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Do Text Messages Cost Too Much?

A key lawmaker and a consumer group are pressuring wireless carriers to explain why prices for text messages have doubled in the last three years as the technology has surged in popularity over the same period.

Sen. Herb Kohl (D-Wis.), chairman of the Judiciary Subcommittee, sent a letter earlier this week to the largest wireless carriers demanding answers for why they've raised their prices for individual text messages outside of flat-rate monthly data plans to 20 cents from 10 cents since 2005. The increases aren't justified, he said, given the lower operational costs to the carrier to send the short code messages.

"It appears that each of (the) companies has changed the price for text messaging at nearly the same time, with identical price increases," Kohl wrote in the letter. "This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace."

He asked the Chief Executives of Verizon, AT&T, Sprint Nextel and T-Mobile to report by Oct. 6 how much its costs them to send text messages compared to how much they've charged their customers over the last three years.

Verizon Wireless spokesman Jeffrey Nelson said the company is reviewing Kohl's letter and plans to respond to him directly.

He said that the cost of text messages is declining, however, because of monthly flat-rate plans that allow, for example, unlimited text messages.

"A teenager can easily send and receive hundreds of text a day - with our $20 unlimited plan (per month) that's fractions of a penny per message," Nelson said.

Consumers Union sent letters to heads of the Senate Commerce Committee and Judiciary Subcommittee to investigate the texting price increases and whether they are the result of a consolidating industry and less competition.

The group said that 600 text messages contain less data than a 1 minute phone call. It said that at 20 cents a text message, wireless carriers would collect $120 for 600 messages.

"Does $120 for the equivalent of one minute of voice seem reasonable?" the group wrote in the letters. "Or do these usurious rates evidence an extraordinary amount of market power?"

The two largest wireless carriers - AT&T and Verizon Wireless - have a combined subscriber base that is two times as large as the number of subscribers for T-Mobile and Sprint Nextel. Their leads in the wireless industry was strengthened earlier this year after they bought up the most spectrum in an auction by the Federal Communications Commission. The auction was for valuable wireless airwaves that can penetrate walls and other obstructions. Verizon also announced its purchase of regional carrier Alltel for $28 billion, which is under regulatory review by the Department of Justice and Federal Communications Commission.

Just how popular has texting become? CTIA released a study this week that showed the number of texts sent in June rose 10-fold to 75 billion messages from the same month three years ago.

By Cecilia Kang  |  September 11, 2008; 4:28 PM ET  | Category:  Cecilia Kang
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"CTIA released a study this week that showed the number of texts sent in June rose 10-fold to 75 billion messages from the same month three years ago."

==================

Sorry, that was my son. I asked him to slow down. Normal service should return shortly...

Posted by: JkR | September 11, 2008 5:09 PM

Lets not forget that it is a double collection because most of the carriers charge 20 cents outgoing and then another 20 cents on the receiving end. Which means you get charged for spam (Why should I have to pay for a text plan to protect myself from spam? Also, why do I need to pay for text, data, and photo messages when I just want more minutes for a phone?)

I dropped AT&T for this very reason. They sell special 5 digit numbers for advertisers and then charge me for them to spam my phone. When I requested the 5 digit numbers be blocked, mysteriously they didn't have the ability.

Posted by: Michael | September 11, 2008 6:08 PM

I've been griping about this text charging problem for a while. When a text message has less data than a tenth of a second of voice, there is something horribly wrong. A 400 minute anytime plan converted to text charges would be $12,000 if text charges were an indication of what data costs on the network. Most people have a plan like that, except it's nowhere near 12k per month. The fact that all the providers are charging in lock step screams oligopoly to me. This is like sitting on an ocean of fresh water (effectively unlimited) and charging $1 per fluid ounce for it.
People complain about oil companies having the highest profit margins, but I would love to see the profit margin on a text message.

Posted by: TheDoctor | September 11, 2008 6:43 PM

What needs to be realized is that text messages are sent on the same carrier signal as regular phone calls, yet they aren't sent until there is bandwidth available on the carrier signal to do so. In other words, text messages never take up bandwidth when there isn't some to spare, so it virtually costs the companies nothing to send them.

