This week, Senator Herb Kohl (D-WI) asked the top wireless carriers—AT&T, Verizon Wireless, Sprint, and T-Mobile—to explain why they doubled the cost of sending text messages over the past 3 years. They have until October 6th to respond.
The similar price increases, coming at similar times, Kohl said, “is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”
Kohl noted in the letter that the top four carriers combined have over 90 percent of the U.S. market, and wants the carriers to provide information on
- how their pricing structures differ from their competitors;
- the factors that led to their decision to raise prices;
- a comparison of text message pricing to other wireless service pricing;
- the utilization of text messaging over the past three years.
“Congress questions high cost of texting” [Cnet: The Iconoclast] (Thanks to Brett!)
(Photo: Getty)
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Good. It costs me $1 now for a quick message & response with my wife now. There’s not reason for that.
@Diet-Orange-Soda: “Good. It costs me $1 now for a quick message & response with my wife now. There’s not reason for that.”
Why not use that regular phone plan, that’s probably “free” between your family members, and not incure ANY extra cost? The IM and texting mania is lost on me. It’s amazing to me what people consider “necessities” these days, and then complain when the companies screw them over for that “necessity” (cable, satellite, cell phones).
IF people didn’t text, talk, watch so much I bet there’d be LOTS of price reductions and competition.
AMEN!!
It costs 4.4 times more per byte to send a text message than it does to send/receive data from the Hubble telescope. Justify that!
[thelede.blogs.nytimes.com]
@Colage: I’m not sure if texting is a luxury. I guess its how you define luxury.
For most people, texting is for situations where you cannot talk with someone, but requires a quick response.
Oh how I long for blissful days, way back in the the early 00s, when a text-message was a nickel.
Can someone explain to me why I can have 750 minutes a month to talk for 39.99 and yet, text, which I would imagine uses less bandwidth that a phone call costs 15 cents per text ?
This is why I turned text off on our phones. I got tired of paying for text from friends saying ” Whats up? ” and having to pay for it.
@AMetamorphosis: Because American customers like to text and companies know American customers will pay that amount per month, usually without questioning it.
@AMetamorphosis: An SMS message is 140 bytes of data, tiny by most measures.
@ludwigk
As a matter of comparison, I used my phone’s (Razr) mobile browser to access m.GMail.com and read one email. Since I’m not on a data plan, it costs me $.01 per KB transferred. I did nothing else on the browser and it logged ~88KB transferred, costing $.88.
I have no point to this…just wanted to see how it stacks up, penny-for-penny, as it were.
true…. 20cents/txt message if u dont have a plan or go over is outrageous…
but then how would AT&T pay their CEO millions a year?
I really think this is an “only in the Americas” thing. Text messaging in most other countries are relatively dirt cheap (and in many, receiving messages are always free).
Only in the United States, making voice calls are actually cheaper than texting in some cases. (In my case, it is relatively cheaper to call than to text!)
—
This is probably a drafted answer by the cell phone companies filed in a “Do Not Send to Congressmen” box:
(Note: Please take it in part seriousness and part jest.)
Dear Senator Kohl and members of the Congress,
We are raising text messaging prices because we can. We’re a tight knit group here in our industry and all thanks to you, we’re getting even cozier. We also know that all you finger-sucking bunch can’t do a thing about it, especially if you care about funding and re-election. Some of you are too lazy to bothered about doing anything anyway.
So, if y’all care about next year, we suggest that you drop this and do whatever we say.
@azntg: Yep, it is. The idea that people are charged to RECEIVE a text is just completely unbelievable. Shit, being charged to receive calls is just as bad.
I paid a £20 one off payment about 8 years ago, which gave me 5 free texts per day, for LIFE. So far, if I used all those texts, they’ve cost me 1/1000th of a penny each. And I’ll keep getting them for as long as Orange exists. I don’t think there’s a plan in the UK that doesn’t include texts, and many are unlimited.
