As the $700 billion bailout for banks falters, the US needs to be very careful about future investment programs. Though I’ve endorsed a broadband stimulus proposed by Yochai Benkler, there should be at least some window of opportunity for consumer groups and others to make demands of telcos in exchange for the money. For example, as Randall Stross wonders, what exactly is the profit margin on text messages?
Text messaging is a wonderful business to be in: about 2.5 trillion messages will have been sent from cellphones worldwide this year. . . . [T]ext messages are not just tiny; they are also free riders, tucked into whatâ€™s called a control channel, space reserved for operation of the wireless network. . . . The public assumes that the wireless carriersâ€™ costs are far higher than they actually are, and profit margins are concealed by a heavy curtain. Senator Herb Kohl, Democrat of Wisconsin and the chairman of the Senate antitrust subcommittee, wanted to look behind the curtain [and has been stonewalled].
Srinivasan Keshav, a professor of computer science at the University of Waterloo, in Ontario, said: â€œMessages are small. Even though a trillion seems like a lot to carry, it isnâ€™t.â€ Keshav, whose academic research received financial support from one of the four major American carriers, discovered just how secretive the carriers are when it comes to this business. Two years ago, when he requested information from his sponsor about its network operations in the past so that his students could study a real-world text-messaging network, he was turned down. He said the company liaison told him, â€œEven our own researchers are not permitted to see that data.â€
Admittedly, cross-subsidization can be a good thing. If the text windfall is subsidizing rural or inner-city broadband, I might be happy to see it. But we deserve to know the full details of the inner workings of the telcos–especially if they want investment in a broadband rollout. Sadly, the FCC has done a terrible job making even its own inner workings transparent.