Wireless Carriers Tell Senate: "Text Messaging Rates Have Dropped, And Your Queries Have Led To Lawsuits Against Us!"
The national wireless carriers have responded to the Senate's request for information on why its text-messaging fees have doubled over the past three years. Their collective response: they haven't gotten more expensive, they've gotten cheaper—and your public suspicion of our business practices has led to lots of class action lawsuits!
RCRWireless reprinted part of T-Mobile's response:
“Although your letter states that carriers’ prices for text messaging appear to have increased since 2005, the opposite is true,” states Robert Dotson, president and CEO of T-Mobile USA Inc. “Since 2005, the prices that T-Mobile charges for text messages — 90% of which are purchased in texting package plans — have fallen by more than half.
AT&T came right out and (almost) blamed Senator Kohl for the spate of lawsuits:
“As you probably know, since your letter was made public, 20 class-action lawsuits have been filed around the country against AT&T and other national carriers, specifically alleging price-fixing for texting messaging services. All but one of these cases cite your inquiry as one of the bases of alleged collusion. We are therefore eager to clear up any misunderstanding,” said Timothy McKone, executive VP for federal relations at AT&T.
If fees for text messaging bundles have dropped, while fees for single-serve text messages have shot up 20 cents, then in a way both sides are right—but if that's the case, we think the carriers are being intentionally dense about the true meaning of the Senator's line of questioning, which (we think) is an attempt to determine whether the carriers colluded to hike individual rates enough to drive customers into more profitable bundle services.
Wireless carriers counter antitrust concerns over rising costs of texting [RCRWireless]
(Photo: Getty Images)
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Comments:
My text messaging rates went up recently.
AT&T also dropped unlimited Media Net too.
Maybe I'm alone here, but I don't really consider package deals when discussing text message prices. Unless you have unlimited texts, you're still gonna get hammered if you go over your limit.
I've got a Blackberry with an unlimited data plan. AT&T charges me $0.20 per text message. However if I use the Google chat application it's free. Preposterous!
Here's an easy way to fix the problem (this statement is targeted to the wireless carriers):
When someone sends 10 messages a month, go ahead and charge them a per-message fee.
When someone sends enough text messages to meet the first bulk package threshold, automatically bump them into that package that month. Repeat up through your bulk package tiering.
The point that the wireless carriers miss is that customers are being overcharged for text messages. Automatically offer them the lowest rate, and problem goes away. Otherwise, their practices are (IMHO) fair game for investigation.
I actually had a verizon rep trying to tell me this the other day as well. "Services have actually gotten cheaper." No, they haven't. Individually, they have gotten considerably more expensive. And to make it worse, they continue to eliminate smaller packages. (The discussion started over the inevitable loss of my $5 50/UnlimitedIN txt plan.) It's not a better deal if I'm paying for something I'm not using.
I understand that buying in bulk is cheaper. Anyone who has a COSTCO or BJs card knows this. But it's only cheaper if you use what you buy. I will never buy 4 loaves of bread at a time, because it will go bad. But you don't see stores getting rid of the option to buy one loaf of bread, and telling you that you either need to pay $1 a slice, or $10 for four loaves.
@humphrmi: why should they? They offer you a way to prepay for text messages, if you decline, why should you then get the benfit of buying upfront and in bulk.
It is similar to buying product in bulk from a wholessaler. A large wholesalers offers a product for a lower rate if you guarantee you will buy 2k of them. If you come in and buy 200, then 100, then another 200, and so on until you happen to reach that 2000, should they then refund your money? no. A smart consumer will look at their bill, then up their plan the next month to accomidate their needs. YOu can also add these items mid months o if you know you are going over you up your plan for a pro rated cost.
@xtc46: The difference is this: In the case of the wireless carrier, there is no difference in the amount of work they have to do if you purchase 2000 messages at once versus buying 200, 100, 200, etc until it adds to 2000.
