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[StrikerObi]

This is the best news I've heard all day. Text messages ARE data, yet are somehow classified as being a different kind of data that costs you extra to send/receive. A text message takes up on average 160 BYTES of data and costs you 10-20 cents to send. At this rate it would cost you $0.64 to send a single megabyte of data or $6,40 to send a gigabyte. Basically, packets of data containing SMS messages are being discriminated against and charged a separate rate from non-SMS data. In this way, the issue is very similar to Net Neutrality. Here's Senator Kohl's letter to Verizon, AT&T, Spring, and T-Mobile.

http://www.senate.gov/~kohl/press/08/09/2008909B29.html

September 9, 2008

Lowell McAdam President and CEO Verizon Wireless

Randall Stephenson Chief Executive Officer AT&T

Dan Hesse Chief Executive Officer Sprint

Robert Dotson President and Chief Executive Officer T-Mobile

Dear Messrs. McAdam, Stephenson, Hesse and Dotson:

I am writing to express my concern regarding what appear to be sharply rising rates your companies have charged to wireless phone customers for text messaging. Some industry experts contend that these increased rates do not appear to be justified by any increases in the costs associated with text messaging services, but may instead be a reflection of a decrease in competition, and an increase in market power, among your four companies.

Your four companies are the nation's leading wireless telephone companies, collectively serving more than 90% of the nation's wireless subscribers. Since 2005, the cost for a consumer to send or receive a text message over each of your services has increased by 100%. Text messages were commonly priced at 10 cents per message sent or received in 2005. As of the end of the month, the rate per text message will have increased to 20 cents on all four wireless carriers. Sprint was the first carrier to increase the text message rate to 20 cents last Fall, and now all of its three main competitors have matched this price increase.

What is particularly alarming about this industry-wide rate increase is that it does not appear to be justified by rising costs in delivering text messages. Text messaging files are very small, as the size of text messages are generally limited to 160 characters per message, and therefore cost carriers very little to transmit. Text messaging files are a fraction of the size of e-mails or music downloads. Also of concern is that it appears that each of companies has changed the price for text messaging at nearly the same time, with identical price increases. This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.

What has changed in recent years is the level of consolidation in the wireless telephone industry. The number of major national competitors has declined from six to four. And the large national wireless carriers continue to acquire their smaller, regional competitors, with the announced acquisition of Alltel by Verizon Wireless being just the latest example. As Chairman of the Antitrust Subcommittee, I am concerned with whether this consolidation, and increased market power by the major carriers, has contributed to this doubling of text messaging rates over the last three years.

Therefore, I specifically ask each of your companies to explain why text messaging rates have dramatically increased in recent years. Please explain the cost, technical, or any other factors that justify a 100% increase in the cost of text messaging from 2005 to 2008. Please also provide data on the utilization of text messaging during this time period. Please provide a comparison of prices charged for text messaging as compared to other services offered by your companies, such as prices per minute for voice calling, prices for sending e-mails, and prices charged for data services such as internet access over wireless devices, from 2005 to the present. Finally, please state whether your text messaging pricing structure differs in any significant respect from the pricing of your three main competitors. Please provide this information no later than Monday, October 6, 2008.

If you have any questions regarding this request, please contact Jeff Miller or Seth Bloom of my Antitrust Subcommittee staff at (202) 224-3406. Thank you for your attention to this matter.

tl;dr - Senator Kohl thinks the big four wireless carriers are colluding to increase the price of a text message because these message carry an insanely high profit margin. (Protip: they are).

 

[castle007]

he is just pissed because he wants to text message the prostitutes that he is sleeping with, but it is too expensive!!

 

[milanbaros]

This is the best news I've heard all day. Text messages ARE data, yet are somehow classified as being a different kind of data that costs you extra to send/receive. A text message takes up on average 160 BYTES of data and costs you 10-20 cents to send. At this rate it would cost you $6.40 to send a single megabyte of data or $6,400 to send a gigabyte.

Isn't it $640 at that rate for 1 MB?

edit: or $655.36 even.

Not that it matters really. Nearly all profit for them.

Why do you have to pay to receive messages? That would be shit.

 

[Ceres]

When did text messages become so expensive anyway? It used to be that you got around 100 a month with your regular plan only like 8 years ago. My first contract was with T-Mobile and I got 1000 texts and 300 minutes a month for only $30 a month total.
And it was only a 1 yr contract.

 

[Dolphin]

Uh, this is the bottom of the barrel as far as illegal business practices go for US telecommunications companies.

 

[Cauliflower of Love]

Don't like it? Don't use it.

