Here’s why the phone company is so rich and powerful

Monday, May 12, 2008

It's no secret that I am really pissed off about fees -- from ATMs to telephone bills, we are charged enormous amounts of money just cents at a time; far more than is proper in most cases, just because they can. Why do we continue to pay without protest?
Here's an interesting point from a UK scientist, who expounds on the high price of SMS messages:

A University of Leicester space scientist has worked out that sending texts via mobile phones works out to be far more expensive than downloading data from the Hubble Space Telescope.

He worked out the cost of obtaining a megabyte of data from Hubble – and compared that with the 5p cost of sending a text.

He said: “The bottom line is texting is at least 4 times more expensive than transmitting data from Hubble, and is likely to be substantially more than that.

“The maximum size for a text message is 160 characters, which takes 140 bytes because there are only 7 bits per character in the text messaging system, and we assume the average price for a text message is 5p. There are 1,048,576 bytes in a megabyte, so that's 1 million/140 = 7490 text messages to transmit one megabyte. At 5p each, that's £374.49 per MB - or about 4.4 times more expensive than the ‘most pessimistic’ estimate for Hubble Space Telescope transmission costs.”

Dr Bannister said it had been difficult to work out exactly how much Hubble data transmission costs. So he contacted NASA who gave him a firm figure of £8.85 [$17.35] per megabyte (MB) for the transmission of data from HST to the Earth.

“This doesn't include the cost of the ground stations and the time of the personnel along the way, but it is an unambiguous number for that part of the process. So that's £8.85 to get each MB from Hubble, to the first point of contact on the ground, but no further. Hence we need to go a little bit further to estimate exactly how much it costs to transmit data from Hubble to the end user - i.e. to the data archive which scientists can access. This is difficult, so I had to make some conservative assumptions.”

Dr Bannister estimated the cost of the data from Hubble could vary between £8.85 and £85 per MB- much cheaper than the £374.49 per MB cost of transmitting one MB of text.

In case you're wondering, that 5p cost works out to 10¢ in US currency -- and US phone operators are now charging between 15¢ and 20¢ per text message. That comes out to a whopping $1123.50 per megabyte of data. That's $1,106 more expensive than Hubble data.
I'm convinced that most people pay these outrageous fees because, like ATMs, they think that it is expensive to have instant data communication. If they realized that it is cheaper for the company to send tiny snippets of data rather than voice; if they understood that ATMs are infinitely cheaper than branch offices and salaries of tellers; if they understood that half of the fees listed on various bills as "Federal" are not taxes nor mandated by the government... well, perhaps there would be a mass uprising. Until then, the sheep will continue to be fleeced and companies will continue to rape us of every last nickel.

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