@azntg: Kohl is the former owner of Kohl’s Department stores and the late Kohl’s Food Stores. He also owns the Milwaukee Bucks. He isn’t worried about getting campaign contributions, trust me…
I use US Cellular (a midwest company) that doesn’t charge for incoming text or pictures… as it should be. I’d get pretty danged mad if my cellular company tried charging me for something I did request…
Um, because people are willing to pay it? Duh.
Text messaging is a cash cow. It is what makes cheaper voice plans & free nights and weekends possible.
If people start to text significantly less, than the price will go down.
@esd2020:
“Text messaging is a cash cow. It is what makes cheaper voice plans & free nights and weekends possible.”
Free nights and weekends, and as cheap, and sometimes cheaper voice plans, existed before most people knew they could text message.
I want one of the “Bells” to have text messaging only. I hate talking on the phone and voice mail. I am very interested in “Text only”
@Mfalconieri: Hmm, text only. Wasn’t that called email at one time?
Just had a discussion about texting with the neighbors tonight. Our conclusion is that it’s glorified note passing. What could be so important that it couldn’t wait until you got to a time and place where you could call, or email someone? Plus those T9 keyboards or those itsy bitsy Qwerty keyboards are just a joke.
I say keep the prices high. You’re subsidizing those of us who don’t use it.
eh, the American people didn’t decrease usage when prices went up. Don’t know why the government thinks they can control text message prices.
I would respond to senator with “Because.”
@Bladefist:
You’re kidding me, right?
Oh, gee, I don’t know why they should justify the cost.
Perhaps because they get massive subsidies and infrastructure right-of-ways, and all sorts of other privileges thanks to the government.
This debate is very similar to net neutrality…
In exchange for that, there is a presumption that they should act in the public good, or at least not outright swindle the public by charging unjustifiable rates for text messages.
And if you don’t like it, you can start your own cell phone company OH NO WAIT YOU CAN’T!
@Bladefist: and the Senator would reply with “Antitrust suit”.
Viva the free market, eh Blade? Deregulators make me sick. Thanks so much for Enron.
they do it because they can get away with it.
I’d say its to offset the rising costs of oil. Oh wait a min…
@LiquidGravity: No, no, wait… your on to something there.
It’s to offset the rising price of oil that you choose to do nothing about. Sure you have hearings and meetings… but to what end? Nothing, as usual. Therefore, we choose to raise prices on texting, because what’s going to happen to us? Sure, we’ll have hearings and meetings, but nothing will happen, as usual.
Golf game still at 2PM, tomorrow?
Regards,
-Insert Wireless Service Provider CEO here-
@LiquidGravity: It may be in a very very small part. They do, after all, still have to pay technicians to go out and install new towers and maintenance, and the shipping costs of the parts for these towers.. Plus, the rising cost of the electronic equipment they use to install, troubleshoot, and ensure quality of service on these towers… ( I work for a company that sells Test Equipment, and let me tell you it ain’t cheap )
But this does not justify them doubling the rate on pure DATA. Just possibly one of the reasons they raised the prices in the first place, offset with pure greed, and you have your answer.
I have that unlimited everything plan. It’s nice to not have to worry.
On the bright side:
I will say that the ever increasing text messaging fees increases allowed me to get out of a contract with Verizon for ” Material Advese Affect ” ( Thank you Consumerist ! )
Because technology is much better and the microchip is much smaller it takes more time and energy for the phone to “find” the text inside the tiny little chip. And since the little hamsters inside the phone have to run harder inside the phone, it costs more to feed them to keep up with their metabolism. That is how they can justify higher charges.
Oh, and if your interested, I got a killer mortgage rate on financing a big red bridge in San Francisco, if your looking for a good long term investment.
@Johnyalamo: The bridge is not red. It is “International Orange“
Why I know this, I dunno…
Quick, deregulate the industry! Prices will magically…
Oh, what, we already deregulated the fuck out of this industry and prices keep going up?
Oh.
@twophrasebark: spot on.
As if this is going to matter really. Someone will get paid off and this will be swept under the rug until some other state official wants to come milk some more lobbyist money outta the telecoms.
I’m feeling way negative today.
