In the age of mobile data, is an SMS still worth Php1?

In the age of mobile data, is an SMS still worth Php1?




Since free, unlimited SMS were abolished over a decade ago, local carriers have started charging for a text message at a par value of Php1.00. Even the free SMS that we get every time we top up our load credits have been reduced significantly thru the years.

Then mobile internet came into the scene. It was still very expensive during its first few years (billing was on a per kilobyte basis) but has gone down significantly in the past few years. You can have unlimited mobile internet for just Php50 a day or under Php1k a month.

Mobile communication slow shifted — from YM, to Twitter, Facebook and now to more dedicated messaging apps like iMessage, WhatsApp, Viber and WeChat.

The time has arrived that mobile internet is so affordable, it makes more sense to use mobile messaging over SMS. It also comes with features that plain old SMS don’t have — picture message, voice message, video and those funny emoticons.

Of course, SMS is still the least common denominator — if you just want to get a critical message across, the SMS is the way to go. It has wider coverage (around 98% of the population of the Philippines is covered with cellular signal) and supported by all types of phones.


 

Nevertheless, the share of the people who are shifting more into mobile messaging is rapidly increasing with the growth of smartphones.

Obviously, the biggest market that is seeing the effect of mobile messaging would be the tens of millions of OFWs aboard, most of whom are probably using some type of messaging app to communicate with their relatives in the Philippines.

That’s probably one of the reasons why Smart bought Chikka back in 2009. But we digress.

We pose the same question many of you may also be wondering — why is a typical SMS still priced at Php1 per message for the last 10 years or more? Your guess is as good as ours. We point you again to our story from a year ago — that NTC’s memo on reducing SMS rates down to Php0.80 is still not yet enforced.

The biggest reason, and this has been shared by friends who used to worked in the telco industry, is that SMS is a billion-peso business that reducing the cost of a message by merely 10 centavos will result to a net loss of hundreds of millions of pesos a year. Do the math. No sane businessman would commit that kind of self-inflicted economic damage.

Our best guess is that the SMS will remain at Php1 in the foreseeable future.



Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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21 Responses

  1. Mica says:

    I hate to say it. But I think that despite all the competition between Smart and Globe… They run on a oligopoly on this 1 peso thing.

    • troll says:

      yes naman! napanuod lang yung “The First Honest Cable Company” na video, alam na yung oligopoly.. at nagamit pa sa tunay na buhay! Gudjab mehn!

  2. Gino says:

    For me, the answer should be NO. Mura na dapat ang sms ngayon. Wish ko lang sana mas bumaba pa ang rate ng Unli Data dito sa Pinas. Kapag online ka, makakapagtext ka pa naman kahit walang load using magtxt.com and other sites na nagpo-provide ng free texting.

  3. roy says:

    I, for one is trying out the 999 plan of Globe which offer unlimited internet service and one freebie (I chose 10 minutes of calls and 200SMS) I may have used a little bit more in replying to text messages but I think this is a better alternative for staying always connected. I rather send messages through iMessage and Wechat now and try not to send messages through regular means. Unless everyone I know also subscribed to data services, I may be forced to still use traditional means.

    Compared to Surfing, Calls and Texts are cheaper may it be Unlimited or ala carte that’s why it’s a hard economic sense for other people, even if they are getting more, to shift to mostly data. I just hope people are educated to make use of such services because some services like bucket pricing is quite affordable for the masses.

  4. EarlZ says:

    SMS is still the main source of income from these telco’s imagine an SMS takes less than 1k of network traffic to send compared to ‘unlimited’ data usage for 999 a month.. SMS the Gold mine!

  5. christian says:

    And NTC is being bullied by the telco giants.

  6. anOnymous says:

    I think we are not the TxT capital of the world …

  7. simplynice93 says:

    NTC should suspend licenses of “pasaway” telcos and not just penalize them. They wont behave unless one telco receives the full punishment of the law/resolution.

    • obed says:

      Will i strongly agree na i-suspend ang license nang mga telecos, pano nito ma susupend? Hindi naman pwede i-hold ang services kasi end user ang maapektohan.

    • Jp says:

      I guess what simplynice93 wanted to say was to penalize them in a way na hold off muna ang pagkuha ng mga bagong subscribers. With every new subscribers, mas nadadagdagan ang kailangan serbisyuhan ng mga telxos kahit na hindi na nila kaya.

      I wish there would be an instance that NTC should order to cease new subscribers for some time…kahit one month lang…

  8. JustAThought says:

    NTC is sleeping with the Telcos.

    I guess, problem with using data to text for a day is that, it’ll drain your battery. I couldn’t last a day when my mobile internet is active.

    Ever since Globe advertised their network upgrade, it has been downhill for them. Though, there are more H+ signal, but internet is slow, text are sometimes lagging, call becomes digitised, etc..

  9. tu9tifive says:

    I believe SMS should cost at most 25 centavos and maybe between 10-15.

    Let us do the math then:
    Assuming we have 1 billion SMS sent in the Philippines monthly, divided evenly between the two telcos, that is EASILY 500 MILLION pesos a year. GLOBE and SMART are operating as publicly traded companies, they have net operating costs and must beat that to turn over a profit. EARNINGS OF AT LEAST 6 BILLION A YEAR certainly justifies that operation. BUT WHERE DO THEY GET THE MONEY? WHERE IS THE MONEY?? it is from those little 140 character thingy that ONLY COSTS ELECTRICITY AND MAINTENANCE !

