Casey Bralla on 28 Dec 2008 19:05:53 -0800

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Re: [PLUG] [OT] NYTimes article: What Carriers Arent Eager to Tell You About Texting

I make my living helping companies convert to "Lean Manufacturing"  (see my 
website for info on Lean).

One of the truisms in modern manufacturing is that we have to lower costs to 
improve profits, since we generally can't raise prices, since prices are set 
by the market.

This has enormous influences in how you quote the price of a product, and how 
much profit you make.

The old way to determine the selling price of a product:   (Cost to provide 
the product or service) + (Desired profit) = (Selling price)

Today's way:  (Price) - (Cost) = (Profit)

Markets set prices.  Producers either sell at the market price, or don't sell 
at all.   If they can make money at the market price, they will.  If there's 
lots of money to be made at the market price, then lots of people will figure 
out how to enter the market to get some of the big profit.   The price of the 
product is only tangentially related to the cost to produce it.

Texting is expensive because lots of peopel are willing to pay the high prices 
for the right to do so.  (I don't pay it, but that's my choice).   If fewer 
people were willing to pay for the feature, or one supplier realizes they can 
make more money by selling more texting at lower unit costs, the price will 

Adam Smith was right.  Nobody's been able to figure out how to overcome the 
laws of supply and demand over the long term, despite lots of very smart 
people trying very hard to do so for 200+ years.

On Sunday 28 December 2008 9:50:04 pm wrote:
> Its an interesting article, but I personally have no problem with rates of
> text messaging (per msg) going up even if the "cost of operation" for the
> carrier has not risen.
> To be honest, I believe that the carriers have raised per use rates in
> order to push people towards unlimited or bulk messaging plans. And its
> that migration away from per use rates that has triggered an explosive
> growth in text messaging.
> Besides, this is capitalism. Prices are set to trigger all sorts of
> behavior. Government should not be telling ATT to lower text messaging
> rates just because they can from a financial standpoint. In fact, its only
> logical that if demand for text messaging is high, then the rates should
> go up.
> -John
> ----------------------------------------------------
> From : TuskenTower <>
> To : Philadelphia Linux User's Group Discussion List
> <>
> Subject : [PLUG] [OT] NYTimes article: What Carriers Aren?t Eager to
> Tell You About Texting
> Date : Sun, 28 Dec 2008 12:04:23 -0500
> >
> >
> > I thought this part was interesting enough to warrant an OT topic:
> > "Perhaps the costs for the wireless portion at either end are high ?
> > spectrum is finite, after all, and carriers pay dearly for the rights
> > to use it. But text messages are not just tiny; they are also free
> > riders, tucked into what's called a control channel, space reserved
> > for operation of the wireless network."
> >
> > Amul
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Casey Bralla
Chief Nerd in Residence
The NerdWorld Organisation
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