Thursday, September 10, 2009

Are Consumers Paying Too Much for Text-Messaging?

Are Consumers Paying Too Much for Text-Messaging? That was the question posed by the Time magazine article I read this morning. With costs to cellular carriers being a fraction of a penny and billings to customers standing at roughly fifteen cents a go, it's easy to see that, for cellular carriers, texting is, well, deliciously profitable at 98%. What's troubling for carriers is the trend of consumers to dropping or scaling back plans, which has lead them to offer bundles with unlimited texting as a "teaser" to draw customers back (like the "loss leaders" for Walmart: prescriptions, shoe repair and so on).

Emerging from the back of the pack, for example, are carriers like Sprint, that are offering unlimited text, picture and video messaging along with 900 minutes for 90 bucks in a clear move to siphon off customers from Verizon, AT&T and T-Mobile. The churn in the cellular industry continues.