idk y txts r so $$. Consumers Union‘s Joel Kelsey says what all already knew—text messages are way overpriced—only he got to say it during testimony to the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights. [Consumer Reports Electronics]

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  1. t-r0y says:

    If people are willing to pay for it, then it’s not overpriced.

    • R3PUBLIC0N says:

      @t-r0y: Wrongo. Supply and demand should not apply to regulated monopolies; because we permit these companies access to our delicious and rare radio spectrum, they should NOT be charging the margins that they are on text messaging. Or any service, really.

      • t-r0y says:

        @R3PUBLIC0N: Maybe. But I’m sure that if you cap their fees on text messages, they’ll recoup it somewhere else. Are you just going to cap their profits? Maybe Obama needs to take over the telecom industry too!

      • Shivved says:

        @R3PUBLIC0N: We don’t permit access to the spectrum so much as we lease it to them. While one could argue that preconditions can and should be put on the use of the spectrum during the bidding process, it seems pretty screwed up to put conditions on it after the fact. That’s like altering a contract unilaterally after it is signed.

        On top of that, I’m not so sure it’s a monopoly considering there was a perfect opportunity for a new competitor to enter the market last year during the spectrum auction. That 700 Mhz block was open to anyone who wanted to bid. If Google had the stones to outbid Verizon they could be well on their way to running a cellular phone company right now.

        • mac-phisto says:

          @Shivved: i wish instead of leasing the spectrum, our government would have had the foresight to erect the towers & lease the bandwidth. if that were the case, i’m convinced we would have a lot more choices in the marketplace today. as it stands, the cost of entry into the marketplace is so high that no new competitors are willing to enter. & with established companies holding the keys to the spectrum, they have the ability to block new entrants.

          but you are correct – the way things stand, they have a pretty wide berth when it comes to what they charge for use of their spectrum.

    • Sean Masters says:

      @t-r0y: Yeap, this is certainly the fault of consumers everywhere.

      :rolleyes:

      • t-r0y says:

        @Sean Masters: I didn’t say it was the consumer’s fault. If you don’t want to pay the price, don’t buy it!

        • greenunicorns says:

          @t-r0y: “I didn’t say it was the consumer’s fault.”

          Okay, fine. Then I’ll say it. It’s the consumers’ fault. Text messaging is a ripoff that too many idiotic consumers pay for. Worse, most cell carriers leave charge you for unsolicited text messages you receive, but don’t give you an option to turn them off.

          WTF?? Hello America, do you still have a pulse, or are you literally corporate zombie buying machines??

          Recession my ass. We all make way too much money to care how badly we get ripped off. If you think the American public is any less damnable for the disgrace that is our cell network, then you don’t know what consumerism is.

          • greenunicorns says:

            @greenunicorns:

            “Worse, most cell carriers leave charge you for unsolicited text messages…”

            And what I meant by that was, “most cell carriers charge you for unsolicited text messages…”

            I can’t proofread.

            • t-r0y says:

              @greenunicorns: Now that’s a valid point. There is no way a third party should be able to obligate me to pay fees to my cell provider. But wouldn’t that be a matter for contract law, not regulation?

              • greenunicorns says:

                @t-r0y:

                IANAL so I don’t know anything about contract law, and I am not a bureaucrat, so I don’t know anything about regulation.

                All I know is that as a consumer, I use nearly NO text messages, and I’ll be damned if I let Verizon strong-arm me into buying a X-messges-per-month plan just so I don’t have to pay a ridiculously high cost per message (when I don’t want ANY messages in the first place).

                The rest of the consumers in the country need to man up and pay cell providers NOTHING for text messages by not sending a single message to anybody. If EVERY subscriber chose to go without a service for a month, in order to send a message, I guarantee you cell carriers would take notice, and further, probably fire a lot of people for causing a loss in profits.

                But I fear that will never happen. The American public has already sent the message loud and clear to cell carriers, “We like it when you screw us out of our money! An iPhone for $60/month? Sure, I’d be glad to pay that!”

    • mac-phisto says:

      @t-r0y: i’m not willing to pay for it, but it’s a service i would like to utilize. where does that leave me?

      • t-r0y says:

        @mac-phisto: Same place it leaves me and that Harley. Should the government regulate the price of a Harley-Davidson?

