Congress to cell carriers: Why have SMS rates doubled?

That’s the question that Senator Herb Kohl, chairman of the Senate's antitrust panel, is asking the four big U.S. cell carriers—and SMS rates have, indeed, doubled since 2005. What gives?

In a letter to AT&T, Sprint, T-Mobile, and Verizon Wireless execs, Kohl wrote that text messages still have the same length restriction—160 characters—as they did in 2005. If that's the case, Kohl asks, why do the big four carriers now charge 20 cents per message, compared to 10 cents just a few years ago (this according to InternetNews)?

Maybe because mergers and acquisitions—witness Sprint-Nextel, Verizon-Alltel, and AT&T-BellSouth—have led to less and less competition, Kohl said.

"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," wrote Kohl, who gave the carriers a month to justify their higher SMS rates.

So, how are the big carriers responding? Verizon Wiireless CEO Lowell McAdam told Bloomberg (via the Calgary Herald) that the average price of a U.S. text message has actually "plummeted" in the past few years—that is, if you consider SMS messages bundled with a rate plan.

But then again, that's their whole strategy, isn't it? Boost prices on individual messages to push users toward SMS bundles, which means guaranteed monthly revenue for the big four.

Meanwhile, higher prices or not, U.S. cell users have gone SMS crazy in the past 12 months.

According to the latest numbers from CTIA (the organization that represents the wireless industry), U.S. texters sent 2.5 billion SMS messages in June—each day, mind you, or 78 billion messages for the month.

That's a staggering 160-percent increase over last year, the CTIA reports—as well as a lot of money for the carriers, who collectively raked in $14.8 billion in wireless data revenue in the first half of 2008.

So, what do you think: Are the big four carriers trying to gouge us with text messaging? Would you dump your bundled texting plan if individual messages were more affordable?

Related:
Sen. Kohl: Why Does Texting Cost So Much? [InternetNews]