I pay .01 per text. I have a $5 plan for 500 text messages. Really the rate only hurts the few people who don’t have a text plan and send 2 per month.
@Bladefist: Good for you.
It’s about time Congress did something! God forbid people stop texting when prices get too high.
dEr Congress, We cn do WE d fuK we wnt. lov, d ppl hu funded yr Fkng campaigns, aka d ph compnEz
hell yeah herb kohl! finally doing something after 100 years in office. and i like it!
they didn’t tell us they were raising it the last time. our contract says 10cents, they told us they were raising it to 15, and then it magically became 20 one day. just biding time until the contract ends, then no more at&t!
I don’t know a single person that regularly uses text messaging that doesn’t have a bulk or unlimited text plan bundled with their voice plan.
I’m not saying that $.20 per isn’t exhorbitant. I’m just saying that it’s also not like there’s no way around it.
I’m not saying that $.20 per isn’t exhorbitant. I’m just saying that it’s also not like there’s no way around it.
@CountryJustice: I agree but I don’t think the cost itself is the point. It sounds like the senator is working up to an accusation of price fixing.
@Bladefist: They’ll probably respond with laughter or silence.
Um, Capitalism 101? Companies will charge what the market will bear (even if the market b!tches and moans about it)?
I’m generally opposed to the government getting involved in markets where competition exists, but price fixing is not acceptable.
@NotATool: Um, Capitalism 101? Price-Fixing fucks up the market. Senator Kohl knows this, which is why he’s asking these companies why they all raised their prices at the same time – what’s the reason for the price increase?
@NotATool: Um, Capitalism 101? Companies will charge what the market will bear (even if the market b!tches and moans about it)?
Unfortunately, the cellular companies do not compete in a Capitalism 101 free market. They are regulated in exchange for the privilege of using a chunk of wireless spectrum. Nobody can convince me that we’d be better off with a spectrum that runs on the survival-of-the-fittest principal.
Besides, OPEC charges what the market will bear too. Seems to be working great of course.
Another me-too on the ‘because the market will allow it’.
I miss the days of it only costing .02 (dollars, not cents Mr./Mrs. Verizon rep) to receive a message so you didn’t have to pay for it when someone with an unlimited plan decided to start texting you.
I just don’t use them. Now, when text spam starts getting to be a problem there *should* be some way to get cheap/free incoming texts but still overpay for sending one.
Ugh, posted too soon. I completely forgot to mention that I’m glad we don’t have anything else important for our government to work on.
I’m just annoyed that AT&T has 3 plans:
$5 for 200 message
$15 for 1500
20 for unlimited.
I always go over 200 by quite a bit but never over 500. All I want is 500 messages for about $10 a month becasue I can not justify spending $15 and never coming close.
We live in a country where prices aren’t contested by the majority of people. Gas prices can skyrocket like they have, with the exception of a few dips, and people will still drive large gas guzzlers when all they use it for is maybe a kid’s backpack. Likewise, though not to blame people who text message because there are benefits, people will continue to text with or without a plan. The companies exploit this and can charge whatever they want for how long they want until some politician like Kohl says WTF? Of course, said politician probably won’t get reelected without AT&T or whomever funding his campaign. I would see support for his questioning if we didn’t live in a bureaucracy, but not everyone is a savvy consumer like a lot of Consumerist readers so I don’t see text-rates, gas, food, etc. going down anytime soon. Or Ever.
Try using your phone for calling people. Novel idea.
@Lithium542: Whoa, whoa, whoa. Slow down a minute. Can you go over that again? What is this “calling from a phone” feature you’re talking about? Can my phone do this? What other phones can do this?
Seriously people, you only have yourselves to blame. Stop texting so gd much and the prices will stop going up, and maybe even down. My plan includes texts, but I’ll call anyone back who texts me, or send them an email. Companies know how to make money, and will get as much out of you as they can. I think the “because” answer other people brought up will be basically what they tell Herbie.
Who cares how much it costs?? If it’s too much for you, DON”T USE IT!! It’s not a necessity and I hate to see the government get more involved in a private industry.
