... legacy telecom operators have realized that SMS messages are now used primarily for app registration and two-factor authentication in many places, as people switch to calling and texting services that rely on network data. In response to increased verification traffic from apps like Signal, and decreased SMS revenue from their own customers, these service providers have significantly raised their SMS rates in many locations, assuming (correctly) that tech companies will have to pay anyway.
...
These costs vary dramatically from month to month, and the rates that we pay are sometimes inflated due to “toll fraud”—a practice where some network operators split revenue with fraudulent actors to drive increased volumes of SMS and calling traffic on their network. The telephony providers that apps like Signal rely on to send verification codes during the registration process still charge their own customers for this make-believe traffic, which can increase registration costs in ways that are often unpredictable.
SMS has become a kind of real-world PoW (proof of work) mechanism. A phone number typically has a recurring fee to keep it working. So a live number indicates that someone is spending money (a proxy for effort) to maintain it.*
It still seems like a lot of money to spend on simple, old technology, but from the PoW perspective, making it cheaper would defeat its purpose.
*Which is why many sites reject Google Voice numbers, for example, for SMS verification.
> In response to increased verification traffic from apps like Signal, and decreased SMS revenue from their own customers, these service providers have significantly raised their SMS rates in many locations, assuming (correctly) that tech companies will have to pay anyway.
There's nothing that requires tech companies to use SMS for registration or for 2FA. The normal way to do it is by email, which continues to be free. For Signal, there is no need to do 2FA registration at all.
Signal is ideologically committed to publicizing your phone number, and apparently they'd rather pay $6 million to hold to their commitment than just... not do that.
... legacy telecom operators have realized that SMS messages are now used primarily for app registration and two-factor authentication in many places, as people switch to calling and texting services that rely on network data. In response to increased verification traffic from apps like Signal, and decreased SMS revenue from their own customers, these service providers have significantly raised their SMS rates in many locations, assuming (correctly) that tech companies will have to pay anyway.
...
These costs vary dramatically from month to month, and the rates that we pay are sometimes inflated due to “toll fraud”—a practice where some network operators split revenue with fraudulent actors to drive increased volumes of SMS and calling traffic on their network. The telephony providers that apps like Signal rely on to send verification codes during the registration process still charge their own customers for this make-believe traffic, which can increase registration costs in ways that are often unpredictable.