The recent announcement at the SONA of the promotional prices of 0.50 pesos per text makes us wonder what is the real cost of sending a message via SMS (or the short messaging system). If companies can still make a profit at 50 centavos then why were the telcos charging us for more before the announcement?
 
Let us make a back-of-the-envelope estimate of the cost of sending data through the cellphone network. Let us start with the basics. SMS or popularly known as text is sent through the airwaves as data packets similar to the internet that we are all familiar with. There are several ways to send this data over the cellular network.
 
SMS was inherent in the design of the GSM (Global System for Mobile communications) network but is now carried over even in the newer 3G networks. For internet rates, either through 3G or through GPRS (General packet radio service), telcos currently charge a flat rate of approximately 10 pesos per half an hour for data transfer.
 
At GPRS data rates, typically at 56 to 114 kilobits per second, which means that at its slowest speed, it can send out the whole of Noli Me Tangere in around three minutes. At 10 pesos for half an hour, sending the whole of Noli would cost around a little bit less than one peso.
 
The whole work of Dr. Jose Rizal contains around 1.15 million characters while a single text message contains only 160 characters. This means that to send one text message costs around one hundredth (0.01) of a centavo! Even if you factor in for administrative costs, we would end up way below the fifty centavos that we have right now. At slower GSM rates, the cost of sending a text would still be a fraction of a centavo. Using faster networks like the 3G would bring down this cost even further.
 
We should probably ask for refunds since apparently the telcos can still make a hefty profit at half a peso per message when it really only costs a fraction of a centavo to send a text. The NTC and the BIR should work together to find out how much the telcos and the government owe the consumers and to find out the quickest and most fair way of undertaking a refund. The government should also bring back the VAT it collected in these overpriced texting rates that we were paying and work to push down further the costs of texting.
 
It has been argued that since SMS is an inherent and integral function in the design of the GSM system and its successors, it should have been given free as part of the use of the network. Telcos did not add anything to their towers to enable SMS, it was there in the system to start with. But even if we grant the claim of the telcos that SMS is a value added service, then the telcos should be able to tell us how much it costs to maintain the service since the Public Telecommunications Act of 1995 requires them to maintain separate books of accounts for these value added services.
 
The claim of government in reducing texting rates becomes suspect since SMS/text was one of their target for new government taxes. For several years, the finance department, upon the urging of the IMF, wanted to impose
"sin" taxes on text. It stopped only when texters, led by the consumer group TXTPower, revolted (through texting of course) and sent a barrage of protest messages to top government officials. Had it pushed through, text messages would have cost P1.50, with P0.50 going to the government.
 
Instead of riding on promotional rates by the telcos, the government should institute a way to provide permanent lower rates for voice, texting and even the internet. Aside from the costs of texting, we should also note that there are still the perrenial complaints of "lost" load, intermittent service and coverage, as well as text spam and messages that hound the texting public.
 
Yet despite these concerns, SMS has grown to be very popular not only in the Philippines, the erstwhile texting capital of the world, but is used across more than 200 countries by over 3 billion people in 2007. The popularity of SMS only reflects our need to communicate with each other and texting provides one of the cheapest way to do that (although at current rates, its around 4500 times overpriced!). We communicate through text with our family members working abroad or in the provinces, transact business, join games or send messages to our loved ones. It is thus important to keep texting genuinely affordable and accessible to all.