@cheeser83:
No.
Communications is an essential utility, like Water or Electricity.
Indeed, the government agrees because they are so in bed with the communications companies, for better or worse…
But so long as a company gets a penny of my tax dollars, their internal workings are a PUBLIC MATTER.
The phone companies want to have their cake and eat it too; they want the privileges of a utility company, yet they want to fully exploit their position.
I can understand WHY they do it, they are a for profit business.
But it’s still wrong.
@dequeued: I agree. Especially since many people don’t even own a landline, but have switched to cell phones as their primary form of voice service, mobile service becomes even more of a “utility” and less of a luxury each passing day, and should be regulated as such.
Why does the cost to the companies matter? Does anyone care that it costs 30 cents to make a $4 latte? (Oh, wait, I forgot what website I was on.)
The thing is, that like a latte, text messaging, like cellphones in general are a luxury. You don’t need to text people. For that matter, you don’t need to be able to call people when you’re at Target. If you want an emergency phone, that’s fine – you can get a prepaid one dirt cheap.
This whole argument is just ridiculous. I hope tomorrow we can get Congress to investigate something equally worthwhile, like how magazines have ads and yet still charge subscription fees.
@Colage:
Oh thank God there is someone else here who I can agree with.
@Colage:
The thing is though that a Latte didn’t cost $1.33 3 years ago. I’m sure the price has gone up, but not by 3x in 3 years.
@xredgambit: Yes, but this isn’t gas. Or food staples. You don’t need to text people to get by in the day, just like you don’t need a latte.
Texting is a luxury. I can’t think of a single situation where someone would need to text someone else.
@Colage: hostage in the back seat, with the kidnapper driving. tell someone where you are, everything, with only a little click (easily inaudible in contrast to the car sounds) and get saved.
there is 1 situation you would need it. you’re welcome : )
@fjordtjie: If you’re being kidnapped, would you really think twice about being charged 20 cents?
If so, you’re probably not worth kidnapping. =p
@Colage: no, i wouldn’t care at that moment if it was 20cents or $5. it’s just a single scenario where a text message would prove a necessity and not a luxury.
and for the record, i never text, because i use my phone for calling…and occasionally taking worthless grainy pictures.
First: I’m over 40. I remember when a cell phone was a luxury and not a common thing. I have one and only use it to make/get calls. We have text/internet shut off on our phones since we don’t need it. I even leave it at home sometimes or turn it off.
What I’ve noticed is that people believe they always need to be connected to each other either through email, text, or calls. This belief seems to be reinforced by marketing and the phone companies themselves. Until people are willing to slow down this will just get worse.
@Starfury: Yes, more and more prevalent with each new kid handed a cell phone too.
The senator observed that the price increases happened almost simultaneously, which seems to be the outstanding issue. Free markets rely on competition to keep prices low, but if the major carriers decide together to raise prices there is no true competition even though there are multiple vendors.
Other than investigating whether or not there was price-fixing behavior happening, the government should stay out of this.
Better yet, just block text messages on your phone like I do. You want to talk to me, call me.
@Xerloq: I don’t think that’s particularly surprising. Gasoline prices at nearby gas stations frequently change at the same time also. The reason is that competitors are watching each other.
At the same time that the carriers were increasing their instant messaging prices, they were also reducing the prices of their other programs. It appears that they have concluded that consumers care more about the monthly price than they do about the text messaging fees. It could also be that the people who most use text messaging (often younger people) are not particularly sensitive to text messaging pricing.
Unfortunately, this sort of meddling has become far too common for our government.
@Diet-Orange-Soda: You’re right. No reason for it. I suggest you don’t do it.
SMS is a totally stupid technology in the first place, and is priced at a beyond exorbitant rate given how primitive it is. Imagine if your ISP charged you $0.20 for every email you sent OR RECEIVED, or $20 for an “unlimited” plan. SMS is even dumber than that, considering that it isn’t nearly as flexible. SMS should just die a quick death very soon, and get replaced by real email.
