Rising Text Message rates
In my uninformed opinion, I’d call some of this an excuse to “assist” users into buying unlimited plans and to offset users preferring to send SMS messages instead of using more expensive voice minutes.
WASHINGTON (AP) — A key member of the Senate Judiciary Committee is asking the nation’s top four wireless carriers to justify the “sharply rising rates” they charge people to send and receive text messages.
In letters to top executives at Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile, Wisconsin Democrat Herb Kohl said Tuesday that he is concerned that rising text messaging rates reflect decreasing competition in the wireless business.
Kohl chairs the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. His inquiry comes as European Commission regulators are threatening to impose a cap on roaming fees for text messages sent by Europeans traveling outside of their home nations, in an effort to force prices down by as much as 70 percent.
Kohl said he was concerned that consumers are paying more than 20 cents per message, up from 10 cents in 2005. This increase, he said, “does not appear to be justified by rising costs in delivering text messages,” which are small data files that are inexpensive for carriers to transmit.
Kohl said he is particularly concerned that all four of the companies appear to have adopted identical price increases at nearly the same time. “This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace,” he wrote.
Kohl also noted that these rate hikes have occurred during the industry’s recent consolidation, which has reduced the number of national wireless carriers in the U.S. to four from six. That consolidation continues, he said, as the large national wireless carriers buy out smaller, regional competitors _ as evidenced most recently by Verizon Wireless’ planned acquisition of Alltel Corp. for $5.9 billion plus the assumption of $22.2 billion in debt.
Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, said it will respond to Kohl’s letter once it has had a chance to review it. And Sprint said “we look forward to responding to the Senator’s inquiry about the text messaging options we offer our customers and we will fully cooperate with his request.”
T-Mobile, which is owned by Deutsche Telekom AG, and AT&T did not immediately return calls seeking comment.
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I’ve read that we Americans are sending more text messages than ever. I wonder if that volume is causing companies to build more capacity, thus justifying the rate increases.
Now that most (if not all) phones allow texting, and many allow data, I’m hoping we’ll see reasonably priced unified plans in the future. (And, my pet peeve, including a data option in family plans.)
Steve
I’m just thinking that people are relying more on txt messages as a cheaper alternative than burning their cell minutes and the providers are seeing a drop in income… especially as they sell their plans based on lower cost minutes/bulk minute plans
Maybe, but if texting has increased 10-fold in the last couple of years, that could be a significant enough increase justify a price increase. (I don’t know if this is the case; I’m just playing a bit of Devil’s Advocate here. If anybody has real numbers on texting, please let us know.)
Perhaps, but I haven’t exceeded my cell phone minutes in a long time on my family plan. My daughter did exceed her 250 text allotment a few times, though.
Also, I’m not sure why somebody would use texts to offset minutes for anything but the shortest exchanges. I don’t know how pre-paid plans work, but most contracts include a bunch of anytime minutes, plus free nights/weekends. So the only time texts would save is if you’ve reached your minute limit and are calling during peak times and either have a texting plan or the texts you use will be cheaper than the overage minutes.
For example, overage cell phone minutes cost me $0.45, I believe. If texts cost $0.15 each sent/received, any message longer than 160 characters would get split into two and a reply acknowledging my text would break even. Anything more than would make texts more expensive than a minute of calling time. I think I could get my message out using voice in a minute or so.
Also, I assume that anybody who does significant texting already has a text plan in place to cover their typical usage, so raising individual text message costs would only hit those who text infrequently (and therefore it wouldn’t be a lot of money extra) or those who go over their texting limit.
Finally, if this increase is to offset a loss in revenue from calling minutes, all a consumer has to do if it gets too expensive is switch to an unlimited texting plan. That will cap their losses.
Steve
Oh yeah, I forgot one thing. I am glad that it’s being looked into. I also wondered whether the infrastructure cost of texting has really gone up.
Steve