The wholesaler, on the other hand, saves time and labour (and therefore money) when selling you one big order of 2000 widgets instead of 200 now, 100 tomorrow, 200 Wednesday, etc. because they don't have to break down as many of the packages they receive from the manufacturer, nor do they have to spend as much money on shipping. It is in their interest to lower the price in order to give the customer the economic incentive to order large and infrequently.
In the case of the mobile phone companies, it is in their interest to find a way not to piss off the customers, who in turn get the Congress all wound up. All it would take is for one carrier to change tack, and the others would have to follow in order not to hemorrhage customers.
Individual text message rates are outrageous. Yes, buying in bulk saves, but not when they make the minimum package more. Smallest bundle is $5 for 200 and the next cheapest is $15 dollars for 1500. Nothing in the middle, and no relief for the casual text messager.
@xtc46:
The other point is them and their issues with contracts. Many carriers like to automatically extend your contract when you make changes to your service plans...
What the-! Did the wireless industry pick up our government's tactics? Outright lying and turning it around to attack those who pose the question?
Wow. Just wow.
Oh and watch for the slight of hand! Verizon starting Nov 1 will be charging the 3rd party content providers penny fees for their message streams. The providers will just pass that on to YOU on your Verizon One Bill.
Its no different than if Verizon jacked its rates, but they don't have the guts to do it themselves so they are passing it on to a third party for billing as cover. SOBs
Don't See how they can get away with Charging us 20 cents for 141 BYTES of data! that equals something like 20 grand a MB. That's insane no matter how you Slice it.
It's shame that these big Corpoarations (AT&T) always find excuse to raise their rates and blame the regulators. Then they screw up and beg for more money. I am paying $30 for iPhone Data plus $30 for unlimited texting for family meanwhile my voice plan is only $59. we are being robbed.
As stated, the argument presented by the wireless carriers is misleading to the very point of lying.
Apples and oranges.
If they are going to talk about reduced cost due to bundling, they need to present the information in terms of bundle cost divided by actual number of messages sent as opposed to the maximum number allowed by the bundle. Nobody texts up to the bundle limit and then stops. To present this case as if they do is outright false.
This particular revenue stream is much like Caller ID and if you look into the past, touch tone dialing. Both very handy things to have, and an absolute cash cow for the phone company. It will be interesting to see how long it takes until / if Caller ID becomes a part of the standard package as opposed to an optional add-on like touch tone dialing once was.
It's ridiculous that they charge for text messaging in the first place.
Are they high? I have AT&T and incoming texts used to be FREE and outgoing were 5 cents. Since about two years ago it is 10 cents both ways.
Am I correct to note that text messaging is much cheaper in other countries? My Kiwi friend tells me that everyone texts there instead of calling because it's cheaper.
@mrooney: Are you a grandfathered AT&T Wireless customer (affectionately called "Cingular Blue" back when the two companies were combined0?
If yes, did they actually discontinue the free incoming text features?
With the current AT&T plans, I think it's 25 cents both ways if you don't have a messaging plan.
+1
They only do it because they know they can poke your eyes out.
Your teenage daughter MUST have text messaging. She NEEDS it or her life is over. Do do love your little girl right?
When I had T-mobile back in 2003, there was no separate text messaging fee, it was bundled, whether or not you wanted it. Since text messaging has finally caught on, they no longer offer plans that bundle it, you have to pay separately for it. It kinda sux when someone texts you and you told them specifically that you don't want text messages, because they simply forget. So, when someone texts you, you have to pay for it. Gah! Where's the reject button for text messages?
@kayfox:
How recently was this? I just signed up for unlimited media net about 2 weeks ago and have been using it very little. I will be dropping it due to lack of usage.
I'm one of these people that it makes sense with, I have to buy a bundle and not use much when I could just pay per use and save a fortune. Except data is so expensive from them (AT&T) that is.
@xtc46:
I think your missing the point of the comment. Using your example of bulk product, purchasing 2000 or something over 6 months means squat.
The post you are replying to is saying if you purchase 200 one month you pay one amount, but if you purchase 2000 which is the thresh hold that you state for the bulk package, you pay the 2000 amount.