    Can we budge enough congress people to make SMS 25 centavos? yes! one-fourh peso is what I believe one 140 character SMS is worth. And it a big worth. Well, I think this is the season we voters, and more specifically tax payers, flex our muscles.

    Once we sunk this in our heads, we will understand that THEY MUST SERVE US. THERE IS A REASON THAT THEY NEED LICENSE TO OPERATE. COMMUNICATION PUBLIC SERVICE, COMMUNICATION IS PUBLIC DOMAIN, like WATER SERVICE, ELECTRICITY.
    PEOPLE CAN BE BEND THROUGH THEIR WILL.

    THERE WAS A TIME WHEN SMS WAS FREE (before 1997) and was only a communications option. NOW IT IS THE MAIN COMMUNICATIONS OPTIONS. It has become a commodity. And like all commodities, it must be subject to market forces and / or government regulations.

    We all agree that there is no market forces in this field, and that government regulation and IMPLEMENTATION IS REQUIRED.

    AND MAYBE IT IS TIME WE VOTE FOR PEOPLE (not necessarily politicians or from political clans) that will look for consumer interest.

    One sms should be worth 25 centavos, nothing mores. Because it costs next to nothing to generate on a per item basis. And it is a great windfall to those companies if taken collectively…
    AND WHAT DO WE GET IN RETURN?

    • Mr A says:

      You did forget that these companies have unli promos, which makes your computation inaccurate. Also, a lot of the users are using their promos against texting normally.

    • tu9tifive says:

      Man, you DIDN’T GET my point.

      Even with promos and offerings (200 free SMS per month? 50 centavos intra-carrier rates for postpaid plans? what a joke!), these telcos still rake in billions of pesos in revenues! the bulk of which is through SMS.

      I pay 800 pesos through my postpaid plan, and I find it unacceptable I only get 170 free SMS credits. I believe I should get 3 times this amount, to t500 free SMS per month!

      MY POINT, EXACTLY, Mr. A is that these telcos get to gulp my hard earned peso through SMS, A COMMODITY that is almost free to make, almost free to distribute and is in everyday demand, without anything to account for to where do they use the bulk of that peso.

      Do they use it to improve their services? Do they use it to enrich their investors? their political patrons? Will we know how these telcos use their money?

      And for the math, I DID USE MY ASSUMPTIONS. If math is your only problem, your missing the BIG PICTURE.

  10. Iyan Sommerset says:

    Greed, as usual. Oh corporations, is there anything you can’t screw for money?

  11. Ruji says:

    Bakit dito sa US eh unlimited calls lahat ng networks? Landline at cellular service including texting is unlimited for all types of subscription whether prepaid or postpaid. And all these are for the whole country! In contrast, the Philippines is even smaller than Texas, probably. Data is also very cheap (PHP 400 for 3 GB 4G-LTE) and in fact AT&T provides free public wifi service in many locations per city for its subscribers.

    Obviously, niloloko lang tayo ng Smart at Globe. Palibhasa kasi nagpapaloko tayo. Una na dyan ang mga mambabatas. Why don’t they pass a law mandating interconnection of all telcos? With interconnection the economic landscape of the country gets better. I think the fragmentation of our communications systems is pulling the economic growth of the country as a whole. That should qualify it as economic sabotage, hehe.

    • Anon says:

      1) Let’s compare the geography of the USA and the Philippines. The Philippines is made up of thousands of islands. It will be harder and more expensive to maintain the cell sites that services the whole Philippines compared to the US.

      2) Let’s compare the overall population of the US and the Philippines. You’ve said that the Philippines is smaller than Texas. AT&T services states other than TX so they can lower their prices because the demand can make up with the cheaper services they offer.

      3) Free public wifi by telcos. Filipinos may exploit that. Remember, the Philippines is still a developing country and most likely they’ll endure the slow public wifi rather than avail a personal wifi connection because they can’t afford it or the cost will be greater that the benefit. Unlike in the US where tolerance on this kind of things is low.

      4) Unlimited calls, text and prepaid? We also have those here, but it’s optional and not the only option for prepaid subscribers. The Philippine market is more of a “tingi tingi” type of market that’s why we have the 1peso per text scheme. If you want to have a mandatory unlimited for prepaid, then we will need at least 10php for text, which is expensive for most of us. Like me, I only send roughly 5 text a day on average which will only cost me 5 pesos. I’ll only go unlimited call/text whenever i need it.

      Comparing the US and the PH with those items is not fair as the two countries have massive differences that makes up the telecommunication infrastructure and its external factors.

  12. mrt says:

    When Senator Enrile lost load credits he started to investigate. Whatever happened to that? I guess madami tumatanggap sa gobyerno from the Telco companies kaya ganito ang kalakaran.

    Telco services here is very overprice, there may be worst situations in other countries, but it is very bad here. Imagine they charge you 1.00 for SMS but the message is super delayed or gets lost.

    They don’t want to reduce the cost of 1.00 and reason out that the operating cost is high, but then they have unli-promos left and right, which shows they are lying through their teeth. NTC and the government does nothing that’s why the Telcos are not scared into complying w/ gov’t regulations/law

  13. exe says:

    That’s why we have to keep advantage with TELCO promos like unlitext and unlicalls. Texting more than 100 text messages a day for 20 pesos aint bad at all.

  14. Anon says:

    Due to inflation, the 1 peso now is actually cheaper than the 1 peso 10 years before. So technically, it’s cheaper now compared before.

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