Facing criticism that even the minimum iPhone monthly bill is too high for many consumers, AT&T is reportedly thinking about cutting its prices. The big rumored change is that AT&T would apparently offer a limited data package for $20-a-month, a $10-a-month reduction over the current all-you-can-eat plan. This makes me laugh because AT&T clearly thinks consumers are stupid.
If AT&T really wanted to reduce monthly iPhone bills it could do something very simple: Start including SMS plans in its unlimited data plans. After all, SMS is data, yet it conveniently falls outside of AT&T’s unlimited service. The reason for this is obvious: Text messages are an absolute cash cow for AT&T and the other carriers. They are also an absolute rip-off, as they cost the carriers next to nothing to transmit. Instead of just folding these SMS fees into the unlimited data plans like rival Sprint does, AT&T wants to pretend to save consumers money by offering a limited data package for $10 less a month. What a joke.
Ever since the launch of the iPhone 3G, AT&T has been fleecing customers with text messaging fees. With the first version of the iPhone, users at least got to send 200 text messages for free with their unlimited data plans. With the iPhone 3G’s updated date plan (which was still just as “unlimited” but with faster download speeds), AT&T cut out all free texts and made users pay at least $5-a-month, unless they wanted to pay the utterly ridiculous $0.20 per text. So basically, that was AT&T jacking up the price of the iPhone plans by at least $5 right there. And many people, myself included, use way more than 200 messages, so it’s more like an extra $15-$20-a-month for either 1500 messages or unlimited messages. Again, a joke when we’re already paying for an “unlimited” data plan.
Worse, is that a lot of people pay the $5-a-month for the 200 texts, and then go way over, meaning they’re paying a lot more than even an extra $20-a-month for unlimited SMS. So while AT&T reducing data plans by $10-a-month may seem significant, on a month-to-month basis with the SMS fees, it’s really not. And worse, this cheaper iPhone data plan would be limited, and users are probably going to go over that limit as well, which will likely end up costing them more than the $10 they’re saving a month.
This “price cut” is pure spin by AT&T. I’m not even convinced that this cheaper plan will be cheaper for anyone in the long run. If it really wanted to reduce the price of the iPhone data plans, it would eliminate the text message fees. And I’m fine if it wants to offer a plan which is the same as the current prices with unlimited text messaging bundled-in, and then offer a cheaper one without the messages included. That’s how it should be. Their “unlimited” plan is a joke.
Exactly! I just posted the same at another post on the subject. This would be much more gladly received by AT&T customers, and a better marketing move.
I think it was Leo Laporte on either TWIT or Tech Guy broadcast who said he figured out that AT&T’s monthly charge equated to about $1500 per MB of data. Incredible.
yeah the text messaging cost per megabyte is absurd.
Absurd is that people pay it knowingly and voluntarily. You point out that a competitor doesn’t do this– there’s the alternative. At that point the consumer has decided the pricing is fair in return for what they want.
Just a pet peeve of mine, but calling things ‘rip-offs’ and ‘fleecing’ when it’s a completely voluntary transaction is pretty weak.
It’s not “completely voluntary” when you have only a handful of cellphone providers and virtually all of them have “incredibly similar” pricing plans. Kinda reminds you of the oil companies, doesn’t it?
it would be weak to call it a rip-off or fleecing—–if it were actually a free market.
I’m surprised nobody has built an app for this yet… some way to route text messages through a web service, then back to text on the other end.
Guess there really isn’t an app for everything.
hmmm. not yet, good idea though
There are a few apps for this – iText Free, SMS Touch, etc. They use @cariier email addresses to bypass Telcos. Last I heard was one of them received legal notices from AT&T and others.
A noticeable chunk of cost is the processing resources behind it. You essentially have to run an email server with accounting. It’s nothing impossible, but definitely something that costs a bit more than traditional networks. And I’m not saying it’s still an outrageous fee, but it’s not pure profit for them completely.
Shit. I’m not saying it’s *not* an outrageous fee. Whoops!
and that cost goes away when you make them free. So in reality, there is no cost associated with sms.