In terms of the post you are replaying to, if 200 is a limit for a basic text package, and you use 500 that month, you pay the upgraded teir that month. Then the next month you only use 100 messages, you pay for the 200 limit teir.
@haimtime:
I dont know who your using as your cell company, but in california at least, AT&T has $5 for 200 messages (starter) then $10 for unlimited to AT&T subscribers and 200 to non-AT&T subscribers, and finally $20 for unlmited texting all around.
So 5, 10 or 20 bucks added to your bill.
T-mobile a few yrs ago was 5 cents incoming and outgoing. My 14 YO daughter ran up a 250.00 bill in ONE MONTH that way!!
When they launched the unlimited plan for the whole family for just 10.00/month, it was the deal of a lifetime for me. We are grandfathered in on that rate, which I believe is now $20.00/month. Unlimited texts for 4 phones. The girls (2) text their brains out every single day, so it's a great deal for us. I shudder to think what it would cost on a per-unit plan, even at 1500 msgs a month.
I live overseas and I added a basic plan to my sisters account as I visit the US 3-4 times a year. But I didn't add a text package and after three weeks my just the text message portion of my bill (in an out) was over $80! Living abroad, my incoming messages and calls are free. My outgoing text messages are dirt cheap. If a foreign operator can make money this way, why do American carriers have to charge such high rates?
Same here...grandfathered into both that and the $2.99 T-zones/full internet with workaround plan, just another reason never to leave Magenta!
@socalrob: I'm also in California on AT&T (iPhone plan) and I know for a fact that the plan for texts are $5 for 200, $15 for 1500, and $20 for unlimited. No in between. Maybe it's different for other phones. I also know that AT&T changes it's texting plans quite frequently, (I was on a $10 for 600 plan 6 months ago) but if you signed up on a text plan before they changed it, you get it keep it.
@dragonfire81: It's stupid when an unlimited data plan is $30/month and yet it doesn't include texting. I use ~1GB in data every month and they'll give me that for $30/month, but if I sent 1GB worth of texts (without a plan) it would cost me roughly $1.4 million. Where is the logic behind that? Text messaging has become part of an oligopolistic market, and it's about time the government stepped in to protect consumers who have no alternatives other than to go without the service at all. And this is not some luxury service that only the rich deserve, it costs the cell companies barely anything to relay text messages.
I have U.S. Cellular.. Outgoing is expensive (if you dont get a package), but incoming has always been free
@Jthmeffy: You're right, it costs about $1,500 a megabyte to send data via SMS. But remember someone on the other end has to pay the same amount to receive it. So it's about $3,000.
All the math is on my blog, here: [gthing.net]
I also have U.S. Cellular, they charge 25c a message outgoing. In Fact they just raised the price of the fee but refuse to allow customers to get out of the contract for free. They are the *MOST* customer unfriendly service I have ever dealt with in my life.
Texting is way too expensive period, texting should be free and included in your plan. It costs carriers nothing.
They are deceptive about all their billing. When I got a new phone a few months ago they changed my plan. It cost the same but the way it worked was different. My old plan didnt charge me for internet use on my phone. It used airtime and ate up my minutes which was fine by me.
When they changed it they neglected to tell me it would no longer use airtime, and instead it would cost $2 per mb. I racked up about $40 in charges the first month that they refused to reverse. The starter data plan that would have covered me and all my useage was only $10 but I had to pay $40.
@kc2idf: But there is extra work involved for the carrier. They would need to redevelop their billing software to recognize the amount of texts and then how to bill them without changing the terms of their clients contract. Also, any texts not prepaid for are part of an unplanned for utilization of resources. If no one buys a plan and one month decides to send 2k each, their going to be bandwidth issues on the network. A company knowing that x% of their clients will want to send approximately 2k messages allows them to make sure their network can bear that load at the minimum.
Just because someone isn't lifting a box, doesn't mean someone isn't putting in more work to make up for customers being irresponsible.
