

But before I dive deeply into these iPhone alternatives, let's take a look at what the new iPhone 3G offers and what it's still missing.

The biggest change to the iPhone in the new version is speed. As the name implies, the iPhone 3G will operate over AT&T's HSDPA 3G network. Today, that network can theoretically deliver download speeds of about 3.6Mbps. But in the real world, speeds are closer to 400Kbps to 700Kbps. Recently, AT&T's wireless chief said the network is being upgraded and will soon offer theoretical download speeds of 20Mbps and actual download speeds of between 4Mbps and 6.6Mbps.

Apple also added GPS to the iPhone 3G, allowing the device to take advantage of location-based applications and services. The company also opened up the device to third-party developers and will soon launch an Apps Store for new iPhone applications. The new iPhone will also support Microsoft Exchange server, which means subscribers will be able to get their work e-mail on the iPhone 3G. And finally the company has greatly improved the battery life of the device stating that it should get a solid five hours of 3G talk time.

But there are also plenty of features that Apple left out of the iPhone 3G, including support for multimedia messaging or MMS. This means users can't send or receive pictures taken on cell phones via the MMS messaging platform. The device also lacks video recording and voice command. And it only supports Bluetooth for headset voice calls, which means it won't allow Bluetooth file transfers to and from the iPhone.

These missing features could help give some phone manufacturers an edge with consumers looking for the perfect multimedia smartphone. But features aren't the only thing that consumers consider when buying a new phone. They also consider price. And even though AT&T is selling the 8GB model for the subsidized price of $200, the carrier still charges more than any other mobile phone operator for its bundle of services, making the iPhone 3G one of the most expensive to own phones on the market. For 450 minutes of talk time a month, unlimited data, which includes Web surfing and email, and text messaging, AT&T charges about $90 a month. Add unlimited voice and the price shoots up to $150.

On the following pages is a list of seven alternatives to the iPhone 3G. All of these phones have a touch-screen. All are 3G capable. All offer MMS messaging, which the iPhone doesn't offer. And all come with a full HTML browser. Some offer Wi-Fi, which even the original iPhone offers, and some have embedded GPS just like the iPhone 3G.

LG Voyager - $199

Carrier: Verizon Wireless

Carrier service plan pricing: Verizon's premium smartphone service with all you-can-eat data and messaging starts at $79.99 per month for 450 minutes a month of talk time. Add unlimited voice, and the price is $139 per month.

What makes it cool? The LG Voyager, which has been on the market for nearly a year, supports Verizon's VCast Video service, which offers a slew of TV channels, including CBS Mobile, Comedy Central, ESPN Mobile TV, and NBC 2Go. It also offers VCast Music, which allows users to purchase music directly over the cell phone network. By contrast, the iPhone plays movies and TV shows purchased from its iTunes media store and doesn't allow for over-the-air music downloads. The Voyager also flips up to expose a full QWERTY keypad.

What are its shortcomings? The phone doesn't offer Wi-Fi, which means it can't access the Internet when not in cell phone range. The lack of Wi-Fi also means that users can't Web surf at super fast speeds when in a Wi-Fi hotspot. And lastly, it's not integrated with Microsoft Outlook, which means subscribers can't access work email. They can only get Web email.

LG Voyager CNET Review

LG Dare - $250

Carrier: Verizon Wireless

Carrier service plan pricing: Verizon's premium smartphone service with all you-can-eat data and messaging starts at $79.99 per month for 450 minutes a month of talk time. Add unlimited voice, and the price is $139 per month.

What makes it cool? The LG Dare has a touch screen that allows icons to be dragged and dropped so that it can be customized for shortcuts on the home screen. It offers a sketch pad that allows users to draw pictures that can be sent via MMS to friends. It also has a 3.2 megapixel camera with face detection, panorama photo stitching, and SmartPic technology designed for taking photos in low light. It offers an embedded camcorder. And like the Voyager, it can be used with Verizon's VCast Music and Video services.

What are its shortcomings? The Web browser and media player is not as good as the iPhone, according to CNET Reviews editor Nicole Lee. There's no Wi-Fi. And also no integration with Microsoft Outlook to access work email.

LG Dare CNET Review

Samsung Instinct - $129.00

Carrier: Sprint Nextel

Carrier service plan pricing: Sprint's "Simply Everything" plan with 450 minutes of talk-time and unlimited messaging, data services that include email and Web surfing costs $69.99 per month. Add unlimited voice, and the service costs $99 a month.