I don’t necessarily know if I’m being paranoid but my knee jerk reaction to this is that AT&T will use this as grounds to pump up the cost of the unlimited data plan or set tiered data plans that are completely outrageous. I already stream upwards of ~200mb a month for email services, pandora, bloomberg, web browsing, youtube, and all the fun goodies we’re supposed to have because we shelled out ~$200-500 for a phone of this caliber. If memory serves I recall somewhere seeing that AT&T would expect 10mb to be a good monthly usage (I don’t remember where) — that’s a complete order of magnitude difference in my own usage and that of several people I know.
I see this as the death of the unlimited data plan, eventually.
That’s probably just me being paranoid, though.
If this were Facebook, I would click the Like button.
Oh I’m sure you can find it somewhere on Facebook to do so
Why don’t you submit this link to facebook and than click iLike
Anyways , MG where did you get the photo from? iLike it.
As far as the post:
ATT = rip-off. But you know Apple people got money!
, NOT
The photo is Satan from the South Park movie
um, thanks?
i’m surprised that this is news on a tech site. iphone is a great marketing coup de etat because everybody puts up with the bs so they get the bling.
The bs all us iPhone user put up with is AT&T
ZIiiiiiiiiing!
Once Android gathers enough steam to get AT&T’s attention this should change. Google scares all its competitors.
I don’t see how Android has any relation to the costs that a cellular provider charges.
@goodmovie,
Google has a habit of giving things away for free and moving into new markets. Before Android came out if I made a comment about Google being a threat to Microsoft it would have been possibly suspect. But now they have come out with an O/S (Android) the threat is very real.
Right now Google has not entered the cell service provider market but that could change too. Or even if they don’t, they could make deals with providers like T-Mobile to reduce subscriber costs by providing subsidies to them, in an attempt increase their range of coverage for the Google ad delivery services by encouraging more customers to move to an Android based phone package.
android, the linux of phone OS’s (oh wait). Only geeks will use it and complain that nobody uses it until everyone uses it and then they will find some other alt-phone.
Remember the iPod when the cool kids liked it BECAUSE it was an Apple product and by definition an alt-pmp?
everybody loves an underdog until they are dominant
thats a joke. But i wish SMS was included with Unlimited data also. It sucks paying an extra $20 to get unlimited text messages when who WOULDNT text on an iphone. they knew we would all use data so they gave us a set data plan but did they not think we would be texting? haha i wish they just combined the fee, make it like $40 for unlimted data and text and that way we save $10
Text messages ARE data. Why the hell should you pay more? If $20 gets you unlimited amounts of data, why do they force us to pay more for a different type of data? $20 should include texts and it’s absurd that AT&T thinks we’re such idiots that we don’t see that.
Amen! SMS is such a rip off. And it’s even worse internationally… Just got back from Prague and AT&T charged $0.50 per text message sent while I was there.
ha, you think the cost per TEXT is a joke internationally? i just found out you get charged $20 per megabyte for data internationally (bc it’s totally outside your national plan) and they don’t have plan options for all countries i normally travel to!
+1
Things won’t change until another carrier get access to that damn phone. AT&T knows it so they’re milking it while they can. Nice to hear them called out though. I’d go with Sprint’s unlimited anything deal but their business customer service & billing is shit.
I’m a fan of the text messaging fee. I’d rather they keep it.
I don’t use text messaging since it’s a rip off, and email gives me unlimited characters.
If they “eliminate it”, that just means it gets bundled in and I have to pay for a useless feature I don’t want/need.
Kinda wish they made voicemail optional. I don’t want/need that either. Voicemail is dead to me as has been discussed here before.
Yes, I am a Crackberry addict. But, I don’t begrudge people their addictions.
On the other hand, I’m still trying to figure out what is so special with an iPhone.
I actually wouldn’t mind the fees so much if the 3G service actually worked as advertised. As it stands now, I spend more time on the EDGE network but am paying the extra $10+ a month.
ummm….
of course you don’t have to text…
in fact.. you don’t have to even have the iphone, or a cell phone for that matter….
i’m doing quite well… and i rarely use the texting garbage,,,
of course my daughter.. she’s insane… but then she and her friends rarely really text critical stuff either.. kind of mindless stream of useless stuff…
but to each his own….
I switched to AT&T and have regretted it since day one. As soon as the contract is up I’m back to Sprint regardless of what phone I can get.
maybe http://now.spri...roductPage.html ??
