Cell Phone Execs Will Face Questions On Text Messaging Price Hikes

Text Messaging Prices Going Up. Photo: NEWS JUNKIE

Text Messaging Has Gone Up. Photo: NEWS JUNKIE

Those cell phone companies will have a lot of explaining to do Tuesday when they testify at a U.S. Senate committee hearing on rising text messaging costs. Representatives from Verizon, AT&T, and Cricket will be faced with questions on why those short 160 character SMS messages are costing the consumer too much.

Last September, U.S. Senator Herb Kohl of (D-Wisconsin) chairman of the Senate Antitrust Subcommittee expressed his concerns that the big cell phone companies may be taking advantage of consumers by upping the price of text messages in cell phone plans. He sent a letter to AT&T, Verizon, Sprint, and T-Mobile:

“Text messaging files are very small, as the size of text messages are generally limited to 160 characters per message, and therefore cost carriers very little to transmit,” Kohl wrote in his letter. “What is particularly alarming about this industry-wide rate increase is that it does not appear to be justified by rising costs in delivering text messages.”

Over the last few years, telephone companies have been hiking up the price for text messages from as little as one-cent per message to 25-cents or more depending if the text is plain text or a multimedia text with photo, video, or audio.

Text messaging can be cheaper if consumers add them as part of their cell phone plans. T-Mobile for example charges $19.95 extra a month for unlimited text messaging with most plans. But for consumers who opt to not bundle text messaging in their cell plans, they’re stuck paying steep charges for sending and receiving text messages.

According to a report by Information Week in September:

Kohl noted that Sprint doubled the rate of its text messages [in the fall 2007] and that the other three large cell phone service providers quickly followed suit. “It appears that each of (the) companies has changed the price for text messaging at nearly the same time, with identical price increases,” he wrote in his letter to the companies. “This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”

Text messaging use in the United States has increased from 17 billion text messages in 2000, to 500 billion in 2004. Microblogging sites like Twitter which reach users by cell phone and web may possibly had an impact in increasing text message use even more in the past two years.

Senator Kohl is not going to be easy on the cell phone executives given his calls to toast GM and Chrysler executives earlier this month for consumer concerns that dealerships weren’t getting any help from the automakers.

Advocates with the Consumers Union have raised complaints to Congress about the unregulated cell phone industry. Joel Kelsey, a policy analyst, with that organization will also be at the hearing on behalf of US consumers, testifying before the committee. Here is an except from the Consumer Union’s website about rising phone bills:

What’s at stake is your phone bill. The average price of telephone service for residential customers in urban areas increased to $24.75 per month in 2003, a jump of more than $4 in just three years. We’re not getting more service for our money, just more add-on fees and surcharges. Consumers can expect to see continued price increases, due to the failure of public policy to promote robust competition, and proposed changes at the state and federal levels that will result in new price increases of several more dollars per month.


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  • Cell Phone Companies Defend Price Hikes On Text Messaging
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    84 Responses to Cell Phone Execs Will Face Questions On Text Messaging Price Hikes

    1. -1 Vote -1 Vote +1Your Neighborhood Cellphone Associate
      June 16, 2009 at 5:22 pm

      It never ceases to amaze me what people feel is referred to as *free*, or that if something is not tangible they certainly shouldn’t have to pay for it. But we pay for electricity, we pay for cable, we pay for water… something that falls from the sky no less.

      You pay for these things for the same reason we pay for text messaging. While that data sent from me to you seems like free… the technology for it to get there…. has to come from somewhere. It is not cheap to put up new cell towers to improve proper data flow so everyone’s “expensive” texts aren’t jammed in switches. And things can’t last forever… maintenance is required at some point.
      It ensures that the company can invest money in further data services, keep your minute monthly rates down, and actually for the most part… not charge you more than you need to be paying.