I cannot at all understand its popularity with the public.
well, they are just going to collude on why they raised prices too.
I suspect it’s because the competition is getting so stiff on minutes, the providers have to make money elsewhere.
But you it’s really silly these days to not just get an all in unlimited plan or at least an unlimited messaging package. I pay $10 month for unlimited messaging, seems like a fair deal to me considering how much I text.
Call me crazy (not fully crazy, just going crazy so my price is half off), but does the US Congress really have nothing better to do?
@Applekid: Believe it or not, there’s actually more than one boob working in Washington, so it is possible for them to screw up more than one thing at a time.
My texting costs me $0. I dont care how much it costs others.
Ahh, remember when receiving texts used to be free? Those were the days…
Its called price fixing Mr. Kohl. You see in a market with heavy switching costs (new phones and long term contracts with huge buyouts) and large saturation (most people already have a phone) its easy for price fixed market to become stable. The ability for a single competitor to simply lower prices and attract business away is limited. Especially on a single piece of an overall larger contract. Fixed pricing is usually unstable – think fixed priced groceries – as a single member of the fixing group can drop out and at least temporarily gain market share.
I would be shocked if the fixing in this case were overt. I expect that the claims will come in as price leadership, additional capacity due to increasing demand – never because we knew we could get away with it.
Additionally some of the heaviest text users are kids/young adults who don’t get to choose a plan, they get stuck on the plan that their parents picked. They can’t afford to break their contracts/buy a new phone to chase lower rates on their preferred features even if there were a company willing to compete on price. Of course companies realize that mobile phones are sticky and choose to maximize revenue from current customers instead of maximizing market share. Sprint is trying really hard to compete on price, but when you’re that far behind the 8-ball there is only so far you can drop prices and still service you obligations.
Mr. Kohl should sponsor legislation to force companies to be phone agnostic and to remove contracts. Commoditizing the mobile phones will force the companies to compete on *gasp* service. Instead of competing via whose lawyers are best.
I’m glad somebody’s going to bat on this issue. I went up to an unlimited text messaging plan, because texting has very practical uses around work mostly. But before that I was almost doubling my phone bill with texting rates. Absurd. And I thought I was the only one who found it strange that companies raised the fees on the text messages almost simultaneously.
I do believe the point of this Congressman’s inquiry is to find out if there is reason to believe price-fixing is going on. If that were the case then the scrutiny of this initial inquiry would have the effect of causing the telecom players to perhaps start being competitive to avoid a deeper look.
Here’s a thought…although text messaging has become fairly commonplace, it is a service that is not at all necessary to get buy in life. it is not like the cost of milk has tripled-we are talking about something that frankly is superflous in life. If people don’t like it, then don’t use it-why is that so hard?
@loganmo: Tell that to the 13 year olds who send 2000 texts a day.
Usually i would hate the government getting involved in private-sector industries, but look at the facts:
you have oligopoly controlling a sector where 1 company was already broken up due to being a monopoly
the cost of entry is extremely high unless you can differentiate (boost mobile)
successful new phone companies are bought up by the existing phone companies, so most consumers will never see the benefits of the regional or niche companies
I applaud them for at least checking to make sure things are on the up and up.
I was on a walk the other day, and overheard a couple arguing about their texting bill $38 the husband said.
I was under the assumption that txting was still 10 cents a text!
What’s bothering me most is the “double dipping” on text messages – you’re getting billed to both send *and* receive!!!!
@Neecy: which is always nice when you receive a junk text.
What I don’t get is why people spend five minutes typing crap with T9 text entry that they coulda called and said in 5 seconds. I have a Smartphone with qwerty keyboard and I hate it when friends text me since I spend most of my time behind the wheel. I’d rather just they tell me what they need over the phone so I can call them back later.
@MrEvil: A Windows Smartphone? Google Text2Voice Windows Mobile (insert version here). And download the program (I forget the name of it, but I have it on my smartphone that I was dumb enough to leave at home today, and it reads my text messages for me.)
