This is one of the first lessons you learn in marketing as long as you are not losing money. But the problem is that when the consumer finds out how much what they are buying actually costs, you end up with a lot of unhappy customers. This NYT piece goes into a bit of detail about how the cost of text messaging breaks down:
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.
That’s why a message is so
limited in length: it must not exceed the length of the message used
for internal communication between tower and handset to set up a call.
The channel uses space whether or not a text message is inserted.
Professor
Keshav said that once a carrier invests in the centralized storage
equipment — storing a terabyte now costs only $100 and is dropping —
and the staff to maintain it, its costs are basically covered.
“Operating costs are relatively insensitive to volume,” he said. “It
doesn’t cost the carrier much more to transmit a hundred million
messages than a million.”
