AT&T texting 'streamlining' points to SMS's slow decline
The carrier says that it will be reducing new customers' options for paid messaging plans
The good ship Text Messaging may be slowly sinking: AT&T confirmed to Macworld on Thursday that it will be reducing new customers' options for paid messaging plans.
The carrier will eliminate the $10-per-month 1000 messages option and the $5-per-month 200 messages option for individuals, leaving new customers with the choice to either pay $20 per month for unlimited texting or to pony up $0.20 or $0.30, respectively, for every text and multimedia message that they send or receive. Those on family plans, meanwhile, can pay $30 per month for unlimited messaging on up to five lines.
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"The vast majority of our messaging customers prefer unlimited plans," AT&T's Executive Director of Media Relations, Mark Siegel, told Macworld via email.
Siegel also said that current customers who subscribe to one of the soon-to-be-discontinued plans can hold onto those options--even if they switch phones. The changes take effect next week, on August 21.
While AT&T presents this as a "streamlining" of its message plans, it also seems likely that it's a reaction to the increased popularity of smartphones and their attendant data plans. The shift to data-capable phones have opened up a slew of new messaging option for consumers, threatening a prodigious revenue stream for carriers.
The way things were
Text messages have long been a lucrative proposition for carriers. According to the CTIA, a wireless industry trade group, more than 2 trillion text messages were sent in 2010, an increase of 31 percent over 2009; the volume of multimedia messages (those including pictures or video) was up 64 percent, to more than 56 billion.
In 2006, the United Nations's International Telecommunication Union pegged the value of text messaging at $80 billion--and that was before the advent of the modern smartphone. Text and multimedia messaging has only skyrocketed since then, so it seems likely that profits have increased in a commensurate fashion.
But the real key is that the cost, to carriers, for transmitting text messages is negligible. A 2008 New York Times article reported that not only does it cost carriers "very, very, very little" to handle text messages, it's also "relatively insensitive to volume." If not pure profit, then it's yielding something very close. (Of course, multimedia messages, which contain much more data than a simple text message, likely cost more.)
In the case of AT&T, unlimited messaging isn't necessarily a bad deal. In order for the $20-per-month plan to be worthwhile, each month you'd have to send and receive just 100 text messages, 66 multimedia messages, or somewhere in between for a combination of the two. That volume isn't exactly a challenge for your average teenager or twenty-something.
Granted, AT&T gets that $20 regardless of how many messages you send. And, since it costs the carrier very little to handle those messages, the bulk of that $20 goes right into AT&T's pocket. And for those who text only occasionally and fall in the gap between AT&T's two options, the best choice may actually be to look elsewhere.
