AT&T recently announced they’ll be shelving their $10/1000 text message plan in favor of a single $20 unlimited plan, or you can pay $0.20 individually for text messages. This falls in the realm of bad deals because AT&T currently offers 2GB of data download per month for $25, from which you could theoretically send 12.5 million text messages. Send just 5,000 messages on their pay-as-you-go plan and you’ve racked up a $1,000 bill. Yes, it’s true, but is it fair?
The truth lies in how text messages are sent. SMS, the short message service, was developed as part of the GSM specification in the early 90s as a way to send text notifications to a phone without requiring an actual voice connection. Text messages do not use the data portion of your wireless plan because they aren’t actually using the that bandwidth, but rather a store-and-forward mechanism that attempts to deliver your message. Today, people rely heavily on their ability to send these text messages, although the service is neither secure or reliable (as much as 5% of text messages are never delivered). Regardless, SMS has turned into a real cash cow for wireless providers, even when they pay as much as $0.04 themselves to send your text message to an out-of-network provider.
So what can you do to avoid paying $20/month or $0.20 per text message? Fortunately, there are many alternatives to text messaging that can end up saving you a bunch. If you have a smartphone, apps like WhatsApp and Skype allow you to send unlimited messages at no additional cost (WhatsApp typically costs $0.99, whereas Skype is free). The advantage of WhatsApp is you can easily share photos and video while using an available WiFi connection, saving you data costs as well. I send the bulk of my text conversation over WhatsApp to keep my SMS costs as low as possible. So, even though AT&T is aggressively up-charging customers for text message plans, there are alternatives that could save you hundreds of dollars per year in wireless fees.