I recently realized that not only do I hardly ever text, I hardly ever talk to anyone on the phone either. If I do need to call someone, I do it at work for free or use skype when I get home. I do, however, have the need to text select friends from time to time, so purchasing a txt plan does not fit for me. Instead I’m forced to pay .15 to send and receive a couple pieces of data that probably literally cost AT&T .0001 to procure.
On the bight side, I am still saving money by not paying Verizon $45 a month for a service I hardly used and instead pay ATT $10ish a month to top up. So I guess I really shouldn’t complain too much.
I find it curious that the iPhone text messaging price structure is different than a PDA or “standard” cell phone. It’s still the same 140-160 bytes on the same data network.
Oh andto those of you saying to “block” texts from your phone via your carrier. That’s all well and good advice, provided you do not own an iphone.
And Text only plans are only available to the legally deaf. Wasn’t this covered here already?
If you want to break it down into bandwidth and cost its something like…
1 txt message = $.0001 worth of bandwidth.
Unlike calls a txt message does not need to be sent instantly. It can arrive a couple min later with nobody the wiser and often they do. They also have so little real data in them they take up just about zero bandwidth, even at max size limit.
Now I could understand 15 cents for a picture or video message, but pure text should be 100% free for at least the first 500 messages per month. Anything over that I would consider in excess and the person should be charged a flat $5 fee for that month.
@parad0x360: Unlike calls a txt message does not need to be sent instantly. It can arrive a couple min later with nobody the wiser and often they do.
This is actually not the case. I work for an inter-carrier SMS messaging company, and industry SLAs are aimed to guarantee delivery in less than one second. If it takes more than 10 seconds to get an SMS, something is wrong. If it takes more than a minute, you can be guaranteed that there are some very annoyed engineers working on the issue.
If you think $.20 per SMS is expensive, give it a couple months. SMS rates are moving up to $.25 per message, and major carriers are already preparing their communications to customers. I look forward to a day where all data sent over my phone is billed the same, whether it’s a voice call, SMS, MMS, or Internet usage. Give me a fair per-megabyte rate and let me go from there. Unfortunately, this would require actual regulation from the FCC, and will never happen. Our only hope is Google being incredibly disruptive with their WiMax 4G services.
If you’re texting enough for the 20 cents to add up to anything, you should probably get a plan. I never talk, and just use texting. I have the unlimited text, much cheaper than using the phone for calls actually. But I guess his generation didn’t text, so it probably scares him.
The phone companies prices are absurd and insulting.
I hope the government forces them to not charge anything for text messages.
Or maybe just a nominal fee to prevent people from abusing or spamming.
I think I would be okay with them capping the text rate at 1 cent per message after the first 100 messages, per month.
The phone companies should be thankful, they would still be making a hefty profit at that rate.
What exactly did we THINK was going to happen?
4 companies, 90% of the market. That’s supposed to drive competition?
Free market economics works great in theory and on paper, but reality proves time and time again that it is unsustainable without regulation, and CERTAINLY unsustainable when these companies are awarded for behavior that goes directly against the principle.
Case Study: AT&T buys up many small local wireless carriers under AT&T Wireless brand. It can’t find sustainability in its growth and pricing models, so it spins the unit off.
Cingular purchases the now-spun AT&T Wireless, a company that grew much like Cingular itself had. Once most of the expense of growth is completed, AT&T moves back in and buys the farm for a bargain price versus what that much growth would have taken.
So, we go from many local carriers, to many less regional carriers, down to 1 national carrier – and this took what, 7 years start to finish?
Eventually, just as when Ma Bell was broken up, government will realize its own people are getting reamed and slice and dice the offenders (even though they profited the entire time to turn their heads). It’s a constant race between this and the offenders staying moving quickly enough to not get stagnant and busted.
Thus begins the cycle again. Ma Bell was broken into 7 RBOC’s, and yet now, barely 25 years later, we are down to 3, all of them re-joining through mergers/acquisitions.
It wasn’t good for consumers 25 years ago, yet since they’ve been allowed to do it again?
Yay for the free market!