This is not a trick question. But it’s one that AT&T, by trimming its text plan options to two—unlimited for $20 monthly, or a la carte texts at 20¢ apiece—is forcing customers to ask themselves.
How much does it actually cost a wireless provider to transmit a text message? Back in 2009, the price per text (for a mobile network, not a customer) was estimated at around 0.3¢. Technology gets cheaper all the time, so by now the costs incurred by AT&T and other wireless carriers for the sending of texts must be substantially smaller—some miniscule fraction of a penny for each dopey insider joke you text to a buddy.
And yet, as of yesterday, AT&T’s has effectively raised prices for the text message plans of new customers. Technically, I suppose, AT&T’s hasn’t jacked up rates. Instead, it has eliminated options that would save many texters some easy money each month. New AT&T customers no longer have the choice to sign up for a limited text message plan—one that offered 200 texts for $5 a month, say, or 1,000 texts for $10 a month. The only option left is an unlimited text message plan for $20 a month, or no plan—in which case, a more-absurd-than-ever 20¢ would be charged for each text sent or received. (The changes are only for new customers; existing subscribers can keep their old plans, even if they change phones.)
Twenty cents might not seem like a lot of money. Two dimes. Not even a measly quarter. But consider this: It’s been estimated that the 20¢ text represents a markup of 6500%, and that estimate comes from over a year ago, when text messages were presumably not quite as cheap to send as they are today.
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AT&T knows that we know the 20¢ text message is a ridiculous, over-the-top rip-off. The provider, in fact, wants us to feel it’s so ridiculous that we opt for the unlimited plan and never have to think about getting nickel-and-dimed with outrageous per-text fees again.
AT&T is also banking on the idea that new customers won’t feel that the removal of limited text plan options is just as outrageous. Here’s how AT&T spokesperson Mark Siegel bluntly explained why the carrier would only offer the unlimited plan:
“When we looked at our text messaging programs the vast majority of our customers were using the unlimited plans, and text messaging is really bigger than ever right now,” he said. “So there you go.”
But AT&T must also know that, in the world of text messages, there’s another trend that’s bigger than ever: totally free unlimited texting. A Los Angeles Times story runs through a few of the many such options available now and in the near future, including Google Voice, textPlus, and Apple‘s forthcoming iMessage.
So why would AT&T effectively raise the price per text on many new customers at the same time that texts are cheaper than ever for providers to transmit, and when it’s becoming easier and easier for consumers to text for free?
This looks like a last-effort money grab aimed at taking advantage of people who don’t know any better, or who don’t want to be bothered. Text message is a huge money maker, reaping $21 billion in revenues in the U.S. last year and what’s looking like $23 billion by the end of 2011, and the providers aren’t ready to give up a dime (or two) of that easy money.
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Increasingly, though, consumers are waking up to how simple it is to skip the monthly text plan fee and save money just as easily. So there you go.
Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.