      The problem with arguing about “the cost” of text messaging is that rarely can people see the big picture. Cell companies aren’t out to get you, trust me…

      If you really are concerned about people being price gouged and no freedom to do anything about it. Consider companies that charge upwards of 50 dollars for dial up internet in rural areas while at the same time prevent other companies from entering the area. These are the types of situations Herbert Kohl should be worrying about in his state.

      Cellphone companies don’t require you to text so just like minutes, or a fancy phone, or anything really… if you have no demand for it. don’t buy it.

      • +1 Vote -1 Vote +1Eric V.
        June 16, 2009 at 5:45 pm

        You must be some kind of shill.

        Its not an issue of whether a cost is justified. Its the ridiculous and obvious gouging. I pay $20 extra on my plan for unlimited data for the iphone, I can visit as many websites as I want, email as many people as I want with as many attachments as a desktop computer, I can upload photos all day long to flickr if I want.

        UNLIMITED data…but text messages cost extra.

      • Vote -1 Vote +1whatever
        June 16, 2009 at 11:49 pm

        He’s a moron and a liar.

        Text Messages Cost Carriers Nothing

    2. -2 Vote -1 Vote +1another shill
      June 16, 2009 at 6:54 pm

      actually, iphone data is $30/month. and with your $20 text plan you can send hundreds, if not thousands, of text messages every single month… so, um, those are unlimited too. i’m missing your point Eric. Yet another case of America’s entitlement culture. you do realize that $1 large soda @ mcdonald’s costs all of a few pennies, right? and that water comes out of your faucet virtually for free, and doesn’t need to be bought in bottles? stupid companies, wanting to make money and stuff. how dare they.

      • +1 Vote -1 Vote +1Shill Killer
        June 16, 2009 at 8:21 pm

        The point is, they are giving us unlimited data for $30, then charging us $1,310 per megabyte? It’s extortion.

      • +1 Vote -1 Vote +1ludwigk
        June 18, 2009 at 5:45 pm

        But those text messages cost NOTHING to carriers. If you have the requisite infrastructure to take and send calls, the ability to send/receive texts comes along at no additional cost.

        Here’s another breakdown (texting costs for iPhone with ATnT):

        No texting plan: $.20 per text = $1310.72/ MB sent
        200 texts: $.025 per text = $163.84 / MB sent
        1500 texts: $.01 per text = $65.53 / MB sent

        Cost for NASA to send and receive data from the Hubble Telescope:

        $17.23 / MB

        So somehow we can send and receive data from the DEPTHS OF SPACE for about 1/4 the price of the cheapest price-per-text tier ATnT offers, and you can’t even use the iPhone in space!

    3. -1 Vote -1 Vote +1Dan S.
      June 16, 2009 at 6:56 pm

      I’m sick and tired of people whining that everything must be regulated. That’s capitalism, and the government shouldn’t be determining how much profit a company can or cannot make. The fact is, if the price is over the top, people will stop using the service. If you can’t afford it, write a letter. That’s still 44 cents.

      • +1 Vote -1 Vote +1Realist
        June 16, 2009 at 9:30 pm

        “That’s capitalism” – well yeah, but capitalism is self-defeating when companies become large enough to price-fix a particular good or service, so it’s not a very good defense.

    4. Vote -1 Vote +1ChessTechnique
      June 16, 2009 at 9:19 pm

      Cell phone bills in general are too much. However if people are still willing to pay those high prices the companies will continue to charge at those high prices. Either way, I like to play chess via text using algebraic notation.

    5. Vote -1 Vote +1Dwayne
      June 17, 2009 at 4:17 am

      The thing is, those same companies are using the inflated costs of (out-of-plan) texts to scare people into taking larger plans than they actually need.

      They have increased the cost of texting up to 20c per text in some cases, yet it is well known that the actual data costs less than a penny to send. As an example: I have a Tracfone StraightTalk PREPAID plan. 1000 minutes, 1000 texts, 30mb data for $30. This is a prepaid provider giving me a deal of say, 2c per minute talk and 1c per text. Data free. Now THAT is more fair while they are still obviously making money.

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