AT&T Wireless: Text Messaging

The case examines AT&T's wireless business with focus on its text messaging services. The industry features a high proportion of fixed costs in relation to acquiring spectrum and building a network. Variable costs are relatively low and, in the case of SMS text messages, are very low. Pricing and margins in text messaging have attracted regulatory scrutiny in the Unites States, Canada and elsewhere. The case requires the use of key concepts in cost behaviour, cost volume profit analysis and product costing to understand the nature of the business and the profit margins involve. Many service or high tech businesses exhibit similar cost behaviours and so the case allows students insight into the management of such enterprises.