Senate antitrust panel asks carriers for SMS rate hike explanation

News by Michael Oryl on Wednesday September 10, 2008.

Yesterday the chairman of the U.S. Senate's antitrust panel sent a letter to AT&T, Verizon Wireless, Sprint, and T-Mobile USA asking the four major U.S. carriers for the reasons behind the doubling in the price of text messages that has occurred over the past 3 years. Sen. Herb Kohl, the panel's chairperson, said the following in his letter:

"What is particularly alarming about this industrywide rate increase is that it does not appear to be justified by rising costs in delivering text messages. 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."

 

"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. This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace."

 

The senator has asked the carriers to explain how the costs of text messages have risen, and how they compare with the costs associated with voice calls and email messages. He has asked for a written explanation to be provided to him by the 6th of October.

Wow, the Senate is actually doing some form of work, amazing. Doubt anything will actually come out of this, though. Probably just some finger wagging.

It does come as a complete shock.  Two years ago I was almost certain that text messages were going to be free within a few years.  They certainly haven't gotten more expensive to deal with.

The carriers have seen a huge increase in demand and obviously saw the opportunity for new profits.

I totally agree...nothing will probably ever come of this, but it's good that people are noticing.  Something else I expected was carriers to introduce free text messages with ads.  I imagine lots of people would opt-in for free text messages if they simply had to deal with a small ad displayed above or below the message.

I guess I have a different opinion on this... once the energy supply concerns, wars and health care issues have been worked out then maybe energies can be dedicated to smaller issues.

Text messaging, while helpful, useful and fun for many people, is not a service critical to the economy and everyday lives.  Fuel is, food is, housing is.  As with the fears of prices on satellite radio getting jacked up with the Sirius/XM merger, consumers can simple opt not to use the service.  And while per-message fees have gone up, messaging packages have stayed the same or gotten cheaper.  For example, five years ago did a messaging plan allotment contain multimedia messages?  I don't think so, just text messages.

I don't think the issue rises to the level of US Senate review... this should be handled by consumer advocacy groups or something of that nature.

In my opinion if carriers are jacking up the per-message costs but maintaining and enhancing the value of messaging plans, then consumers have plenty of options.

I think PGens makes some great points, but at the same time, I think I can say with confidence that there was some SERIOUS margin baked in to the $0.50/message that I got charged for the few texts I sent when I was in China.

I am also surprised they aren't free.

Does anybody know how the behind-the-scenes billing works for carriers with text messages? I would figure that someone would make an unlimited plan and throw it into the price of the normal plan, but as it stands today all the unlimited plans are $15 or more. Maybe they can't because they'd be eaten alive by inter-carrier fees?

My SERO plan has free unlimited text messaging (w/o an additional fee), but that's a bit of an exception given what it is.