SMS & Trade Union stupidity
24 February 2011
This news item from El Reg is a bit dated, but it is still of some interest as it manages to capture so many aspects of Trade Union stupidity in one go. Hitting a method of communication with a punitive charge that would simply kill it off, and even if it did not, it would not solve the problem it was intended for anyway. In a nut-shell: having a 1p tax on SMS messages would halve the country's deficit.
100 billion text messages, at 1p per message, would nett £1 billion. The UK's structural deficit (i.e. excluding bank bailouts) is projected to be £66 billion this year. 'nuff said.
In GSM there are separate signalling (i.e. control) and data channels (i.e. voice) channels. The signalling channel deals with things like call establishment/termination and cell handover, but otherwise is idle a lot of the time. SMS was designed to utilise the signalling channel when it is not being used for call control, and the 140-character limit is an artefact of available control frame space.
Since it was designed to use redundant capacity in the signalling channel rather than compete with voice traffic in the data channel, the cost of SMS messages to carriers was basically nothing. The 12p charged 5-10 years ago per-SMS was basically pure profit. These days you can bulk-buy SMS messages for 2-3p each, for which 1p per-message tax would constitute a massive mark-up.
To make matters worse, some consumer packages don't even bother having any real per-message price. Many mobile billing models work by time-limiting credit and assume relatively few people will regularly get anywhere near using it all before it expires, which is one step away from a flat-rate rental charging model. Considering the trend towards unmetered billing plans, a per-message levy on SMS messages would before long account for its entire cost.
A mature technology
By any definition SMS is a mature technology, although one that is much more popular in Europe than elsewhere. However these days more and more handsets are smart-phones which are capable of receiving e-mail, and there are plenty of reasons to believe why such a development would send SMS into terminal decline even without external influences. On a £15 for 3 gigabytes data tariff each megabyte costs 0.49 pence, and even with very generous assumptions on network traffic usage you get several emails per pence. Assume like-for-like (i.e. text-only emails that are fairly short), and you easily get 100+ emails per pence. With SMS messages artificially held "high", it would not take long for SMS to become extinct in favour of emails.
And what about a per-email levy?
Whereas with SMS mobile carriers handle the messages directly, with mobile internet all the carriers do is provide a network connection to (usually) separate email providers. And since this connection is encrypted (any worthwhile email provider will provide encryption) the carrier wouldn't be able to tell how many emails were being transferred.
And the fundamental political question
Classical taxation versus spending. Cut services or increase state-sanctioned theft. However in this case it is union self interest, as the deficit is why union members are under the axe, and this time round upping taxes is barely viable. If Income Tax was doubled, and assuming doing so would actually double income tax revenue, it would fall short of the £163 billion that is this financial year's expected deficit. Next year's projected deficit of £116 billion would need a VAT rate of 27% to service.