        • mac-phisto says:

          @t-r0y: no, but they also don’t have to. there’s competition in the motorcycle marketplace. there’s more than a dozen brands each with a dozen models selling at various price points. you have the choice to spend anywhere from a few thousand to a hundred thousand on a new bike.

          which is completely unlike the cell marketplace where despite the low cost of supplying the product in question, the consumer price continues to rise across the board. the question shouldn’t be, “if people are willing to pay for it, why can’t you charge whatever you want?” it should be, “if competition truly exists in this marketplace, why aren’t we seeing competitive pricing models?”

    • Xerloq says:

      @t-r0y: The airwaves are regulated because they are owned by the public – they’re a “natural” resource to be used for the public discourse. Companies that broadcast in that medium are regulated because not all can occupy the same spectrum at the same time.

      Television and radio networks that broadcast OTA must broadcast for free, allow the use of the airwaves for PSAs, and give equal time for political discourse, etc. They make money on selling advertisements, making their product, essentially, an audience.

      Given that, the nature of cellphones means that they’re regulated differently. I think Supply and Demand works just fine here. The thing I’d like to see is more competition – not necessarily more companies, but more technologies (like VOIP over WiFi, WiMax, etc.) brought to market. So long as they’re not owned by the same companies as the cell phones, S&D will work to drive prices down.

      • dave23 says:

        @Xerloq: Supply and Demand is not an appropriate statement here, since the rule is base on the assumption that the supply is finite and the market is competitive.

        In this case the supply is infinite (txt messages effective ride for free on cell calls data packets*) and the market is not competitive at all.

        *I know it is an oversimplification….

  2. dohtem says:

    I’m afraid that if the mobile carriers reduce the price of sending/receiving individual texts, they might increase the price of the text bundles.

  3. shepd says:

    idk y txts r so $$

    ALMOST disemvowelled. Almost.

  4. EhnoValemount says:

    normally I’m strongly against government regulations on private companies but this is so clearly price fixing. The carriers all know that if they stop charging such outrageous per-text fees then people will realize that they’re worth nothing.

  5. Saboth says:

    I don’t really see text messages as a resource that needs to be controlled by congress. Now if they want to step in on my $135 (no movie channels) cable bill from the telco/cable co monopoly that exists in every city…FEEL FREE.

  6. axiomatic says:

    Whats worse is that there are hundreds (thousands likely by now) iphone/smartphone/internet apps that do SMS completely free. People are just too stupid to use them.

    I do support this probe however as the mobile phone providers are truly selling “snake oil” at a premium price.

    • pecan 3.14159265 says:

      @axiomatic: Though I think anyone receiving a text message still gets charged – so if you think you can go without a plan, think again.

    • dohtem says:

      @axiomatic: You assume everyone has a data plan and a smartphone. Those apps won’t work otherwise.

    • Coles_Law says:

      @axiomatic: There’s the problem-there’s hundreds of them. I’m assuming sender and receiver need to run the same program for this to work (correct me if I’m wrong). I wouldn’t keep hundreds of apps on my phone just to save $0.20 (disclaimer: I don’t text and don’t own a smartphone).

      • axiomatic says:

        @Coles_Law: You are correct, it would be a “must use same txt app for this to be free” type of thing but still, its an option, and a free one to boot.

  7. Anonymous says:

    Only a few years ago Verizon charged $0.05/msg sent, and $0.02/msg received. What have they done since then to increase the service provided to justify the now $0.25/msg sent/received. If only everyone realized that text messages are crammed into the free space available in data that’s already being transmitted, hence they should be free since there is no increase in data transmitted.

  8. HiPwr says:

    My texts are part of a bundle, so I don’t pay per text. However, if I were and I didn’t like the cost, I would stop using them. Simple.

  9. rpm773 says:

    Ok, so if text messages are overpriced, what should the cost be?

    And show your work.

    • DarqAnshin says:

      @rpm773: According to consumerist:
      [consumerist.com]

      So if it costs verizon .015 per per 1024 bytes and each message is 140 bytes it is roughly 7 messages for each kilobyte of data. 71

      For 500 messages the math would be (71 * .015)+.015 = $1.08 cost for verizon roughly (71*7 = 497 so an additional $0.015 for the remaining 3 message). At that rate an additional $1.25 for Verizon fees and maintenance would bring the total up to 2.32 for 500 text messages. Verizon currently sells it to you for 10.00 a month. The savings would be 10.00 – 2.32 = 7.68 (Roughly saving you 76.8% on what your currently paying).

