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+ - Facebook may bust up the SMS profit cartel-> 3

Submitted by
AndyAndyAndyAndy
AndyAndyAndyAndy writes " Fortune has a very interesting article today about wireless providers and their exorbitant profit margins for SMS handling, especially when looking at modern data plans.

'Under the cell phone industry's peculiar pricing system, downloading data to your smartphone is amazingly cheap — unless the data in question happens to be a text message. In that case the price of a download jumps roughly 50,000-fold, from just a few pennies per megabyte of data to a whopping $1000 or so per megabyte.'

A young little application called Beluga caught the attention of Facebook, which purchased the company yesterday.

The app aims to bring messaging under the umbrella of data plans, and features group messaging, picture and video messaging, and integration with other apps.

The author argues that, if successful, Beluga (or whatever Facebook ends up calling it) could potentially be the Skype/Vonage or Netflix-type competitor to the old-school cellular carriers and their steep pricing plans."

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Facebook may bust up the SMS profit cartel

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  • I realize now the article was actually published on Friday, therefore making the Facebook purchase on Thursday.
  • Carriers already detect Internet traffic that isn't really an SMS and bills it as an SMS, such as various instant messengers.

  • Just today, I told a potential client that SMS isn't free and that to build a web application that uses SMS for notification requires a startup cost, a monthly and a per message charge.

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