Signal’s president reveals the cost of running the privacy-preserving platform—not just to drum up donations, but to call out the for-profit surveillance business models it competes against.
The encrypted messaging and calling app Signal has become a one-of-a-kind phenomenon in the tech world: It has grown from the preferred encrypted messenger for the paranoid privacy elite into a legitimately mainstream service with hundreds of millions of installs worldwide. And it has done this entirely as a nonprofit effort, with no venture capital or monetization model, all while holding its own against the best-funded Silicon Valley competitors in the world, like WhatsApp, Facebook Messenger, Gmail, and iMessage.
Today, Signal is revealing something about what it takes to pull that off—and it’s not cheap. For the first time, the Signal Foundation that runs the app has published a full breakdown of Signal’s operating costs: around $40 million this year, projected to hit $50 million by 2025.
Signal’s president, Meredith Whittaker, says her decision to publish the detailed cost numbers in a blog post for the first time—going well beyond the IRS disclosures legally required of nonprofits—was more than just as a frank appeal for year-end donations. By revealing the price of operating a modern communications service, she says, she wanted to call attention to how competitors pay these same expenses: either by profiting directly from monetizing users’ data or, she argues, by locking users into networks that very often operate with that same corporate surveillance business model.
“By being honest about these costs ourselves, we believe that helps provide a view of the engine of the tech industry, the surveillance business model, that is not always apparent to people,” Whittaker tells WIRED. Running a service like Signal—or WhatsApp or Gmail or Telegram—is, she says, “surprisingly expensive. You may not know that, and there’s a good reason you don’t know that, and it’s because it’s not something that companies who pay those expenses via surveillance want you to know.”
Signal pays $14 million a year in infrastructure costs, for instance, including the price of servers, bandwidth, and storage. It uses about 20 petabytes per year of bandwidth, or 20 million gigabytes, to enable voice and video calling alone, which comes to $1.7 million a year. The biggest chunk of those infrastructure costs, fully $6 million annually, goes to telecom firms to pay for the SMS text messages Signal uses to send registration codes to verify new Signal accounts’ phone numbers. That cost has gone up, Signal says, as telecom firms charge more for those text messages in an effort to offset the shrinking use of SMS in favor of cheaper services like Signal and WhatsApp worldwide.
Another $19 million a year or so out of Signal’s budget pays for its staff. Signal now employs about 50 people, a far larger team than a few years ago. In 2016, Signal had just three full-time employees working in a single room in a coworking space in San Francisco. “People didn’t take vacations,” Whittaker says. “People didn’t get on planes because they didn’t want to be offline if there was an outage or something.” While that skeleton-crew era is over—Whittaker says it wasn’t sustainable for those few overworked staffers—she argues that a team of 50 people is still a tiny number compared to services with similar-sized user bases, which often have thousands of employees.
read more: https://www.wired.com/story/signal-operating-costs/
archive link: https://archive.ph/O5rzD
Now I want to know more about that $6 million annually spent on SMS messages... That seems like a ridiculously unnecessary cost, wonder if some startup can wedge into the market and undercut the competition.
Signal use phone number for account identification. SMS is essential to verify that the phone number you used on your signal account is belong to you. This could be the real motivation for signal's recent attempt to start allowing their users to contact other users using their username instead of phone number.
It wouldn't surprise me if they keep the SMS verification to keep the number of superfluous accounts to a minimum, which would likely greatly exceed the $6m operating costs. I also wonder if that $6m included their now defunct SMS integration, and if that cost has changed at all.
It's also worth noting that while SMS is typically nowadays a free feature, it wasn't always as such. It used to be that users were charged per message, especially in Europe, which is why Europeans tend to rely on messaging services instead of SMS; US carriers made SMS free only maybe 10-15 years ago, and that was only to US based numbers. When you're dealing with many people that are international, such as in the EU, that adds up quickly. SMS is a Telco utility, and they tend to be, er, behind the times as it were. Remember that when you're an internet-based service and you want to interface with a Telco utility, ie via SMS, they charge a tarrif, like a toll road. While Telco utilities are all digital and voip-equivalent based these days, they are still a private network and charge fees to access. And I am now rambling so I'll stop here.
I remember once a girl I was friends with lamenting that someone sent her two text messages when it could've been one, because each one counted against the free quota before you were charged per text.
Yup, the late 90s to mid 00s we're an interesting time
And god forbid special characters
Right, the reason why SMS is used was explained in the excerpt, I'm not asking about that. I guess what I'm curious about is how badly the telecom firms they're purchasing SMS services from are price gouging, and if they are, why there hasn't been a startup in this space
In my country, all carrier here would block bulk SMS sending (and terminate your phone number if they think you abuse it) unless they come from a special short number account (e.g. those with 4 - 5 digits phone number), and those account is not cheap. That's where the telcos made money from sms these days now that ordinary people don't use sms much. They would partner with api providers such as Twillio to setup the account. You can review Twilio international sms pricing for an overview of sms prices across the globe. In my country, it's 50x more expensive than US.
You mean startup for sending SMS? That would have to be a real telco, otherwise it would just be a front that is essentially renting capabilities from an established telco - and it would suffer the same fees/rates as Signal. Either way, really expensive to operate, with no real benefit to show for it.
I mean... yeah. A real telco. I figure it has to be one of a few things:
a) The profit margins baked into existing SMS services are razor-thin and there's no room for a startup to undercut that (unlikely);
b) The monopoly of the existing telcos is thorough enough that they can shut out newcomers;
c) The initial costs of any potential newcomers are great enough that nobody can secure funding;
d) Nobody both wealthy and moral enough has had this idea yet