When the first generation iPhone came out, I had unlimited data and SMS for $40 per month. For the same options, it now costs $50 because the data went from $20 to $30 (their justification in price hike is 3G).
I COMPLETELY agree with this and have always felt this way. How can text messages not be considered data. Oh because txt msgs are a HUGE revenue stream.
People who text don’t realize the power they have. If they have a few “no text” days, ATT will lost millions. Then they might pay attention and adjust their text fees. Maybe.
Because those one day boycotts always work…
don’t by any gas tomorrow either =/
right.. because text messages are exactly like gas in a car.. you have no alternative or choice whether you use it or not.. so if you skip a day of texting, you’ll have to send twice as much the next day.. NOT
in this case, all you have to do is skip the text message actually TALK to a person or send an email.. which are both included in your monthly fees
a one-day (or for maximum effect, several consecutive days) boycott actually does impact the providers
Actually, first-gen iPhone customers received 200 free text messages with their (cheaper) data plan. Personally, I’m on the fence about text messaging. I don’t really like it, but I have to imagine we’d face higher data plan charges if AT&T was forced (via competitive or regulatory pressures) to discount SMS fees.
Yep, mixed that one up, will fix thanks.
Very well said MG. Amen.
I don’t get why people text when they can e-mail.
I definitely don’t understand why people then go on to gripe about the cost of texting.
because not everyone that is being contacted can receive emails directly to their phone. Text still holds an important place in communication. and emailing someones phone is possible (for example +555555555.tmomail.net will send your email as a text to tmobile customers) but this doesn’t seamlessly integrate with already existing contacts in email services. It would be a hassle to add every single person in that manner, which would also require you to research each carriers specific email addy for this to be possible. then you need to know what carrier every person you want to contact uses. This shyt is a hassle even writing about. texting is still very useful and making it part of unlimited data will make many many customers happy.
you sound like you have the case of tunnel vision to me.
correction: 5555555555@tmomail.net to email a tmobile user, and they receive it as a text.
I know everyone is “hot and bothered” by SMS overages, and the cell phone companies are gouging, but there is basis in the charge, and its based on SMS itself.
SMS text “messages”, technically data, are actually sent via the control channel (see http://communic...rks.com/sms.htm for a very light description), as opposed to “standard” data connectivity that uses different channeling.
SMS when designed back in the 80s, was not intended to be used as a heavy-use messaging transport, but rather to be used to send occasional very short messages (presumably numbers). It was primarily designed for “first responders” and emergency crews to have some way of sending “high priority” messages.
Along came the pesky customers, and after falling in love with “IM” on computers, naturally gravitated to “texting” on the cell phones. It is a testament to UI “design” that the two map seamless from a functional perspective, but vary greatly in their implementation.
For ATT (and any GSM operator) to maintain the “high reliability” delivery people have come to expect, as well as ensure that there is adequate control channel capacity for running the network, They of course need to continue to add “capacity” to ensure that. However, I’m willing to bet that ATTs costs to ensuring adequate infrastructure is nowhere near the huge (obscene?) amount of money they are making from texting charges.
that said, our real effort should be aimed at getting people away from “texting” and back to “IM”, which will make use of the “regular” data channel, leverage the “unlimited” part of the plan, reduce costs, and make everybody (except ATT) happy.
you got it wrong, i’m afraid. SMS is always “best effort”, not “high priority” … you need a pager for that (thats why hospitals and other “first responders” in the techi world still use pagers). go skytel!
In no way in SMS “high reliability” or even “high priority”–as someone who knows how the SMS system works, I can tell you that there is no guarantee whatsoever that an SMS message will make it to the recipient, or make it in a reasonable timeframe. SMS is about as close to UDP in the IP world as one can get–it’s “best effort” with no delivery confirmation.
Carriers are NOT spending money on keeping SMS networks up to date, and most of the price of the SMS message a consumer sees is pure profit to the carrier.
So switch to T-Mobile?
Great post. Here’s hoping Apple shares the iPhone with other carriers so that there can be some competition.
It is because of these text plans that I have always steered clear of buying in to them. Very nice article. I really hope that we can see AT&T include text messages but I’m not holding my breath. Sad thing is if they reduce my bill I will probably sign up for text messaging… Maybe this is their evil plan!