Bigger fish to fry and all that.

 

[StrikerObi]

Isn't it $640 at that rate for 1 MB?

You're right, I multiplied by 10 instead of 0.10. I'll fix it.

 

[pxleyes]

Don't like it? Don't use it.

Bigger fish to fry and all that.

Gotta love the naive masses.

 

[Pimpwerx]

Don't like it? Don't use it.

Bigger fish to fry and all that.

Ha! No. This is the job of our elected officials. They don't get anything done anyway, but when something worthwhile is pursued, we should support it. PEACE.

 

[hc2]

When did text messages become so expensive anyway? It used to be that you got around 100 a month with your regular plan only like 8 years ago. My first contract was with T-Mobile and I got 1000 texts and 300 minutes a month for only $30 a month total.
And it was only a 1 yr contract.

Since they became so popular. T-moble is now around $5 for 1000 messages a month, they have really made it difficult to get 1 year contracts now. And don't ask about the cost of sending photos. Another thing they will do is, when you change your plan for the amount of messages per month, they cancel the original agreement to the first of the billing period and start the new agreement the day you call. I changed our messages per month from $5 per 1000 to unlimited. They canceled the original plan and left two weeks only covered by per message cost of 50 cents per message. Then the new plan picked up. I called them on this and they backdated the new plan to the first of the billing period.

 

[ice cream]

Dude text messages in Pakistan are 1 rupee which is equal to $0.0130745 . (1.3 cents)
Happy us

 

[Cauliflower of Love]

Since they became so popular. T-moble is now around $5 for 1000 messages a month, they have really made it difficult to get 1 year contracts now. And don't ask about the cost of sending photos. Another thing they will do is, when you change your plan for the amount of messages per month, they cancel the original agreement to the first of the billing period and start the new agreement the day you call. I changed our messages per month from $5 per 1000 to unlimited. They canceled the original plan and left two weeks only covered by per message cost of 50 cents per message. Then the new plan picked up. I called them on this and they backdated the new plan to the first of the billing period.

sms and mms are on the same plan, so what are you talking about sending photos?

And the only time your plan gets reset is when you change your plan, not the additional options.

 

[milanbaros]

I pay 10p to send and nothing to receive on O2 PAYG and its been that rate for as long as I can remember. I think 5p would be a much more reasonable rate, still big profit margin for them even at that price, but with inflation over the years, especially the last 1 or 2, I suppose I should be glad it hasn't gone up.

 

[PrivateWHudson]

Just like Best Buy and Circut City making all of their money on warrenties and Monster Cables. Or Movie Theaters and Baseball parks ripping you off on soda and snacks.

If it was collusion, fine bust them for it. Most likely it was the Verison Guy seeing AT&T getting $0.20 for a text and jacking their price up to make some easy profit.

 

[Dolphin]

Don't like it? Don't use it.

Bigger fish to fry and all that.

Bigger fish? You mean like how US telecommunication companies stole $200 Billion from US taxpayers?

 

[milanbaros]

This is the best news I've heard all day. Text messages ARE data, yet are somehow classified as being a different kind of data that costs you extra to send/receive. A text message takes up on average 160 BYTES of data and costs you 10-20 cents to send. At this rate it would cost you $0.64 to send a single megabyte of data or $6,40 to send a gigabyte.

Thats even more wrong :lol :lol .

 

[Xeke]

I have verizon, my friends have verizon, verizon has IN calling and IN texting. I've got no real complaints.

 

[Cauliflower of Love]

Bigger fish? You mean like how US telecommunication companies stole $200 Billion from US taxpayers?

Yes.

 

[hc2]

sms and mms are on the same plan, so what are you talking about sending photos?

And the only time your plan gets reset is when you change your plan, not the additional options.

You are correct, the rate for text and picture messaging is the same, but higher than I thought,
"Your account will be charged the $0.15 per message rate for domestic text and picture messages."

 

[ronito]

Look, text messages are at the lowest they can possibly be. Why? Because of the free market. They can't possibly go any lower. Sheesh.

 

[Roughmar]

Wut?

 

[Skiptastic]

Seriously, this is the shit the Senate wants to review? Not health care or energy?

:|

 

[HomerSimpson-Man]

About damn time. The cost to data packet size ratio for text messaging is absurd!

