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Canada Text message rates have huge markup

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Canadian text message rates have a huge mark-up according to Srinivasan Keshav, Canada Research Chair in tetherless computing at the University of Waterloo.

In testifying before U.S. senators, he estimated the consumer mark-up on some text messages to be 4,900 per cent. The maximum cost of a text message is “very unlikely” to exceed 0.3 cents. Nevertheless the oligopoly of the large cellphone companies charge pay-per-use texters 15 cents to send a text message and, beginning next month, Rogers will join Bell and Telus with an additional charge of 15 cents to receive a text message. In the United States, carriers recently increased their per-message rate to 20 cents for those without a text plan.

It is unfortunate that the cellphone oligopoly pushes the pricing as high as the market will stand. This is stifling demand and in consequence Canada lags others in the development of the Mobile Web. Thess companies would be very much better off financially with more reasonable pricing multiplied by vastly increased usages.

The new Rogers CEO seems to understand this, but will his view prevail when for so long the dog-in-the-manger price gouging has been the rule.

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This entry was posted on Wednesday, June 17th, 2009 at 3:59 pm and is filed under Cell phones. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

6 Responses to “Canada Text message rates have huge markup”

1. Kagemand Says:
   June 17th, 2009 at 11:39 pm

   This is really bad for those people who text more than uses their mobile phones for calling, the huge markup is not reasonable to begin with, they really need to think this over again and analyze the situation. They need to balance things out, what is best for consumer and beneficial for their company and not just for the company alone. Thanks for this article.

2. rome tours Says:
   June 18th, 2009 at 6:44 pm

   i think that the consumer comes first and this mark up is exaggerated.

3. jlbraaten Says:
   June 21st, 2009 at 8:43 pm

   Are the Canadian rates any less than the US rates? It’s all one big racket if you ask me. SMS is one big rip-off. With the increase of smart phones, the carriers better start building more margin into their data plans or they’ll soon be in trouble once text messages go away in lieu of full blown social media capabilities of smart phones.

4. Movers Says:
   June 22nd, 2009 at 2:05 pm

   Unfortunately this is not a well known issue. For as long as text messages have been around they have always cost the companies next to nothing. But people have gotten used to paying 15 cents per message and think it’s normal. On one hand it’s huge price gouging but on the other hand this is the point of capitalism – if the customers are willing to pay 15-20 cents per message, the companies will charge that much. It’s basic economics.

5. Get Paid To Write At Home- $400 a Day Says:
   June 23rd, 2009 at 2:42 pm

   Uuum, this is exactly why I use MetroPCS. One flat rate and unlimited texting! LOL

6. hp printer scanner worx Says:
   June 24th, 2009 at 8:19 am

   Movers is totally right. At some point the cost of messaging will float to the top of the collective conciousness and people will be calling in to cancel their service for something cheaper and market pressure will begin to push the prices down. Seems like a good subject for twitter, whatever twitter is.