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Congress Asks Wireless Carriers To Justify Text Message Rate Increases

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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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Comments:

124
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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.

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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]

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Oh how I long for blissful days, way back in the the early 00s, when a text-message was a nickel.

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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.

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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?

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@AMetamorphosis: Because American customers like to text and companies know American customers will pay that amount per month, usually without questioning it.

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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.

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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.

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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"

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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."

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they do it because they can get away with it.

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I'd say its to offset the rising costs of oil. Oh wait a min...

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I have that unlimited everything plan. It's nice to not have to worry.

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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 ! )

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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.

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Quick, deregulate the industry! Prices will magically...

Oh, what, we already deregulated the fuck out of this industry and prices keep going up?

Oh.

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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.

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It's about time Congress did something! God forbid people stop texting when prices get too high.

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dEr Congress, We cn do WE d fuK we wnt. lov, d ppl hu funded yr Fkng campaigns, aka d ph compnEz

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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!

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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.

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Um, Capitalism 101? Companies will charge what the market will bear (even if the market b!tches and moans about it)?

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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.

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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.

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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.

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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.

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Try using your phone for calling people. Novel idea.

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@AMetamorphosis: An SMS message is 140 bytes of data, tiny by most measures.

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@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.

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@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.

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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.

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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.

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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.

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@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.

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@Colage:
Oh thank God there is someone else here who I can agree with.

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@Johnyalamo: The bridge is not red. It is "International Orange"

Why I know this, I dunno...

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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.

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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.

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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.

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well, they are just going to collude on why they raised prices too.

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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.

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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?

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My texting costs me $0. I dont care how much it costs others.

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@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-

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@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.

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Ahh, remember when receiving texts used to be free? Those were the days...

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@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.

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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.

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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.