Therefore, I specifically ask each of your companies to explain why text messaging rates have dramatically increased in recent years. Please explain the cost, technical, or any other factors that justify a 100% increase in the cost of text messaging from 2005 to 2008. Please also provide data on the utilization of text messaging during this time period. Please provide a comparison of prices charged for text messaging as compared to other services offered by your companies, such as prices per minute for voice calling, prices for sending e-mails, and prices charged for data services such as internet access over wireless devices, from 2005 to the present. Finally, please state whether your text messaging pricing structure differs in any significant respect from the pricing of your three main competitors. Please provide this information no later than Monday, October 6, 2008.

Oh yes, this would put some nice perspective to everything.

 

[Cauliflower of Love]

Companies suddenly have to explain why they want to make more profit?

wtf? I'm tired of seeing whining about companies(read:businesses) gettting shit for trying to bring in more profit for luxuries people crave.

 

[HomerSimpson-Man]

Seriously, this is the shit the Senate wants to review? Not health care or energy?

:|

Well, the guy is the head of the Anti-trust Committee for things like this, when there's decreased competition from telecommunication companies and uniform prices hikes without explanations, it tends to bat an eye towards the Anti-trust Committee.

 

[Skiptastic]

Well, the guy is the head of the Anti-trust Committee for things like this, when there's decreased competition from telecommunication companies and uniform prices hikes without explanations, it tends to bat an eye towards the Anti-trust Committee.

Well, congratulate me on being moron of the year. That's what I get for skimming through the article. :lol

 

[Lathentar]

Companies suddenly have to explain why they want to make more profit?

wtf? I'm tired of seeing whining about companies(read:businesses) gettting shit for trying to bring in more profit for luxuries people crave.

Companies have to explain price fixing. Which is what this is.

 

[Kestastrophe]

Best WI senator since McCarthy

 

[Firestorm]

You guys are complaining about high rates? Move north of the border.

 

[methane47]

A text message takes up on average 160 BYTES of data and costs you 10-20 cents to send. At this rate it would cost you $0.64 to send a single megabyte of data or $6,40 to send a gigabyte.

Zoolander school for kids who cant do math good

edit: late...

Edit edit: ... a FSU supporter?

 

[StrikerObi]

Look, text messages are at the lowest they can possibly be. Why? Because of the free market. They can't possibly go any lower. Sheesh.

Did you read the article? A uniform 100% price increase from four competing companies at nearly the same time looks very much like collusion to fix prices on text messages. Advances in technology make things like this cheaper over time, not more expensive.

He was being facetious.

My mistake then.

 

[NekoFever]

Companies suddenly have to explain why they want to make more profit?

wtf? I'm tired of seeing whining about companies(read:businesses) gettting shit for trying to bring in more profit for luxuries people crave.

When several companies aren't competing but are keeping their prices at the same artificially high point, that's price fixing. If they were actually interested in increasing their profits one of them would be charging the actual cost with a reasonable profit in order to undercut the others and get more business, but the fact that none of them has done this should tell you everything.

Look at the unlimited data plans for iPhones and such: they can afford for you to download hundreds of megabytes of data, but for some reason you're limited to 600 text messages (as on my plan), which works out to 0.09MB.

 

[SouthernDragon]

Hey, our government is doing something!

Hooray!

 

[Cauliflower of Love]

When several companies aren't competing but are keeping their prices at the same artificially high point, that's price fixing. If they were actually interested in increasing their profits one of them would be charging the actual cost with a reasonable profit in order to undercut the others and get more business, but the fact that none of them has done this should tell you everything.

Look at the unlimited data plans for iPhones and such: they can afford for you to download hundreds of megabytes of data, but for some reason you're limited to 600 text messages (as on my plan), which works out to 0.09MB.

Pricing per message are similiar across companies, but they all offer differen tiers of text bundles, and they all seem to have different prices.

Text plans start at $5 for like 300 which is like a penny and a half a message. If consumers can't do the math and see the savings by getting on tiered plans, that's on them.

If there were no tiers or unlimited text plans, then yeah, it'd be absolute bullshit. If people are willing to pay the $.20 per message, companies are gonna push it to see how far they can take. (you can leave your contract if you don't like it when they keep raising prices)

If there's some smoking gun floating around about collusion, like someone else mentioned, then yea, go after them, but I don't see it like that.

 

[Bluecondor]

Companies suddenly have to explain why they want to make more profit?

wtf? I'm tired of seeing whining about companies(read:businesses) gettting shit for trying to bring in more profit for luxuries people crave.

I totally disagree.

Many different industries face social pressure (laws, public opinion, media pressure) to make their products and services available at a reasonable rate to the consumers who need these products.

According to your logic, (companies should be able to charge whatever they want for 'luxuries people crave.'), any item that business defines as a "luxury" could have its price determined by business.

