Cheaper Ways To Text Are Coming

Sending text messages is old-fashioned, expensive and very, very popular. Those three ingredients are combining to produce cheaper – even free – ways to do it.

On Wednesday Apple plans to roll out iMessage, a cross between texting and instant messaging. There are several other apps that provide much the same service. TextPlus, for example, has offered a texting app since early 2010.

Texting uses a small sliver of a cell phone network's voice channel to transmit small amounts of data. It costs the cell phone provider almost nothing to transmit the data. Youthful cell phone users were quick to adopt the form of communication, spelling out words using a different function of their handset's keypad.

Still prefer texting

Despite the explosion in smartphones, which allow users to also send and receive email – which is included in their data plan – younger smartphone users still prefer to send and receive texts over email, even though they come in at exactly the same place email does on their devices.

One reason, perhaps, is not everyone has a smartphone. If someone with a smartphone wants to send a message to a friend with a regular voice-only device, they have to send a text.

And text messages are expensive. Carriers usually charge 10 to 20 cents to send a text and the same amount to receive one. Just an average text conversation can be costly, unless you have an unlimited text plan on your account. Even then, you pay a flat monthly fee for the privilege of sending and receiving the same data you could be sending and receiving for free with email.

How text apps work

Text apps will allow users with a data plan to send and receive text messages using their cell provider's data network instead of its voice network. For all practical purposes, they are emails – they'll just pop up as though they are text messages.

If these apps catch on – and there's no reason to believe they won't – what will that mean for cell phone companies that make huge mark-ups on providing text services? It will likely put a sizable dent in their profits.

It could result in cell phone companies finding themselves in exactly the same position as banks did recently, when legislation and rule changes eliminated a lot of the fee income that contributed to their profits.

To make up for it, banks are now instituting new fees rather than settle for lower profits. Consumers can expect cell phone companies to respond in similar ways.