Complete price gauging.

Posted by: Michael Strickland | September 11, 2008 6:53 PM

The companies are realizing that texting is becoming the main source of communication. Since they charge by the minute for talking and people are texting, they are going to reduce the cost for talking and make it more expensive to text.

Posted by: Brent T. | September 11, 2008 7:15 PM

Texting cost so much because its a HUGE income for Wireless companies. I'm a teen and don't text. My friends text. My one friend pays $5 for 500 texts from Verizon or something like that. But, from spam his freinds go over the 500 texts a month. One month he got a $100+ bill for texting because he received a lot of texts. Now hes broke because his friends texted him too much. Texting is the cash cow for Wireless companies now. Not going over minuets.

Posted by: Andrei | September 11, 2008 7:22 PM

In other countries, text messaging is a lot cheaper compared to voice calls. Also, you don't get charge for incoming text, only outgoing. So why can't they do it here?

Posted by: PG | September 11, 2008 7:52 PM

The US should get it together like in Japan. We only send emails to each other from phones and to and from computers and it costs 0.1 cent about and you don't need a special plan for it. I never get spam, although it is out there. It is nice to send emails to my family in CA from anywhere I want for nothing.

I think this would be a nice service to have, but the companies will surely lose money.

Posted by: Ted | September 11, 2008 8:14 PM

This seems exactly like price fixing to me. But if they get fined then the consumer is going to end up paying for that as well. They rip us off once and then do it again but when they hike the prices to cover the cost of fines they'll never go back down.

Posted by: Mason | September 11, 2008 9:14 PM

I've always thought it's bogus that I get charged for receiving messages. Messages someone has already paid to send.

The postal service doesn't charge me $0.42 to get a letter from my mailbox. More over, the postal service doesn't charge me $0.42 for mail, whether I want it or not.

Paying for unlimited texting is cheaper than allowing my friends to bump me over my plan.

Posted by: Adam | September 11, 2008 9:52 PM

Umm so we trying to figure this out what about gas prices??????

Posted by: Jeezer | September 11, 2008 10:57 PM

I am currently living in Japan, and the text based rates are actually on "packets" or data throughput (bandwidth) than just plain texts. Here, it seems that the opposite is just the same here. Every plan has some sort of unlimited or confined (meaning, if you send say 70 dollars worth of packets, but you have the 40 dollar confined deal, it makes the bill reduced to 40 and not 70+) texting plan here, but you select the individual talking (i.e. minutes) plan which can be expensive if you run over. Japan is known for being a country that is nearly exclusive in texting only and the plans reflect that. I don't think the US can adopt the "confined" plan, but I think it's acceptable to have unlimited text plans at reasonable prices as the US catches up with Japan in cellphones.

Posted by: Sandman | September 11, 2008 11:29 PM

Txt msg cost is only 2 cents in my country without monthly plans. It's normal cost our communication campanies. However, some people argue that it's not cheap. I think, cost is too expensive in ur country.

Posted by: Foreiner | September 12, 2008 1:10 AM

www.techspank.com has a funny, scathing commentary on the Text Messaging pricing absurdity. Why we can't have a cheap and sensible system as is used in Europe is beyond me, and this certainly smacks of price gauging.

Posted by: Ian | September 12, 2008 1:35 AM

What in Sam Hill is wrong with people? Why text when you can talk? Most phones have a thing called 'voice mail' that will receive a message if the recipient is not able to talk at the time.

Also, parents should police their children who use these phones. Limit their minutes, their text messaging (if not cut it off entirely), and make the children actually talk face to face with their friends. It's what everyone did just 15 to 20 years ago. Enough of this cell phone talking and texting when the idiot children are within eyeball range of each other.

Cells phones are NOT a right, but a privilege, people. If you get a phone bill larger than you expect and/or if the child gets a phone bill larger than they can afford, change the phone usage.