If there is a shortage of water and food after a disaster - companies could easily say that the scarcity of water makes it a luxury, and thus, they want to charge $20 a gallon to flood victims. You don't see that happening though, because there are laws against this type of predatory pricing and there would be a huge public outcry if a firm tred to do this.

In a similar vein, if a group of companies bands together (literally or figuratively) and agrees that an item is a luxury, they cant just sell this luxury for whatever price they want. This is the type of logic that gave us 75 years of Bell Telephone's monopoly (with one type of phone available - the old black phone), price fixing in the oil and gasoline industries, and countless monopolies in various industries.

Luxury pricing has to be influenced by a mix of market forces, legal standards and public opinion. As Nobel Prize winning Economist Milton Friedman argued, "companes ought to generate the greatest level of profit within the bounds of law and ethical custom (i.e. what is generally agreed upon as "socially acceptable")."

Mobile telecom companies have pushed it too far. In the name of pursuing the greatest level of profit from the huge consumer demand for text messaging, they are dangerously close to violating price fixing/collusion laws (particularly since there is a clear pattern that prices have risen for texting across the industry without an increase in costs) and there is a growing public outcry over the seemingly unjustified soaring prices of something that many people now use as a communication staple.

If Milton Friedman were alive today, he would tell the mobile telecom companies to wise up and limit their exposure to potential price fixing suits and negative public opinion on text messaging pricing.

 

[StrikerObi]

Pricing per message are similiar across companies, but they all offer differen tiers of text bundles, and they all seem to have different prices.

Text plans start at $5 for like 300 which is like a penny and a half a message. If consumers can't do the math and see the savings by getting on tiered plans, that's on them.

If there were no tiers or unlimited text plans, then yeah, it'd be absolute bullshit. If people are willing to pay the $.20 per message, companies are gonna push it to see how far they can take. (you can leave your contract if you don't like it when they keep raising prices)

If there's some smoking gun floating around about collusion, like someone else mentioned, then yea, go after them, but I don't see it like that.

The smoking gun is that they all happened to raise their price for an individual text message at the same time.

And yes, you could "leave your contract if you don't like it when they keep raising the prices" but the problem is that every other major wireless carrier is also raising their price at the same time. The consumer is stuck with nowhere to go. This is why laws like the Sherman Antitrust Act exist.

On an entirely separate note, there is no such thing as a "good" texting plan here in the states. They are all ripoffs. Data is data. Text data doesn't cost the carrier any more to send than internet or e-mail data. They are discriminating based on the type of packet. This is unfair to the consumer and ought to be outlawed via a network neutrality act.

 

[White Man]

Did you read the article? A uniform 100% price increase from four competing companies at nearly the same time looks very much like collusion to fix prices on text messages. Advances in technology make things like this cheaper over time, not more expensive.

He was being facetious.

 

[eznark]

holy shit, 20 years in the US Senate and Kohl finally gets around to trying to accomplish something. Dumb or not, it's nice to see the guy finally trying to earn his paycheck.

 

[Variable]

Canadian politicians need to do this to our BS wireless providers.

 

[notsol337]

he is just pissed because he wants to text message the prostitutes that he is sleeping with, but it is too expensive!!

I wonder how often your avatar gets quoted.

 

[jobber]

I wonder how often your avatar gets quoted.

It does nothing because people who want to be "cool" do it too much to the point where it's annoying.


on topic: a few years ago, text messages were free with Sprint. I used it all the time. That's when the phone companies noticed people were texting more than talking which didn't make anyone go over their minutes.So they started making up new bullshit data plans that DIDN'T include text messages.

 

[eznark]

It does nothing because people who want to be "cool" do it too much to the point where it's annoying.


on topic: a few years ago, text messages were free with Sprint. I used it all the time. That's when the phone companies noticed people were texting more than talking which didn't make anyone go over their minutes.So they started making up new bullshit data plans that DIDN'T include text messages.

fuckers! Thinking they can profit off a service they are providing you.

 

[jobber]

fuckers! Thinking they can profit off a service they are providing you.

:lol I don't care. I have unlimited for $6 a month.

I think the issue is why is this a separate charge now when when a few years ago it was included with a data package.

 

[eznark]

:lol I don't care. I have unlimited for $6 a month.

I think the issue is why is this a separate charge now when when a few years ago it was included with a data package.

because a new market emerged and they realized they could charge for a valuable service.

Collusion, which is what ol' Herbie is supposedly concerned about, is an entirely different issue.

 

[Wizman23]

Just get a blackberry and use Blackberry messenger. Problem solved.