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Comment by lusr | Hacker News Reader

"Apple iMessage is a classic example. If you're using iMessage, you're not using one of our messaging services, right?"

It's hard to believe this is a real quote by such a senior executive. If the profitability of your business is so significantly based on a hack (SMS) that you stay awake at night worrying about it, and you didn't bother innovating by developing a real solution to the problem (pervasive real-time communication) in the past 20 years while the hack became popular, then you absolutely deserve to lose this profitable part of your business - especially when you're in the friggin telecommunications business!

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What makes the move from unlimited data to "pay for what you eat" is the bizarre tethering restriction: they expect people to pay $25 more per month to tether without additional data.

If your shifting your model to selling data, wouldn't you want to make it as easy as possible for your customers to consume more data?

I don't get it. If tethering was free, I'd use more of it, and happily pay for it.

You probably know this already, but AT&T relies on most customers using nowhere near their data cap each month; allowing tethering would significantly decrease their profitability.

They can make a profit from someone who uses 5gb and pays $55 in a month, but I suspect they make more from someone who uses 400mb and pays $25.

Honestly I never thought of that, but it makes a lot of sense. Great point.

Despite SMS being a hack that costs carriers (essentially) nothing to send [1], the reality of this situation is that telcos will be/are quickly losing one of their largest profit points to services like iMessage.

Real question: Where are they going to recover that profitability from?

[1] http://www.wired.com/gadgetlab/2008/12/text-messages-c/

I'm genuinely curious... why is AT&T losing so much money over iMessage? When iMessage came out I went to downgrade my SMS plan, and found you can no longer do so. It is unlimited SMS or no messaging. Not everyone I know owns an iPhone and $.20 per SMS adds up, so I am stuck paying for unlimited.

Mysteriously, AT&T changed their plans very shortly after Apple announced iMessage. Obviously they foresaw a lot of people downgrading their plans so they just did away with the tiered plans completely.

Providing value over what a 500 loc client app and a 50 loc Node.js server can offer would be a good start.

I was going to say something similar. While I realize that we are mostly entrepreneurs here, aren't there some of us who believe in working hard and providing a reasonable service or product at a reasonable price? In all seriousness, people often consider giving to charities and whatnot as a contribution to society. Wouldn't it be even greater to simply run a service - especially in this case - for an "honest" amount of money; ie, enough to make some profit, save some, and cover costs? Is this line of thinking completely absent from society?

Where are they going to recover that profitability from?

They won't. They'll eventually need to adapt to the reality of their business, which is to move data from one point to another. They'll get to decide how to monetize their dumb pipes but their current SMS business model won't last.

Another real question is this: Do people think the first of the major telcos to buckle down and actually do this will pull quite far ahead of the others?

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