      • Shivved says:

        @DarqAnshin: @Sean Masters: So what exactly should their profit margin be, and who should decide that figure?

        • DarqAnshin says:

          @Shivved: With the math I showed they would still make double of what it costs the user since the user only costs them $1.08. I would say morality should state you don’t price gouge your customers my 7000% of your costs, but we know that wont happen. So to answer your question there should be a council that reviews costs and plans and release the costs/plans to the public. Companies found of price hiking over 3x the initial cost and maintanance should be penalized by the FCC.

    • mac-phisto says:

      @rpm773: imo, the charge should be 50% whatever it is now. in other words, DON’T CHARGE ME TO RECEIVE TXTS! THAT’S JUST STUPID!

  10. pythonkid says:

    I send and receive over 3000 text messages each month… thanks to my text plan, it costs me only 7.99 a month.

    • Parapraxis says:

      @pythonkid: yes, but if you knew how much data is sent in those 3000 messages, you’d realize that even at 7.99, you’re still getting overcharged, data-wise.

    • gStein_*|bringing starpipe back|* says:

      @pythonkid: i pay $5/mo for 500 texts, plus free “in” textx (whatever verizon has defined “in” as, i don’t know… i think it might be free verizon-to-verizon and verizon-to-alltel)

  11. DarqAnshin says:

    Cell phone pricing in general is vastly over priced. Cellular companies are making a killing every which way (Data plans, SMS, Passing along fees for taxes, etc). I believe that many cell phone companies charge as much as they do for SMS so that they can recover a loss on the phone minutes not being used. I have a 450 minute a month plan currently (lowest plan available) of which I use 200 minutes. I can say that I get charged more for using 230 minutes than I do for using 180 minutes even though I don’t go over my minutes. I tend to text more than I talk just to avoid the outragouse 20.00 a month in “recovery fees”. I would be honestly happy to get rid of those recovery fees.

  12. tmed says:

    The reason congress needs to review this is that there seems to be anti-competitive price-fixing happening.

    If you have a product that costs nearly nothing, and you have several companies selling that product, if the prices stay at such a high profit level as Text Messtgaing has, than there appears to be collusion (which is illegal) to keep the prices high.

    Congress needs to review the practice because the appearance of impropriety is so high.

    • Mobius says:

      @tmed: tmed nailed it right on the head. /thread

    • Darkest Daze says:

      @tmed: They then also need to look into Cable TV service, Internet, cell phone voice plans, and VOIP services. None of these prices ever go down, only up, and supposedly the infrastructure and maintenance costs are always dropping. From what I hear, the cost to upgrade their services still makes their pricing over blown.

      • LiquidGravity says:

        @Darkest Daze: You are forgetting the ‘circle of life’ (in a greedy world).

        The cost of living goes up and has never gone down (there have been some spikes due to major events but in recent history on average it is rising) – so wages go up some to so people can make a living. This reduces the companies profits – so they raise the cost of products/services to raise profits. Repeat cycle.

        Real world data:

        Source: [data.bls.gov]
        You can’t tell me that it suddenly got more expensive over the years to do the same thing. Check any of the items listed most raise as time goes on.

        And as with most cycles this is a chicken and the egg kind of thing. What came first personal or professional greed?

        Everything has its exceptions and the biggest one for this topic is outdated/unwanted technology. But that is a topic for a different day.

        • Darkest Daze says:

          @LiquidGravity: Then explain their insane profits that keep getting larger and larger every year, even when the prices aren’t changing. They keep prices the same, they make a more money, they raise prices, they make a shit-ton more money.

    • Mary Marsala with Fries says:

      @tmed: Dead on, THANK YOU.

  13. RobertBaron says:

    yeah! Lamborghini’s are overpriced too because I can’t afford one!

    Anyway, unless the cell providers are colluding with each other to fix prices, then I don’t see what the problem is. Texts are priced exactly right or else it wouldn’t be so popular to use.

    • Saboth says:

      @RobertBaron:

      I’m pretty sure they are colluding. Just like I am sure my local gas stations are colluding. Normally this area is around 20-30 under the national average, but recently we are either at the average, or above. Also, the cheaper gas provides (ahem Sheets) seems to basically be matching Exxon and Chevron on price. Our area is higher than just about every area around us…also fishy they all basically seem to change price at almost the exact same hour on the same day.