What makes it cool? This is the "first cell phone we've seen that throws some direct competition Apple's way," CNET editor Kent German wrote in his review of this phone, which just hit the market last month. Physically, the Instinct looks a lot like the iPhone. It also has integrated GPS and works with Microsoft Outlook to allow people to get work email on the phone. But it also offers some unique features. Unlike the iPhone 3G, the Instinct offers Sprint's mobile TV service and has a built-in camcorder.

What are its shortcomings? The screen lacks multi-touch functionality. This means you can't pinch a page and blow it up like you can on the iPhone. It also offers much less memory than the iPhone. It doesn't support Wi-Fi or instant messaging. And German said he wasn't impressed with the email interface. And its call quality wasn't up to snuff to boot.

LG Vu -- $299

Carrier: AT&T

Carrier Plan pricing: Subscribers can get 450 minutes of talk time, unlimited mobile Web, texting, and live broadcast TV for $105 per month. Add unlimited voice, and the service is $165 per month.

What makes it cool? The coolest thing about the LG Vu is that it offers live broadcast TV. AT&T uses the MediaFlo network to deliver the service, which is operating in more than 55 markets in the U.S.

What are its shortcomings? The device lacks GPS and doesn't support Wi-Fi. The MediaFlo TV service isn't available everywhere yet. And the monthly charge for the live TV service along with the data and messaging service charges, makes this an expensive phone to own.

LG Vu CNET Review

BlackBerry Bold: $300 (estimated price)

Carrier: AT&T (expected later this summer.)

Carrier plan pricing: This phone hasn't officially launched on AT&T's network. But judging from AT&T's current BlackBerry service plans, subscribers can expect to pay $90 a month for 450 minutes of talk time, unlimited data and unlimited texting. With unlimited voice, that price jumps to $150 a month.

What makes it cool? This device doesn't have a touch screen. Instead, it sports a full QWERTY keypad. But it does have Wi-Fi, and it features an improved Web browser that allows the option of viewing pages in a full desktop HTML style or a mobile version. The phone also comes with an embedded camcorder and GPS for location-based services. Research in Motion is also working on something called the Blackberry Media Sync, which will allow BlackBerry devices to sync with Apple iTunes, so that BlackBerry users can listen to music from their iTunes library.

What are its shortcomings? BlackBerry Bold doesn't have a touch screen. And it's not available yet. It is expected to hit AT&T stores later this summer and will likely be added to the other carriers' line-ups later in the year.

RIM is also rumored to be readying a new phone called the BlackBerry Thunder that will be the company's first touch screen device. The phone hasn't been announced yet, so this is all rumor. But it's expected to be released on Verizon Wireless and Vodafone networks in the third quarter of 2008, according to the blog The Boy Genius Report. It will likely be launched on other networks after that.

Sony Ericsson Xperia X1 -pricing not yet available

Carrier: This phone will be released mid-September. And a U.S. carrier hasn't been announced yet.

Carrier service plan pricing: Not available.

What makes it cool? This is the first Sony Ericsson phone to use Windows Mobile from Microsoft. It also has a very cool arc slider design. The phone has a touch screen on top and a full QWERTY keypad underneath. It has Wi-Fi and comes with a 3.2 megapixel camera, assisted-GPS, a multimedia player, 400MB of internal memory, and a microSD expansion slot.

What are its shortcomings? It won't be available until mid-September and even then it could take a while before any U.S. operators pick it up.

Sony Ericsson Xperia X1 CNET Review

HTC Diamond --$700 for an unlocked phone without a subsidy

U.S. Carrier: Not announced yet.

Carrier service plan pricing: Not available.

What makes it cool? The HTC Touch Diamond has a cool 3D interface and what CNET reviewer Bonnie Cha calls, "a beautiful touch screen." It uses Windows Mobile 6.1 and offers Wi-Fi, Bluetooth, GPS, and a 3.2-megapixel camera. It also offers voice recognition for dialing and a pre-loaded YouTube application for viewing videos.

What are its shortcomings? The Touch Diamond won't be available in the U.S. for months. And the current version isn't optimized for the U.S. market. Cha also described it as sluggish and said the call quality is subpar." There's also no expansion slot for more memory.

HTC Diamond CNET Review