I agree with Avi, I see why SMS costs a bit extra, but it’s a bit ridiculous now… and not just with AT&T. I think Verizon and others charge a bit much (save for Sprint apparently according to the other comments.)
Either way the push should be towards getting phones that support small instant message apps that respond just as quickly as a SMS.
I really can’t believe that I’m going to be defending AT&T here…
TXT messages are generally called a “Data” charge, but they are not IP based data like email or internet traffic. SMS traffic actually passes through the “voice” network, not the 3G data networks.
Should they roll them all into one charge, sure, why not. But they aren’t the same thing…
Switched from Verizon to T-mobile almost three years ago and never looked back. Terrible customer service at Verzion.
Blackberry Pearl
$20/month unlimited data, unlimited SMS, unlimited email
Total bill (including fees) $68/mo.
Been great coverage in the SF Bay Area and most of the country where I travel.
i def. agree. i left tmobile for AT&T BIG mistake. I was with tmobile for 5 yrs. I will be going back soon, if AT&T doesn’t make crucial changes soon.
I agree completely – text messaging costs are such a rip off. Here’s hoping for iPhone carrier competition so we can switch from AT&T. Apple – please allow competition!
@Avi – while that article, and your argument, have merit, there are very inexpensive techniques to overcome control channel capacity limitations. Effectively it costs carriers almost nothing to provide SMS services. Every carrier needs a control channel, and signaling protocols take precedence, scaling back SMS at various hops (SMS centers) in the path.
No matter how you slice it, this is a huge profit for carriers, and its why AT&T is doing its users a “favor” by limiting data plans and charges.
One marketing mistake (as I see it) is that they are actually crippling functionality of the iphone by not being able to take full advantage of network features if paired with a limited data plan.
Lets face it, this is nothing more than a temporary band-aid over the oversaturated 3G wound, all wrapped up in the guise of a benefit to users.
Keep in mind that a $10 reduction for the data plan brings it back to the original price point for their unlimited data plan that the iPhone launched with. It got raised to $30 from $20 when the iPhone 3G launched.
On Verizon I’m getting ready to drop my unlimited texting, mainly because I’m sick of paying $20 a month for a service that I can mimic on my phone with an unlimited data plan and Palringo. Palringo is a multiprotocol IM client (for which they have a Windows mobile client), and I can text people either using the email address of their phone (5555551212@vtext.com for Verizon customers) or through AIM’s SMS gateway.
And I use PockeTwit for Twitter.
Which is more expensive? SMS by the MB or ink jet printer in by the ounce?
Couldn’t agree more. Fees for text messages are a huge rip-off.
While you are right in the analysis from the user perspective, you are missing two of the aspects in the carrier’s perspective:
1. AT&T is overwhelmed with the data consumption of iPhone users and its trying to have the less active users spend less time on their data consumption. It is also part of their battle of preventing mobile VOIP from reaching to the mainstream.
2. iPhone is responsible for all of AT&T’s current growth, and it reaches some saturation among the tech fans crowd. Reducing the data cap means a potential lower monthly cost for mainstream customers, who compare iPhone with G1 and Blackberry with no strong preference.
I think that we would see much more of this flexibility in the iPhone pricing in the coming while – because its meaning to AT&T Wireless is immense.
AT&T sucks. Bad. The only thing preventing their demise is their monopoly of the iPhone.
yeah – I have a blackberry bold exclusive with att in the states as far as i know – they wanted to charge me an additional 30/month for tethering – they are completely out of hand with their prices.
no friend circles either – rollover minutes my A$$ – if i could add 10 friends i wouldn’t need rollover minutes.
Yes, it’s all in the text messaging. So does anyone have a good iPhone app for text messaging? No, because apps can’t alert you because of the API restrictions.
What’s even better is that it’s really only the iPhone people getting hosed here.
I’ve got a number of different unbranded S60-powered smartphones from Nokia that I use with my AT&T account. For the same features as the iPhone folks get (450 minutes and unlimited 3G), I only pay $54.99 ($39.99 + $15). iPhone users pay $69.99 for the same plan.
