Bell/Telus Text Messaging Cash Grab Makes No Economic Sense

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Bell/Telus Text Messaging Cash Grab Makes No Economic Sense

6:35 am on July 9, 2008 | Category: Business, Telecom Services, Wireless, Messaging, Editorials

Two of Canada’s leading cell phone carriers, Bell and Telus, will soon charge their customers for incoming text messages, beginning on August 8 and August 24, respectively.

The companies, which already charge $0.15 for each SMS message sent, plan to bill customers an additional $0.15 for each message received, theoretically doubling revenue from SMS services.

SMS is already a cash cow for Canada’s mobile operators, which process more than 45.4 million messages per day, according to the Canadian Wireless Telecommunications Association. But carriers claim that it’s the phenomenal growth of text messaging which is forcing them to charge for incoming messages.

“The growth in text messages has been nothing short of phenomenal,” explained Telus Mobility spokesman, AJ Gratton. “This volume places tremendous demands on our network and we can’t afford to provide this service for free anymore.”

But despite carriers’ attempts to bamboozle customers using big numbers, their assertions don’t make economic sense. The “economies of scale” theory suggests that the cost of transmitting an SMS message should decline as the overall number of messages increases.

The excuse of “tremendous demands” on Bell and Telus networks is utterly frivolous. In reality, this price increase is a cash grab, plain and simple.

Customers who send a message are making a choice to pay $0.15 a pop. If carriers genuinely couldn’t afford to provide the service at that price, they could always increase the cost to senders, which would in turn reduce demand for an unreasonably expensive service.

By charging customers for incoming messages, however, the cell phone providers are attempting to take choice out of the equation, charging twice as much for each text message, while preventing a reduction in overall demand.

But Bell and Telus are taking a reckless competitive risk on this one. Without the option to reject or summarily delete messages, many customers will be forced to pay for “spam,” harassment, and other unwanted SMS communications. This will undoubtedly cause many frustrated users to flee to Rogers Wireless, which has clearly indicated that it has no plans to charge for incoming messages.

Who knows; I wouldn’t be surprised to see some Bell and Telus customers take legal action to get out of their current contracts.

One thing is certain: with new competition looming on the horizon, Telus and Bell are making a stupid decision that could easily haunt them for years to come.

Editorial by Jeremy Maddock.

14 Comments »

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It would be good if they were to take the extra revenue they are taking from the customers and erect more and better signal strength towers, especially in rural areas to improve the overall quality of service.

Comment by Shawn Eckart — July 9, 2008 #
Bell bites back with poor-man’s iPhone
Globe and Mail - 3 Jul 2008
BCE Inc.’s lengthy struggle to privatize may have left management distracted and Bell Canada’s brand reliant on a couple of aging beavers, but the phone company is still managing to strike back at its more nimble rivals.
Bell to offer smartphone with unlimited data plan CBC.ca
Can You Avoid The iPhone Data Plans From Rogers? Yes, But It Will … CTV.ca
E Canada Now - Marketnews.ca - The Gate - Canada NewsWire (press release)
all 16 news articles »

The stastics do show on my own site too that MY MANY POSTS ABOUT MY UNDENIABLE EXPERIENCE WITH BAD BELL SYMPATICO ARE STILL ON THE TOP 3 MOST POPULAR READINGS OF ALL OF MY VARIOUS TOPICS THAT I HAVE POSTED ON MANY SITES OF MINE.

The war aginst these giants has just begaun now on the net too and i ha said so before too that this will happen.

I had already written months ago even here that Bell was capping the Sympatico downloads EVEN cause it was making way for their iphone business and Bell will definitely abuse it’s phone customers the next same way it has undeniably now too abused many of it’s ISP customers. Sad and unaccepatable.

Message from youth: Don’t charge us for incoming texts
Canoe.ca - SUN MEDIA A decision by telecom giants Bell and Telus to charge customers for receiving text messages as well as sending them isn’t sitting well with youth who use the service more than any other group.
Bell/Telus Text Messaging Cash Grab Makes No Economic Sense Teleclick.ca
Text-fee plan flayed Winnipeg Sun
Prepaid Reviews - Canada.com - CBC.ca - Canoe.ca
all 109 news articles »

see also
http://postedat.wordpress.com/2008/06/29/dealing-effectively-with-complaints-problems-bad-service-isp-provider/

Comment by thenonconformer — July 9, 2008 #
Agree with your last point Jeremy. Very short-sighted to charge for these.

For TeleClick.ca users, we just added a way to send text messages to TELUS Mobility users for free. If anyone here cares to test it out and let us know what you think, we’d love to hear if it works for you and how we can make it better.

www.mobilemammoth.com/send-text-message

Again, it is free to SEND the message, since you are sending it from our website and not your phone. If we figure out a way for people to avoid those upcoming fees to receive messages, we’ll let you know!

Comment by MobileFreak — July 9, 2008 #
I made a similar point on my blog today .
The Bell and Telus rationale regarding cost does not fly. From a network perspective, it costs much more to carry a minute of voice than it does to carry 160 Bytes of SMS.

