Cell Phone Math

I recently got a new Palm Pre 2 from HP.  This is the unlocked GSM phone.  I got this phone because I’ve made some popular apps for WebOS (the operating system of the phone).  This type of cell phone requires a “Sim Card” that you can get with T-Mobile or AT&T.  Since I need Data, Voice and Text Messaging T-Mobile has all that for $60 a month where AT&T is about $100.  Seems like a no brainer.  The catch though is for technical reasons (which I won’t get into) T-Mobile is only 2G on this phone.  AT&T would be 3G.  Why such a big price difference?

Well, that’s because cell companies are ripping you off for text messaging! 

(Sprint and T-Mobile are definitely better than Verizon and AT&T)

The Math:
AT&T is now charging $25 for 2Gb of data and $25 for unlimited text message for a total of $50.  Does this sound fair?  (Tangent: All other carriers have a 5Gb limit, AT&T gives you less)

Each text message is 140 bytes of data and the average individual sends about 400 texts a month.

140 bytes x 400 = 56,000 bytes (or approximately 5 kilobytes or 5k)
$25/ 400 = 6.25 cents per text.
$25/5k = $5 per k.

Does this sound fair?  Who knows?  Well let me help you out.

Using $25 for 2 Gb of data is roughly the same as $25 for 2 billion bytes.  To equal the same rate as the data plan, you would have to send over 14 million text messages.

If we use the $25 for 2 GB text messages should cost $0.0000017 per message.  This is the same as over 6,000 text messages for 1 cent!


Conspiracy Theory or just Price Fixing?:
So how can these cell phone companies charge so much?!  They are up the cost of a text by nearly 4,000,000%.  Are they “Price Fixing”?  Why hasn’t the FCC or FTC looked into this?


Furthermore, why hasn’t anybody come out with a “Text Only” phone for $20/month?