    • DarqAnshin says:

      @RobertBaron: Sorry but if there were multiple car manufactures selling Lamborghinis then you would have a good analogy. As for your other statement, I would suggest seeing this article

      [consumerist.com]

    • Parapraxis says:

      @RobertBaron:

      learn what a cartel is.

    • mac-phisto says:

      @RobertBaron: yeah! because that’s a perfect analogy!

      your homework for the evening: [www.unc.edu]

  14. schiff says:

    Did you all grow up in a closet? Sending a text message costs almost as much as mailing a letter if you don’t have a plan. How is that even remotely fairly priced?

  15. enderx says:

    last I checked, the cell phone business is a charity.

  16. doctor_cos wants you to remain calm says:

    Text messages are transmitted to and from your cell phone in a control channel. They are tucked into the automatic polling messages between your phone and the towers, so the system knows where your phone is if someone calls you.

    In other words, text messages cost the carrier nothing. So anything they charge you for sending and receiving these messages is 100% PROFIT.

    To summarize:
    1. Sneak text messages into control chit-chat between phones and system.
    2. Charge consumers $$$ for this virtually free bandwidth.
    3. (Say it with me now) PROFIT!!!!

    • doctor_cos wants you to remain calm says:

      [www.nytimes.com] before all of the smarter people tell me how wrong I am.

    • NeverLetMeDown says:

      @doctor_cos:

      OK, so they charge less for text messages, and prices go up somewhere else. It’s just squeezing the balloon.

      • Sean Masters says:

        @NeverLetMeDown: that too would be profiteering. They should be charging less for text messages (or nothing at all) and also not shifting those losses elsewhere, as there is no reason to besides making outrageous profits.

        Verizon Communications latest internal estimates put its profit margins up from 43% to 45%. Nearly 50%? That’s just pure bullsh*t.

        • NeverLetMeDown says:

          @Sean Masters:

          Yeah, because those networks came for free.

          Opex does not equal total costs.

          • doctor_cos wants you to remain calm says:

            @NeverLetMeDown: But I’m already paying for the network by paying for the phone, at some percent markup.

            Any percent markup of zero is…zero. The messages cost them nothing, so they should cost me…nothing. Or a whole lot less than what they charge now.

        • NeverLetMeDown says:

          @Sean Masters:

          And by the way, I think whatever you’re paid is “outrageous,” so go into your boss tomorrow morning and say that from now on, you’ll work Saturdays for free.

    • Anonymous says:

      @doctor_cos: That’s the single most important point regarding text messaging – why is the cost to consumers going up when it doesn’t cost the provider anything additional to provide this service?

      Why are the cellular providers able to add up exorbitant fees for customers that text too much and are not on a “plan”.

      They are making $ out of nothing. The whole reason text messages have to be a certain length is because cellphone companies are using the channel control communications bandwidth and thereby not impacting the regular network traffic.

      Govt really needs to fix this utterly fake fee system. It is a sham.

  17. anithinks says:

    And what about the fact that I get a charge for an INCOMING text message, one which I cannot even deny accepting?

    Spambots can send me 10 messages, ones which I have to pay for? Absurd to the point of ridiculousness…

    • frank64 says:

      @anithinks: I had Sprint turn off my text messaging, because I was getting charged for spam.

      • mac-phisto says:

        @frank64: that’s something i have a really big beef about & why i believe incoming texts should be free. you cannot control who sends you a text; only whether you want to send/receive texts or not.

        “you can’t have texts b/c you don’t want to pay for spam” isn’t a valid choice.

  18. KixStar says:

    I only pay $45/mo for unlimited text/picture messaging (and free incoming, and nights and weekends starting at 7pm), so I’m really getting a kick out of these replies.

  19. H3ion says:

    If they are a regulated monopoly, then prices should be subject to government control. If they are really competitive (Verizon, AT&T, Sprint, et al.) I would expect to see some competition based on pricing because they all provide pretty much the same service. Has anyone seen price competition because I sure haven’t.

    • NeverLetMeDown says:

      @H3ion:

      My first cell plan was $20/month and included 20 minutes, with $0.99 for each add’l minute, and no roaming.

      I now pay $35/month for 400+ minutes, free roaming, and free evenings and weekends.

      So, unless I was planning on using fewer than 35 minutes/month, and never leaving the local area, my cell service has gotten a LOT cheaper.

      • Knippschild says:

        @NeverLetMeDown: Or possibly your first provider/plan was crappy.