Posted by: Critter69 | September 12, 2008 4:11 AM

I just went over my text limit and got charged an extra 34.00 for going over my 500 minute plan with Verizon... Hows that for getting screwed? Its simple they know people are texting like crazy and unless you get unlimited texts... they are going to gouge you... its just like the minutes deal back in the day... you just have to set your plan accordingly... its like insurance... you have to pay for it but you'll never use it... get the unlimited plan for mins and text... and just abuse them... yeah your gonna pay extra...it sux... but cell phones suck... they have 100% market share... they can do whatever the F888 they want! what are you going to do about it? Use a land line? HAH

Posted by: James | September 12, 2008 8:58 AM

Why not just stop texting?

Posted by: Oleg | September 12, 2008 10:17 AM

If texting costs too much, why not just stop doing it? Sending text messages is not a right...

Posted by: Guy | September 12, 2008 10:33 AM

Oleg and Critter69 got the right points. If you are going to text, stop complaining when you go overboard. It is just so simple to find something else to blame. Companies are here to make $$. While they may be price fixing, this service is NOT something you can't live without. Nobody is forcing you to use it. It is a cell PHONE after all.

Control your kid's usage. Find out how much it cost to text. Get unlimited plan if you HAVE TO. Didn't know it's going to cost so much is not an excuse.

The text spam is a different problem all together though. I do receive them from time to time, but the most i've received in a month is may be 3. I have Sprint/Nextel.

Posted by: carcar123 | September 12, 2008 10:35 AM

When we started with Verizon it was 10 cents to send and 2 cents to receive. Now I think it is about 20 or 25 cents to either send or receive if you aren't in a plan (and you need a plan per phone - you can't get a family plan unlike message minutes). The text spam cost is absolutely insulting. Once, when I called to complain about receiving a spam message they gave me a courtesy credit and said there is nothing they could do about it except blocking all text messages.

Posted by: Neil Ottenstein | September 12, 2008 11:19 AM

I wouldn't mind being charged a minute per text message that I send and 0 charge for received messages.

Posted by: PriceGaugeVictim | September 12, 2008 11:22 AM

Heres an Idea. How about you DON'T text at all. Why spend half an hour texting back and forth when you could call them and talk for 5 minutes. Everyone here already said its cheaper to call them.

Posted by: ninja | September 12, 2008 12:21 PM

Have no fear. Text will die soon. We will just email from our smart phones like you would when you are at your computer. (or if you must, Instant Message)

Posted by: Anonymous | September 12, 2008 12:40 PM

I will say that texting prices are rediculous...how about data usage charges? Thats even more horrible.

Posted by: Patrick Alexson | September 12, 2008 1:31 PM

Sounds like its time for a MASSIVE class action lawsuit!!

Posted by: blank | September 12, 2008 1:41 PM

Let the market decide how much a text should cost. If they are selling messages for 20 cents then they are worth 20 cents. Next our lawmakers we will be pushing for a windfall profit tax on text messages.

Posted by: John | September 12, 2008 1:50 PM

The market has already decided text rates are overpriced. Their customer service is iffy (not the network quality), but Virgin Mobile US offers a QWERTY phone which runs for under $100 with NO contract. You can get a 1000 messages ( text or email) for $5 per month, or unlimited for $10. No additional data plan fees apply and because there's no contract, you can change plans anytime without fees. As usual, our reps in govt are pursuing costly solutions which will be available after the problem is already solved.

Posted by: rob | September 12, 2008 3:40 PM

rob, you're right on point. Let the market deside and keep Government out of our business.

Bottom line, if you don't like the service then switch. A cell phone provider is here to make money, just as any business out there. You cannot blame them for practicing capitalism, after all thats the best system out there. As someone from the former soviet union i am happy to see capitalism and free market at work. If you do not like the service, switch to the one you like. If one isnt available, start one yourself.

Posted by: Oleg | September 12, 2008 4:21 PM

If all you have to say are a few words, dial the number, say them, and hang up.

Posted by: Tom Truth | September 13, 2008 10:31 AM

Yeah I got nailed one month for $75 for going over my plan - it reminded my of the good old cell phone days when calls where like .5 a minute. The phone companies are using an old tactic to make more money.

Posted by: Alex | September 13, 2008 2:48 PM

I love the people that say just don't text. I'd like to know why i can't get rollover texts if i don't use my limit. I can only wish.