Comment by GaryD — July 9, 2008 #
You know what? I don’t buy into all these hysteria articles.
1. Why now? Telus announced that they would charge for text messaging back in April. Why did it take so long for newspapers to get their pens ready? Is there any connection with Rogers data plans for iPhone scandal? Are some paid journalists trying to mislead customers and other media out of that scandal?
2. Who is paying for SMS in reality? Some say that SMS is already paid for by sender. It’s NOT TRUE. SMS is paid for by sender only if it sent from another cell phone. If you send SMS from web site or through e-mail to certain cell number you don’t pay for it and neither recipient. This alone accounts to 600 million potential revenue loss for cell companies last year and they still carried all that traffic, so in fact it was substantial material loss. Somebody should pay.
3. I don’t know about Bell, but Telus has web based option to block SMS separately from cell phones, web and e-mails for your cell number. I read reports of people that actually called Bell and get their text messages blocked at no charge by Bell customer support. If you don’t need it just block it. What is the problem?
4. Why people are surprised to pay for service? Don’t they have all those paid additional services like call waiting on their home phone? Having it for free for a while does not warrant this in the future. If you want it you need to pay for it. If you don’t need it then block it.
5. Some smart people try to not use their minutes and text for cheap using web or e-mail, which is abuse of the system. Cell companies should address it one way or another.
6. This issue affects less than 5% of cell phone users as per Telus / Bell stats. Why all the fuss?

PS. I hate cell phones. That’s why I have realistic look at this. Cell phones cause cancer and they are very dangerous for children and teens. I glad to see some irresponsible parents getting bills for their teens cell phone use. This may enlighten them if nothing else works.

Comment by Azza — July 13, 2008 #
Hey Azza,

Eat a Dick!

Comment by Pink Floyd — July 15, 2008 #
Azza, your brain tumor has obviously increased in size to the point you are unable to think straight.

In my opinion, when I made my contract with Telus, I was not charged for incoming texts. For them to implement the incoming charge mid contract should be a breach of that contract.

Oh and your stat numbers are BS also. It will affect all customers in one way or another.

Comment by Marcel — July 20, 2008 #
You all are forgetting one simple thing here. When they say they need this extra revenue to upgrade the towers, it’s a bunch of B.S. Did you all forget that you are paying a MONTLY SYSTEM ACCESS FEE?! Hellooooooooooooooooo….. last I checked, wasn’t that for upgrading the towers?!

And I quote the Bell Mobility website…..

“What is the System Access Fee (SAF)?

The System Access Fee is charged monthly by Bell to help recover the costs associated with operating and maintaining a wireless network, including costs for ongoing maintenance, new equipment installations and technology upgrades. The fee is not required by nor collected for the federal government or any of its agencies.”

So why the heck am I being billed for the system access fee AND incoming text messages? Just to be double billed for the same issue of upgrading the towers?! Give me a break!

Nothing but greed…. plain and simple. I worked for Cingular Wireless in the states and they were a horrible company, but they were still ALOT cheaper than our Canadian companies.

Comment by AJ — July 22, 2008 #
Thats bs. If some company spams me i have to pay for it. Telus better use this extra cash to put up more towers to improve signal strength. Everywhere I go the signal quality is always crap. Once my contract is up I am going to rogers or to new competition. I’m not surprised bell is involved in this either. They have been ripping people off since they were a monopoly in landline phones 20 years ago.

Comment by john — July 24, 2008 #
People are getting it all wrong. Those who actually USE the text message feature will NOT be charged anything more as their bundle include unlimited txt msgs. Only those who don’t have any text messages bundle would be charged (they will actually be charged for sending AND incoming as they are on a pay per use basis…). I dont know about Bell, but Telus will credit and block any text messages that are coming from an unwanting sender. You will only have to forward the actual message to a special number and the system will take care of the rest no question asked.
Again why people are so hysterical about all this!? Isn’t normal to get charged for a service anymore?
We all can argue from today til tomorrow about the actual cost of sending a txt msg or about the profit marging of the cell companies, but at the end of the day we, as customers, are chosing to use those service therefore we should pay or choose not to use the service anymore.
But again, the vast majority of people using txt msgs on a daily basis have a bundle that includes a certain amount (or unlimited) of txt msgs… at .15$/msg, it would simply be too expensive for those people. And they dont have to worry about getting charged for incoming!

Comment by Neo — July 30, 2008 #
As I believe this text message cash grab is a breach of contract I await the impending class action lawsuit.Although not a heavy text message user I am offended at the concept of charging for unsolicited messages if they are not something that I encouraged or initiated.
Hooray for Rogers or any other provider who is smarter than this.
Telus, I hope you feel the pain of your irate customers.

Comment by Ed — July 30, 2008 #
My husband’s phone is with Rogers and mine is with Telus. Before you switch to Rogers for better reception let me tell you more often than not it is my Husband’s phone that has no service in remote areas. On the text messaging issue, I believe the younger generation is being taken advantage of and I applaud all of you for fighting against being overcharged. Becoming wise consumers is your best defense. I have an 18 year old Son and have seen all too often a disrespectful attitude toward younger consumers. They will happily take you money, after all you are one of their largest demographics. You all deserve more respect.

Comment by mom — August 6, 2008 #
Over the years I have had all 3 different cellular service providers(Bell, Telus and Rogers) Out of the three I have always found that Rogers has the best customer service and clearer reception.

If you want to make yourself angry check out what Europe pays for the same cellular service as we do here.

Comment by James — March 18, 2009 #
Been reading all the posts and I must agree with the fact that people that use SMS on a daily basis are not the real “target” of this action.

On the other hand, why not just charge for incoming SMS that have been “responded” to? That is technically feasible and it would “justify” the charge, imho.

Comment by Bill — March 23, 2009 #