@ShadowFalls: Ive worked with T mobile, Sprint, Verizon and ATT/Cingular over the last 4 years. none have ever made me extend my contract to add things like text packages, heck tmobile lets me change the number of minutes, texts, data plans, just about every single aspect of my plan without adding time to my contract.
@socalrob: I understand what the post is saying. I just don't agree with it. If you begin texting a lot, it is your responsibility to make that adjustment to your plan, why should the provider have to? It is your responsibility to make sure you are getting the best deal, its the providers responsibility to make as much money as possible for its share holders, and idiot customers who cant seem to keep track of their minutes/texts and know when they need to add more of either to their plan deserve to get billed for the overage.
SMS messaging can't (using the current technology) be free, as it uses sideband signaling channels to send those messages [[en.wikipedia.org]]. Those channels are constrained resources, and should therefore be cost-restrictive. Otherwise, using common economic sensibilities, if texting were free you'd never be able to send a text anyhow because the system would be jam-packed.
The real problem is that the technology and implementation of GSM-based SMS is rooted in 1980s tech, completely ignoring the "tubes" revolution. Now, most every mobile handset has the ability to talk "Internet" and has many other, better mechanisms to exchange messages…but the carriers have simply chosen not to put forth the effort to -use- them. They pass along that largesse to the all-too-willing-to-pay-up customers.
Some implementations, RIM & iPhone, have begun to move towards data-centric messaging approaches but the chicken and egg scenario limits adoption. And even in the case of the iPhone, the data-centric approach is half-assed at best (no MMS, no IM--likely carrier induced).
@teexcue: Sending a text message is not the same as sending regular data. They use different routing structures and methods which call for different staff to manage. Send an email instead of a text and you can use your data plan.
@xtc46: Why shouldn't they? At the end of the month, if I buy something from a wholesaler, do they take back what I didn't use for that month? As good intentioned as your comment was, I think you're a little off base.
It's less that texting is cheaper than voice minutes are more expensive. The biggest Vodafone New Zealand plan is NZ$40/month (US$25/month), and does include 2000 text messages (but only to Vodafone users, not to competitor customers), but it only includes 20 national anytime minutes (and 200 minutes to Vodafone mobile customers); no free nights and weekends. US plans tend to include a LOT more voice minutes (US$40 Verizon plan includes 400 national anytime minutes and free nights and weekends), but to charge extra for texts, so the balance between texting and calling is a lot different.
@haimtime: So just buy an app from the App Store that does text messaging. I've seen a couple of them...
*shrug* I have maybe sent 10 text messages in the four or five years I've owned a cell phone so I would say that the costs have been a wash for me.
I'm sure it costs me some dates when a girl asks if she can text me and I say she can just call me because my phone I get from work has no texting plan (nor do I want one.)
@xtc46: Bollocks. SMS was developed specifically to use the bits of the cell spectrums not being used by the actual voice information being sent over the cell networks. It basically rides in between the people talking on the same network. The cost to the company is miniscule.
They should just have rollover for text messaging bundles. AT&T has it for voice minutes (which I barely use), would *love* it if they had it for text/data (which I use a *lot*).
Can someone explain to me why paying for text messaging isn't a racket? Why the hell is $5 the difference between only 1500 texts a month, and 15,000 a month without massive charges?
At least on AT&T that is, which doesn't even give you a basic plan for texting only within your network, unless I'm mistaken.
@scottboone: It's sideband async, which means they can backfill their spectrum when it's not being used for other things.
If we are going to quote wikipedia, lets jump right to the good stuff.
"Commercially SMS is a massive industry in 2006 worth over 80 billion dollars globally. SMS has an average global price of 0.11 USD and maintains a near 90% profit margin."
90% profits! At 0.02/message they would still be making a 50% profit on the service!
Another pricing quandary's.. why do pre-pay customers pay less per txt than a contract customer?
But for people like me who don't have text messaging, the rates have gone up for when we get the drunken text message from friends/family. Which is why I have had to block them on our cell service. When we are able to afford those extra rates when we are out of debt, of course the unlimited makes more sense.