Posted by: Jay | September 13, 2008 2:50 PM

Somewhat related : I received a Domestic - Picture/Video message from (some number) @mm4.inphomatch.com
this week. I have no idea where that came from, but I have sent Verizon a customer service email to complain about it. Every time I receive a text or picture/video message from someone I don't know I am going to complain. Maybe one day Verizon will get the message that they shouldn't be charging people to receive things they don't want.

Posted by: Neil Ottenstein | September 13, 2008 5:13 PM

It's actually cheaper to communicate with the voyager spacecraft, than it is to text your best friend.

So. Use a wireless ethernet hotspot, and use Instant messaging. That's FREE !

Posted by: Jay R | September 13, 2008 6:47 PM

"A teenager can easily send and receive hundreds of text a day - with our $20 unlimited plan (per month) that's fractions of a penny per message," Nelson said.

I think I see part of the problem. Verizon et al are bad at math. $20 = 2000 pennys guys, so you would have to send/receive more than 2000 text messages for the price to drop to "fractions of a penny".

As a retired telco employee I know very well how little bandwidth is used by a text message compared to a minute of voice, yet as stated above the cost per byte of text far exceeds the cost per byte of voice calls. Just in case you don't know all connections between cell towers, land lines, and the swithcing equipment that severs them has been digital for decades.

Textings main advantage is that is more reliable in weak signal areas. It provides a much more reliable message service than pagers, yet there are still lots of people using pagers.

Lessson? People are slow to learn when they are being hosed! The market will take care of this problem in due time. But the more we spread the word, the faster it will get fixed.

Oops, was that more than 160 characters?
My bad!

Posted by: Ron | September 13, 2008 9:46 PM

I'm simply amazed by those saying "let the market decide." I'm sorry, but do you not comprehend when you read?

The article clearly talks about the fact that the cell phone providers are basically a monopoly now, and practically government protected at that. If we're going to support such large corporations to handle our communication then some government oversight is to be expected when price gouging is suspected.

Posted by: Mike | September 14, 2008 3:23 PM

According to Leo LaPorte "The Tech Guy on KFI", Doubling the price from .10 cents to .20 cents means users who text, are paying $140 per Megabyte, much more than the actual cost of the bandwidth to the phone companies.

Time for some outrage, people!

Posted by: Jonathan | September 15, 2008 9:32 AM

One WEB-site I came across recently made the claim that SMS (Short Message Service) revenues worldwide was upwards of $100B. The author of this claim went on to state that this revenue was bigger than a number of other entertainment venues (he included DVD rentals and music).

A little here .. a little there .. and pretty soon .. we're talking serious money.

Posted by: wmartin46 | September 15, 2008 9:46 AM

Yes, the US is the world's most expensive markets. The carriers charge .20 to receive and .20 to send. Even in expensive markets like Australia (.22 AUD), UK ( 10p), Netherlands (.18 Euro) - no market charges to receive text messages. All countries have cheaper plans, if you buy monthly unlimted capped plans.

The real crime the US carriers is commiting is allowing free email spammers access to their gateways. So a spammer will send a free email to cellnumber@operator.com, and try all five carriers. THe spammer doesnt get charged but the recipient. THIS IS A CRIME AND THEY SHOUD SHUT THESE FREE EMAIL GATEWAYS DOWN.

Posted by: Tom Sheahan | September 17, 2008 12:43 AM

Not according to state judges who give authorization to SPAM mailers to dump millions and billions of non-tracable emails into your personal email boxes.

Didn't you know that your personal property, and its connection to the electronic highway is "FREE". And its the solemn duty of SPAM mailers to completely overload the internet with worthless, pieces of non-solicited junk, just to peeve off the receipent.
Thanks a load judges you really help the public.
The SPAM sender is nothing more than that annoying evening time telephone caller who was trying to sell you something. The "auto-dialer" with the recorded message, who you told to stuff it. Many states enacted laws to remove personal telephone numbers from these outfits, only now to resurface as SPAM mailers.
Now the judges are going to give free access to your home PC and ISP to the SPAM sender, who doesn't have a block on them, so now millions of non-traceable emails are going to rain in on your home email accounts, with no way to stop them.

Posted by: Less1leg | September 17, 2008 10:27 AM

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