Source: Tom's Guide | Keywords: SMS, charges, senate | Themes: Smartphones, Business
The 100 percent increase in the cost of sending an SMS text message over the past three years has been called into question by the chair of the Antitrust Subcommittee in the Senate Judiciary Committee.
"I am concerned with whether this market consolidation, and increased market power by the major carriers, has contributed to this doubling of text messaging rates over the last three years," the Chair, Senator Herb Kohl said in his letter to AT&T, Sprint, T-Mobile and Verizon Wireless regarding the price hikes.
Since 2005 the price of a text message has increased across the board from 10 cents to 20 cents a text, with only four companies serving 90 percent of the U.S. market – down from six, with carriers continuing to make local acquisitions and eat up more of the market share.
"Some industry experts contend that these increased rates do not appear to be justified by any increases in the costs associated with text messaging services, but may instead be a reflection of a decrease in competition, and an increase in market power, among your four companies," he wrote.
Text messaging has taken off in the U.S. at a slower pace than in other markets, particularly Europe where SMS messaging is the most mature and outstrips traditional calls as a percentage of mobile phone usage amongst many market segments.
"Also of concern is that it appears that each of companies has changed the price for text messaging at nearly the same time, with identical price increases," he wrote. "This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace."
Sprint was the first to raise the price of a text message to 20 cents in the fall of last year, with the remaining carriers also raising their prices shortly after. Kohl has asked the four carriers to explain this, and the differences in pricing and service offerings they are competing against.
He also asked for data on the utilization of text messaging from 2005 to 2008. He gave the companies till October 6 to respond.
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Well, have they factored in inflation? Today's 20 cents are worth less than 10 cents were 2 years ago.
That being said I also wondered why text charges went up, MMS charges are completely through the roof too. How much is an SMS charge in europe?
How is this a problem? Doesn't every US carrier offer unlimited SMS and MMS messaging?
Unlimited costs more, I don't pay it because I never use more than a couple texts a month on my personal phone. I'd rather pay 20 cents for a few messages, even though it's extortion, than $5 a month (25 messages worth) and only use $1.20. I can call anyone I know with a Verizon phone (everyone I care to talk to has them anyway) for free any time!
The carriers are taking advantage of the fact that kids and most adults don't seem to realize the value of money "oh, it's only 20 cents, that's nothing". Stupid consumers lead to higher prices, it's a simple fact.
Considering the extreme cost of wireless service to begin with, texting and internet should be included anyway; without the additional cost. But then the companies couldn't line their pockets enough to own 4 houses each!
Same thing with the music services, $15 a month is a lot for those services. It's a convenience vs cost issue and most people are too stupid to realize how much money they loose on conveniences.
FanCarolina, the increase in txt rate is so that users will be extorted into spending more money on the texting plans.
Not everyone needs 200, 500, or unlimited. Some people just need 10. That's now $2 to send 10 messages.
I don't understand how sending a few dozen characters over a cell network can justify charging 20 cents. The cell companies should just be happy that you aren't actually calling the person as one second of voice communication is way more data than any text message.
Oh, and @Niva, I hope you're joking (otherwise you're an idiot).
@Niva: Yes, inflation is a problem but 20 cents today would be worth about 18 cents in 2006, not "less than 10 cents two years ago".
And I have to agree with gm0n3y, in that I don't understand why a text message costs so much, as from a data standpoint they are smaller and don't have to be sent in "real time."
About the only reasons I could think of would be start up costs or significant market forces. The former fails because text messages have been around for years and pretty much every carrier supports it. The latter fails because, as I already said, pretty much every carrier supports it and has for years.
Collusion, or greedy apathy seem to be the most obvious reasons for the cost. However, we are not experts nor very knowledgeable of the details so we may be missing some piece of the puzzle.
Exactly, the free market should have carriers cutting rates to try and entice new customers to switch over to them. This is a case of pure greed via anti-competitive price fixing.