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.
September 11, 2008; 4:28 PM ET
Previous: Will 'White Space' Devices Cause Problems for Cable Watchers? | Next: Web Users Hate Targeted Online Ads, But That's Not Stopping Them
Get This Widget >>
Blogs That Reference This Entry
TrackBack URL for this entry:
Please email us to report offensive comments.
Posted by: JkR | September 11, 2008 5:09 PM
Posted by: Michael | September 11, 2008 6:08 PM
Posted by: TheDoctor | September 11, 2008 6:43 PM
Posted by: Michael Strickland | September 11, 2008 6:53 PM
Posted by: Brent T. | September 11, 2008 7:15 PM
Posted by: Andrei | September 11, 2008 7:22 PM
Posted by: PG | September 11, 2008 7:52 PM
Posted by: Ted | September 11, 2008 8:14 PM
Posted by: Mason | September 11, 2008 9:14 PM
Posted by: Adam | September 11, 2008 9:52 PM
Posted by: Jeezer | September 11, 2008 10:57 PM
Posted by: Sandman | September 11, 2008 11:29 PM
Posted by: Foreiner | September 12, 2008 1:10 AM
Posted by: Ian | September 12, 2008 1:35 AM
Posted by: Critter69 | September 12, 2008 4:11 AM
Posted by: James | September 12, 2008 8:58 AM
Posted by: Oleg | September 12, 2008 10:17 AM
Posted by: Guy | September 12, 2008 10:33 AM
Posted by: carcar123 | September 12, 2008 10:35 AM
Posted by: Neil Ottenstein | September 12, 2008 11:19 AM
Posted by: PriceGaugeVictim | September 12, 2008 11:22 AM
Posted by: ninja | September 12, 2008 12:21 PM
Posted by: Anonymous | September 12, 2008 12:40 PM
Posted by: Patrick Alexson | September 12, 2008 1:31 PM
Posted by: blank | September 12, 2008 1:41 PM
Posted by: John | September 12, 2008 1:50 PM
Posted by: rob | September 12, 2008 3:40 PM
Posted by: Oleg | September 12, 2008 4:21 PM
Posted by: Tom Truth | September 13, 2008 10:31 AM
Posted by: Alex | September 13, 2008 2:48 PM
Posted by: Jay | September 13, 2008 2:50 PM
Posted by: Neil Ottenstein | September 13, 2008 5:13 PM
Posted by: Jay R | September 13, 2008 6:47 PM
Posted by: Ron | September 13, 2008 9:46 PM
Posted by: Mike | September 14, 2008 3:23 PM
Posted by: Jonathan | September 15, 2008 9:32 AM
Posted by: wmartin46 | September 15, 2008 9:46 AM
Posted by: Tom Sheahan | September 17, 2008 12:43 AM
Posted by: Less1leg | September 17, 2008 10:27 AM
The comments to this entry are closed.