Text messaging is a way of life for some. Those 160 characters are used for everything — from scheduling business appointments to sending good night messages. Though the current pricing scenario does not reflect this, according to a Canada-based researcher, the cost incurred by the operator to transmit one SMS is 1/80th of a one minute voice call.
SMS v calls
Srinivasan Keshav, Canada Research Chair in Tetherless Computing, who recently presented his research findings at a U.S. Senate committee hearing on ‘Cell phone text messaging rate increases and the state of competition in the wireless market’, says “A direct comparison of the amount of data is not possible because voice calls are continuous, whereas for some technical reasons, there need to be gaps between two SMSes. An analysis incorporating this difference shows SMS transmission cost to a carrier is about 1/80th of a voice call. The rest is profit,” he says.
In both GSM and CDMA systems, “SMS costs the operators virtually nothing to transmit,” he adds.
Rajiv Rajagopal, CEO of Bharti Airtel, Tamil Nadu, says that SMS traffic has grown “multi-fold” over the past few years and value added services (VAS), of which about 6 per cent is the contribution from SMS traffic, constitutes about 10 per cent of the total revenue. A one minute call transmits about 720 kilobytes of data. Though SMS is charged almost on a par with a one-minute pulse voice call, each SMS carries about a tenth of a kilobyte (0.136 Kb) of data.
According to the Telecom Regulatory Authority of India (TRAI), more than 82 billion text messages were sent in India in 2008.
Depending on the tariff plan, each SMS would have cost between 50 paise and Re. 1 — in the absence of ‘booster packs’.
The comparison with voice call rates is just part of the picture. SMSes are not just tiny; they use redundant ‘cargo’ space. Mobile networking protocols, that form the framework of communication systems, allocate a separate channel for control signals. When a call is made, a control signal is first sent to the tower through the channel. Once the link is set up, after its brief journey through the data channel of the spectrum, the call gets routed through the digital pipelines of the operator to a tower nearest to the receiver.
SMS is transmitted through this control channel. Each control signal is of fixed length.
That is why each SMS can be only 160 characters in length. The channel uses space whether an SMS is inserted or not. SMSes are essentially free riders, sandwiched into a space which is otherwise unutilised.
“Pricing SMS provides an opportunity for carriers to play around with packaging. It is a marketing tool as they can offer free SMS around a voice plan,” says Subodh Sankar, a telecom executive working in the VAS sector for the past 13 years. He feels business logic dictates pricing.
“Operators are reeling from the cost they paid for spectrum. Market pressure dictates that voice rates cannot be increased beyond a point. SMS is a popular service and it is used for padding their bottomline,” he says, and adds, “Operators would argue that ‘fair’ is the value the consumer gets out of a service.”
A senior BSNL official agreed with Mr. Subodh’s assessment. “Pricing SMS is a good revenue generating mechanism,” he said.
Major telecom service providers such as Vodafone and Bharti Airtel did not wish to comment on pricing issues as it is an “Industry related matter”.