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

[john@essenz.com]

I guess my point is, the cost of providing a service is not the only 
factor in setting the price, nor should it be. The fact that SMS costs the 
carrier nothing does not hold any weight in the decision of how to price 
the service. As a raging capitalist, I feel a company should price 
services as high as they want - regardless of how much it costs to 
produce. The only exception being true utility services, but SMS messaging 
on wireless phones is really pushing the limit of the definition of 
"utility". 

And I hate this notion of there being no competition in telecom. Telecom 
is one of the most competitive markets. There are plenty of other 
providers out there, you just haven't heard of them. But they are there, 
they are making money, and they have a base of satisfied customers. The 
big 3 or 4 are convenient, and get the most attention. Heck, in PA alone, 
there are over 120 registered CLECs with the PUC. 

-John

----------------------------------------------------
>From : Toby DiPasquale <toby@cbcg.net>
To : Philadelphia Linux User's Group Discussion List 
<plug@lists.phillylinux.org> 
Subject : Re: [PLUG] [OT] NYTimes article: What Carriers Arent Eager to 
Tell You About Texting 
Date : Sun, 28 Dec 2008 23:00:39 -0500
> On Sun, Dec 28, 2008 at 10:45 PM, sean finney <seanius@seanius.net> 
wrote: 
> > there's two things worth mention:
> >
> > (1) my take on this is that the government isn't intereseted in 
"setting 
> >    a fair rate", but instead protecting the public from a small cartel 
who 
> >    may be abusing their market position to fix prices[1].  not that i
> >    expect any results from this effort given the power of telco 
lobbies. 
> 
> More likely is that they are trying to shut up a vocal minority of
> their respective constituencies. If you do the math on this, its
> pretty easy to see that SMSs are not a huge part of anyone's recurring
> expenditures no matter how you slice it.
> 
> > (2) "supply and demand" is a bit more difficult as a justification 
when the 
> >    rising demand is against an almost unlimited supply (since the 
costs to 
> >    scale the system are mostly required already from the increase in
> >    normal usage/subscribers).   IANAE[2] but i imagine that the 
landscape 
> >    would be a bit different if the bar for entry into the market 
weren't 
> >    so high for potential competition.
> 
> The supply is nowhere near unlimited. The control channel is very
> small and enhancing the ability to transcieve SMSs requires putting in
> capacity for the entire line, not just SMS. This is pretty damn
> expensive in the mobile phone world but its being done because the
> demand and potential for profit is greater than the cost.
> 
> > this assumes a free market, which is a bit of a stretch here imho.  
currently 
> > you have a case were the competition is declining and the remaining 
players 
> > are very large and possibly acting in an anti-competitive fashion.  
also point 
> > (2) above about "supply".
> 
> See, this is the thing: the free market exists whether regulations
> allow it or not. As per laws, there's never been a "free market" as
> described in the text books anywhere in the world at any time.
> However, whenever people are free to choose how to spend their time
> and money, the free market exists.
> 
> Again, the key factor here is that people *want* SMSs and the ISPs
> aren't charging enough to make them not want it. If you want the
> economic description of it, the price is low enough on the demand
> curve to capture a portion large enough to make this the most
> profitable recurring revenue source for telco's today.
> 
> As well, remember that the service is currently drastically
> underutilized, as there are significant numbers of cell phone users
> that have never sent an SMS, yet pay for the privilege every month.
> 
> -- 
> Toby DiPasquale
> 
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