Originally Posted by quentin
That's not the Wireless subsidiary that we're talking about, that's the entire corporation. Get their balance sheets, look at the patterns (not just the numbers), and compare them to Verizon. You can't just look at GPM and determine how well a company is doing off of that.
So? If they need the wireless subsidiary to subsidize some of their other activities, so be it. My point is, they aren't just ripping everybody off - they have costs and expenses to pay, and they have to find a way to pay for them. If people are stupid enough to pay for text messaging, well, that's their own problem.
FYI, Verizon's profit margin was a bit less, around 10% IIRC. Similar looking income statement. And I don't know what you would plan on telling by comparing the balance sheets... the health of the companies maybe? But that's largely irrelevant to our discussion anyway.
Originally Posted by Mygaffer
They make much more money selling the service than they do selling the access to the service. That is the single fact at the root of usage based billing and the need for network neutrality. With such a high barrier to entry this isn't a market being fully serviced by competition. We need new service providers to increase competition otherwise you need regulation.
It's a high barrier to entry because it COSTS A LOT OF MONEY TO PUT UP CELL TOWERS. It's not free. They need to charge high prices to pay for their expenses. If someone could do it better, they would, and AT&T would have a lot higher profit margin than just 16%. And there's lots of competition - I mean, how many cell towers do you expect companies to put up? One in each person's backyard, so we can have hundreds of wireless carriers? Just about anywhere you live, you have access to 4-5 major wireless networks, and many more small-time outfits with low prices.
You get what you pay for in wireless service. There's a lot of very cheap phone services, like Cricket or Virgin, but people instead choose to let phone companies rape their wallets, then sit back and QQ about it as if there's nothing they can do. But the fact of the matter is, the major carriers are major for a reason - they actually have coverage and infrastructure to back up their prices. If you want to pay less, you'll have to deal with less coverage and less infrastructure. The cheap carriers are out there, and the choice is yours.
Heck, you could probably go out and find wireless phone service for $20/month. Why aren't you using that again? Oh, because it doesn't have very good coverage? And why might that be? Oh, because they don't charge very much for their phone service, thus cannot support hundreds of billions of dollars in infrastructure to give you better coverage?
I'm not trying to argue that text messaging isn't overpriced for what it is - it is extremely overpriced, and I will never pay for it unless I have a lot more disposable income than I do now. But people have to understand that if they decrease the price of those text messages, they'll have to increase the price of something else to compensate in order to pay their bills.
If you don't like it, don't text, or find a different freaking cell service.