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This article was published on August 18, 2011

Why is AT&T charging more for text messaging? It’s afraid of iMessage, Facebook Messenger and Huddle

Why is AT&T charging more for text messaging? It’s afraid of iMessage, Facebook Messenger and Huddle
Matthew Panzarino
Story by

Matthew Panzarino

Matthew Panzarino was Managing Editor at TNW. He's no longer with the company, but you can follow him on Twitter. Matthew Panzarino was Managing Editor at TNW. He's no longer with the company, but you can follow him on Twitter.

When AT&T announced today that it was going to be effectively increasing the pricing of its text messaging plans by removing the 1000 message plan and keeping only the more expensive $20 unlimited plan and a 20c per text plan, it wasn’t taken with much joy. Text messages are a notorious source of profit for carriers and cost almost nothing for them to send.

But if you’ve been using Apple’s upcoming iOS 5 beta, due out this fall, and its included iMessage feature, then you understand that this move is as inevitable as it is greedy. See, iMessage is a cross-device, cross-carrier messaging platform for iOS that allows you to send text messages free of charge to any other iPhone, iPad or iPod touch running iOS 5.

Come this fall, all of the over 15 million iPhone subscribers on AT&T will instantly be sending and receiving free text messages to any other iDevice user. This is a huge deal, sure to make almost anyone comfortable using the lower SMS plans unless they send a lot of text messages to non-iPhone users.

This is why AT&T is removing the option to use a lower priced plan: It can’t stand the thought of losing all of that SMS revenue to iMessage and is instead forcing everyone to go to the unlimited plan. AT&T figures that if it stands to lose SMS revenue then it might as well get its pound of flesh while it’s at it. It’s a crappy, greedy move that outlines just how much the carriers are out to bilk customers.

I discussed the stealthy benefits of iMessage and what it could mean to the crusty carrier system here on the day after WWDC, where I also talked about the gigantic ripoff that MMS and SMS messages are and how little they actually cost the carriers.

Multimedia messages use your data connection, not your cellular connection, but carriers charge you per MMS and they charge you the bytes of data it takes to send that MMS. You’re getting charged double for every MMS you send. SMS is even worse because the effective charge to the carrier is zero.

SMS messages get sent on the control channel of your normal phone line, a segment of the connection normally used for diagnostic data. This should make them free with any service that you already pay for but because of contracts and the relatively small choice of carriers in a given area, we get charged magnitudes more for messaging than we should.

If you step back from the issue and look at the inclusion of iMessages into the standard app people use to SMS, a picture starts to emerge that Apple is making a statement to the carriers with this feature. A free-of-charge text, video and picture messaging service that works across all of the 200 million iOS devices already sold is going to massively decrease the amount of SMS messages sent by iDevice users.

AT&T just couldn’t bear to see this free money slip through its fingers, and instead decided to reach into the pockets of new iPhone customers and take it in the form of an unnecessary unlimited plan.

I would expect Verizon to follow suit on this SMS pricing “adjustment” soon as it will affect all new iPhone 5 customers on its network as well.

And iMessage isn’t the only reason that AT&T has to money grub either. Facebook just launched its cross-platform standalone app Facebook Messenger and Google has Huddle messaging inside the Google+ app. Don’t think that AT&T, and the other carriers, aren’t noticing the messaging app trend. Pretty soon, almost any mobile device user will have a cross-platform alternative to SMS messages and that doesn’t bode well for text messaging profits.

Admittedly, only iMessage offers a truly stealthy option that is integrated at a system level. It’s probably the biggest threat on AT&T’s radar because it will take effect without iPhone users having to do anything different or use any separate app. But it can only be a matter of time before Google offers Huddle integration with text-messaging to Android OEMs, then this thing will really kick off.

I, for one, plan to downgrade to the pay-20c-per-text plan as almost 100% of my messages go to other iPhone users. AT&T can keep its grubby paws out of my pockets.