While free texting apps are becoming more available on cell phones, wireless carriers are still charging 20 cents to send out 160 characters of text and another 20 cents to receive them.
In a world where technology is everywhere, and is becoming more affordable, charging so much for exchanging a few words seems hypocritical.
In fact, many different, free means of transmitting messages are making an appearance which could end the need for traditional text messaging services, and take a huge chunk out of cellular network provider companies’ profits.
Services that use an Internet connection to send and receive messages, like Skype which offers various communication services without the need to rely on a telephone line or cellular network, are growing in number and popularity. Analysts say this could seriously affect wireless carriers’ profits from text messaging.
The difference between a service like Skype and a text message is the path each of them takes to get to and from users’ devices. Texting uses a cellular network, whereas free text messaging applications mostly use a data network and the Internet, similar as how email does.
Apple is planning to present iMessage on Wednesday, which could become a big challenge for wireless carriers. “The service lets iPhone owners send messages with text, photos and video to other iPhone owners over a Wi-Fi or cellular data connection.” This service will come as part of an upgrade to the Apple iOS mobile operating system and will be used to communicate between Apple mobile devices that have been upgraded to the latest software.
"There's a huge amount at stake here," said Craig Moffett, an analyst at Sanford Bernstein who covers telecommunications. "They are undermining the core business model for an industry that makes most of its money from services that are high priced and low bandwidth, like texting."
The wireless industry rakes in more than $20 billion in revenue each year from texting alone. For example, Verizon Wireless relies on texting for about a third of its operating income, according to Moffett.
Customers are paying exponentially more for using cellular networks for sending text messages. To send one megabyte of text over a $25/month data plan costs the user 1.25 cents, whereas to send the same amount of data over a cellular network costs $1,500 at 20 cents per message.
Because of this remarkable difference in cost, analysts predict that new messaging technologies could eventually dominate the text messaging industry, causing carriers losses in revenues.
However, since iMessage will only work between Apple devices (iPhone, iPad, iPod Touch) to begin with, it is unclear whether customers will jump on the free text-messaging band-wagon just yet.
On the other hand, companies like Samsung and Google are working on their own ways that users could message for free. In addition, Microsoft could potentially use their recent acquisition of Skype and GroupMe to enable their smartphones with free messaging services as well.
Furthermore, there is an increase in demand for are many applications available for multiple devices that can send instant messages cross-platform, such as TextPlus, WhatsApp, Kik, and TextMe.
One of these services, Pinger, apparently has 19 million members in the U.S. alone. According to Pinger’s chief executive Greg Woock, Pinger has handled over 15 billion text messages since its first release in 2009. He says: “It always comes down to the economics, free is a compelling price point.”
It is evident that wireless carriers will have to prepare and try to keep up with the imminent competition.
AT&T has already started to require its customers to choose between an unlimited text messaging package for $20/month, or pay 20 cents for each text they send out and receive. The company has also discontinued their 1000-texts/month for $10 package, a move that only seems to force its lower-usage customers to pay more for something they seldom use.
Only time can tell the fate of current text-messaging services and of the companies that provide them.
It is a nicely written article giving details about a major issue these days. The data is organized properly with lots of details about cell phone companies and their competition with the free text messaging apps. You have transitioned very well from one point to another. Though your article is divided into short brief sentences and I didn't find it choppy at all. In fact, the text is divided into several paragraphs making it easy for the readers to go through the whole article and providing them the ease of looking back to a particular point if they want to. You have done a nice job with this article.
ReplyDeleteCool article and well written! A couple simple grammatical errors you might want to look at:
ReplyDelete"Furthermore, there is an increase in demand for are many applications available for multiple devices .."
That doesn't really make sense.. I would just take out the "are." Also I found it interesting that you indented all your separate paragraphs. It's common for news articles to be broken up in small sections but I don't think I would indent them. It makes it slightly harder to read. Instead, I would try just putting a space in between each paragraph. Also, you might want to consider your audience when writing the title. My guess is that most people reading your article will be consumers that could stand to save money if more free texting applications are created. Therefore I would direct the title towards consumers by establishing that the average American could save money, not that the cell phone companies stand to lose money. Overall it was a great article!
This is a really informative and useful topic to read. The introduction is well to understand your position and purpose of the article. When I read through every paragraph are smooth and clear to understand. I think you did really well organized for this article. However, I feel that maybe the last sentence can go with the last paragraph. Consider that it might be just a accidental mistake. Overall I believe this is a great article.
ReplyDelete