        I pay for $79 a month plus $20 a month (so after taxes it’s about $123) for a 2-line family plan, 1200 minutes (my mom and I barely use 600) and unlimited text/messaging and fave five.

        It’s yucky. We got the plan during a promotion. Now I’m stuck. If i wanted to go down to let’s say 800, I’d actually be paying the same/little bit more due to the promotion at time of signing. The only way for me to save money is to go down to like 200 or 400 minutes, it’s been awhile since I checked. But my point is, in order for me to save anything i have to sacrifice a lot to the point downgrading wouldn’t be practical.

        Oh gotta love T-Mobile.

  20. SunnyLea says:

    My hand to god I though you had disemvoweled yourselves for a moment.

    (I’ll take, “Ways you know SunnyLea isn’t 16 for $100, Alex.)

  21. Michael Norton says:

    “To CU, these text-message rates, along with exclusivity deals for certain cell phones, exemplify the need for ‘more oversight’ into the wireless marketplace, to ‘determine if government intervention is necessary.’”

    I’m all for making texts free, or at least lowering their prices, but doesn’t this sound a little communist to you?

  22. Anonymous says:

    What I do find interesting in the article, is that while it mentions that 4 years ago texts were $.10, it fails to mention that “family share lines” were $20 back then as opposed to $10 now, and free mobile to mobile calls were either non-existent or limited in minutes each month, as opposed to unlimited now.
    And I don’t know about you, but I’m pretty sure I get more monthly minutes for the dollar than I did four years ago.
    So if this text rate hike has given me services I do use for a cheaper price, then let them raise ‘em more.

  23. JohnAllison says:

    I think it is easy to claim that TXTs are over priced.

    When it costs 4 time more to send a text message than to send data to the Hubble Telescope, then I think one could justifiably claim that a TXT is over priced.

    [www.physorg.com]

  24. zigziggityzoo says:

    the bastard AT&T rep lied about the ETF. it’s $175, and decreases by $5 per month. The 23rd month would, in fact, be $60 to cancel, not 1/24th the original ETF.

  25. MooseOfReason says:

    You can’t have a monopoly in a free market unless a company receives the government’s help.

    The government and the FCC restrict entry into the communications market. That’s why we have a lack of competition and high prices.

    “Deregulation” is such an ugly word nowadays, though…

  26. RandomHookup says:

    It’s about time Consumerist got a little disemvoweling.

  27. Red_Eye says:

    The phone companies are doing the same thing the record labels did. They continued to subdivide the charges and profits until they nickle and dime you for just short of every smallest portion, then they expect you to suck it up when they all decide to raise the rates. I call it unlimited profiteering, the point a company crosses when all that matters is earth shattering growth in profits.

    Back in the day the reason so many Mom and Pop businesses never grew was because they served their purpose. They gave their owners a job, a income and provided a needed service to the community. When companies became held by thousands or millions of owners they got big enough that they can Walmarterize the competition out of business. They do this by taking a short term loss, to kill the profits of Mom and Pop until they are gone then they raise their prices back up slowly over time until they surpass that of Mom and Pop because after all they are only in this for the financial growth, not to maintain a status Quo and a balanced economy.

  28. Mary Marsala with Fries says:

    Just stepping in to wave my hands as A Consumer Who Refuses To Pay the Outrageous Prices for Text Messaging!

    This is obviously price-fixing and collusion; nothing else can explain the uniformly astronomical profit-margins. And while I’d like texting and would probably use it, I refuse to buy it until it costs a reasonable amount per KB, and until I’m not charged for other people texting me. Quite thoroughly period.

    • MooseOfReason says:

      @Mary Marsala with Fries: How much does it cost you to send each text?

      I use Tracfone, and it costs 0.3 units to send one, and I spend $20 on a 60 minute card. My phone automatically doubles the minutes, so that’s 120.

      120/.3 is 400. 20/400 is 5 cents per text message, less if I use a promo code to get more minutes.

  29. vladthepaler says:

    What’s with disemvowelimg your own headline?

  30. Anonymous says:

    I commend Mr. Kelsey for standing up for the consumers. My main concern w/cell phone companies is w/the early termination fees. That bothers me more than text costs.
    I would like to see Mr. Kelsey take on companies that provide cable services, such as Comcast. We MUST have the ability to order stations “a la carte” because we have NO CHOICE! Our bill is rediculously HIGH because of that!!