Even if AT&T *does* drop the iPhone data plan down by $10, I’m STILL saving $5/month, and I have exactly the same data speeds and access. I regularly blow through 1GB+ on my phone, without tethering.
Unbranded FTW!
I’ve sworn off At&T for years because of their pricing. I tried it many years ago and had such a traumatizing experience with them that I vowed never again. Suffice it to say, I paid an arm and a leg to get out of that as fast as I could.
Sprint, on the other hand, is great. Especially if you’re needing services like those offered by Nextel.
However, about 2 years ago, I discovered Boost Mobile which runs on the Sprint/Nextel network and decided to give it a try. It’s true their phones aren’t the best of selections, but as far as services go… never been a problem. They even assisted me when I bought a phone they didn’t offer and when I learned I couldn’t get text messages properly, they walked me through some steps to get that issue taken care of. Since then, I’ve had no problems texting up a storm.
Still more good stuff; about two months ago, they (Boost) launched a $50 unlimited everything plan and I am more than satisfied and only stop short of worship because I don’t believe anything is ever 100% flawless. I’m eagerly awaiting the release, sometime this month, with their newest phone, the Motorola Clutch. From what I’ve read of the phone coupled with the Boost unlimited services, I should be in heaven… and loving it.
This is called run it up the flag pole and see what sticks. I think they are getting an earful.
Actually, there is an iPhone app out there to address this! It’s called Textfree, from Pinger.
Textfree Unlimited provides unlimited texting. You can get it through this link on your iPhone:
http://itunes.a...925151&mt=8
There is also a free version of the app (Textfree Lite):
http://itunes.a...928665&mt=8
Talk about a poor attempt to make the consumers happy. This is funny, I was just questioning their yellow pages print ads on my blog just a couple of days ago. I wonder what’s next.
Verizon seems to be doing similar business practices. They modify the software on Blackberries so the user cannot use the GPS chip unless they are subscribed to their VZNavigator service. They also charge an extra 30 dollars to tether a Blackberry as a wireless modem. Granted, the bandwidth consumption is enormous but the company is bringing in some pretty nice profits, couldn’t they expand their network?
MG – you should resign.
1. You don’t show your real name.
2. Every second post of yours is about twitter
3. When it is not about twitter it is about something inconsequential such as cell phone fees.
So true, plus never reads his verbiage twice: “With the iPhone 3G’s updated date plan”.
Disclaimer : I hate ATT. Yes hate. I’m on my 4th iphone too. All warranty replacements from apple. What crap.
ATT overcharges. Let’s not forget that this overpriced SMS messaging on the iphone still doesnt even support MMS like all the others do. Apple and ATT have completely taken advantage of their customers, but to be fair the customers have been lining up to be fleeced. In the end blame falls to the idiot consumers.
Last month ATT dropped a discount on my account that has been there for the past 8 months without so much as a warning. This discount gave me a bunch of extra SMS messages for free. So I just got nailed with a huge overage fee. Called them up and they put the discount back, but won’t remove the charges. Convenient for them.
From where I stand if Verizon doesnt have an iphone when my contract is up next year, I’ll be switching to whatever phone VZW is offering. The iphone is a very cool device for everything other than being a reliable communications device, which unfortunately is the most important thing to me.
3g rarely works for me. I drop MOST of my calls. I am constantly amazed by how many places I go where my phone has no signal at all. Places where everyone elses phones work fine.
I’ll gladly go back to paying VZW whatever they want to have my reliable communications back. It’ll probably be cheaper anyways.
Perhaps wait until it’s gone beyond the freakin’ RUMOR stage to actually bash a company like this.
You conveniently ignore the central issue: THE $199.00 iPHONE!!!
AT&T pays Apple ~$400 for every iPhone contract. They have to recoup that money somehow. The message fees help pay the iPhone subsidy. (You remember when iPhones were sold unsubsidized. It was less than two years ago. You were probably one of those complaining that the phones should be subsidized.)
Text messaging costs are the biggest rip off in the cell phone industry. Someone also posted earlier, ” I don’t know why people text when they can e-mail”. How many of your 13 year old daughters are going to e-mail there friends 100 times a day instead of texting. You can try to enforce that but I guarantee it will not work. Good luck my friend.