Congress to cell carriers: Why have SMS rates doubled?

Thu Sep 11, 2008 10:22AM EDT

See Comments (163)

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]

 

Comments on Congress to cell carriers: Why have SMS rates doubled?

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  • 46 Posted by hhh2003 on Thu Sep 3, 2009 4:18PM EDT Report Abuse

    I pay $20 a month for unlimited data, internet, email, and text with T-Mobile for my Sidekick.

  • 47 Posted by samuraiswrd on Thu Sep 3, 2009 9:02PM EDT Report Abuse

    Yea i send nearly 100 texts a day .I mean at the end of the night i have to erase my phone cause thats all its able to handle . I think i like the plan better cause i would be spending like 25 bucks a day paying for each one .So i wouldn't switch if they lowered prices .But if they do lower prices my plan should be lowered too .I pay like 93 bucks amonth for my cell plan and i only got 450 mins .Thats outragous if u ask me .Especially sence my friend has three cell phones with the exact same plan i use and is only paying 200 a month .Doesn't add up to me .I think the companys just make u pay what they want really .

  • 48 Posted by zxyggrhyn on Thu Sep 3, 2009 11:02PM EDT Report Abuse

    On #51:The unlimited text promo still has a fee, of course! Php 20 (less than half a dollar, 2008) per service per day.

  • 49 Posted by navydesvet on Thu Sep 3, 2009 7:34PM EDT Report Abuse

    It's not oil, it's only greed. The cellular rates have skyrocketed in the last few years due to these companies seeing an expanded use of this service and want to maximize their profits and screw the American people. What doesn't make any sense is that it takes less airtime to send a text then it does a standard call. The only thing in common with the oil companies is they are willing to bite the hands that feed them (the American people). I'm glad to see someone in our government get off their arse and question them about it. Now if they will just DO something about it.

  • 50 Posted by chimpanzeex3 on Thu Sep 3, 2009 3:23PM EDT Report Abuse

    1-2 messages per month??? i checked my usage details and i have used 1600 text messages just this month!. thank God for unlimited!.

  • 51 Posted by tsmith191 on Thu Sep 3, 2009 10:23PM EDT Report Abuse

    Yes, I remember text messaging use to be free, & I think it should be free again! I have 3 differnt phones on my account & I've put a block on all text messaging on all of my phones. I don't see why we should pay more money, for something that is an option on our phone. I have US Cellular, so until they become free again, I will not be sending text messages. Why pay more, when I can call the same person for free? I think everyone should stand up & quit sending text messagin, force them to make the changes!

  • 52 Posted by sleman_abu_salim on Thu Sep 3, 2009 9:27PM EDT Report Abuse

    Well I know Sprint/Nextel has plans where you get text messaging for free, which is what I have. I love text messaging because I hate actually talking with my wife. So typing with my thumbs is soooo much better:) But really it is better.

  • 53 Posted by revelatorseyecandy on Thu Sep 3, 2009 8:37PM EDT Report Abuse

    I think it is ridiculous how much they charge for individual text messages. I text very rarely, so don't want to pay a monthly charge for a bundle/package. It just goes along with how much cellular phones cost in general these days. They used to have a "safety" plan that had a minimal charge for minimal usage, but most don't even offer those plans any longer.

  • 54 Posted by tatlo9 on Thu Sep 3, 2009 9:57PM EDT Report Abuse

    They Are Gouging US. Costs em the same amount or LESS for them to send our text messages than in 2005. Lack of competition always leads to higher prices. ONWARD SENATOR KOHL... make the pricing reflect the actual cost of sending them, not the inflated $0.20 a message they are gougin us with now!!!

  • 55 Posted by blondebn8 on Thu Sep 3, 2009 3:09PM EDT Report Abuse

    um well i have a unlimited internet,email,and text/pic messaging on my sidekick and its only 20$ a month?so i think thats a pretty good deal.so maybe if its 14$ a month just for texting for yall maybe you should switch to t-mobile,because t-mobile is the gnarrr shizz

  • 56 Posted by ljrichards76 on Thu Sep 3, 2009 6:55PM EDT Report Abuse

    Three years ago, my texts were 5 cents a minute after I used the 300 that came with my minute plan. I changed phones, and they took away my free texts and made them 10 cents each. When they raised the overage to 20 cents each, I bumped my plan up again. Yep. Guaranteed revenue for them and definitely because of the lack of competition.

  • 57 Posted by scotmcampbell on Thu Sep 3, 2009 9:08PM EDT Report Abuse

    I suppose if text messaging cost 20c a few years ago, then the price would not have increased, as that was the focus of the article.

  • 58 Posted by dblissmn on Thu Sep 3, 2009 3:39PM EDT Report Abuse

    It's completely ridiculous. I'm forced into it because too many people I know depend on text and won't even answer voice calls half the time. On Verizon we've gone from 2 cents incoming, 10 cents outgoing, to 20 cents for all messages, and the $2.99 bundle has been discontinued, leaving the $5/250 message one as the cheapest. The $2.99 one would have been perfect for me, and the old a la carte package would have been manageable, but as I see it they're just trousering an extra $2 to $3 a month of my money for this.

  • 59 Posted by annemhammer on Thu Sep 3, 2009 2:55PM EDT Report Abuse

    People,almost every provider will let you sign up for unlimited text at a low rate. This will allow savings with your voice minutes. Example, Sprint includes "UNLIMITED" text with most packages. Keep up with the times.

  • 60 Posted by sethsaredsfan on Thu Sep 3, 2009 9:14PM EDT Report Abuse

    supply and demand...it's not free for companies to send text messages through the air

  • 61 Posted by jettd42291 on Thu Sep 3, 2009 4:34PM EDT Report Abuse

    the carriers are monopolizing the market. simple as that. look at Europe. no texting fees. look at Asia. u pick ur phone, then the wireless provider. just another strange American way of doing things

  • 62 Posted by ryannrita on Thu Sep 3, 2009 8:57PM EDT Report Abuse

    HOW ABOUT THIS ?? I do not care about TEXTING, HOWEVER, my plan includes texting ( in otherwords, texting IS AVAILABLE) if I want to use it. This is the problem, I DO NOT want texting and do not use it BUT IF someone texts me, AND I READ IT, I pay pay..smile..so I dont read it...what happens...I get texts from who knows who, guess t-mobile stores them... and get beeps...messages..etc...that here comes a text message... ANNOYING... If I accidentally push to read it..darn...pay again... wonder how many they store before they get tired of storing...ha, probably until I change plans...they probably have to store them due to some idiotic govt law.... smile... o well..Keep on Texting..but DONT text me, I TRY HARD not to read it...but I do hear your annoying BEEP BEEP...

  • 63 Posted by acornell70 on Thu Sep 3, 2009 2:45PM EDT Report Abuse

    my husband has trache tube in his throat & cannot talk. This has enabled to have conversation with his entire family. Its just not fair since he does not use the regular voice service at all.

  • 64 Posted by r33fkeeper on Fri Sep 12, 2008 5:37PM EDT Report Abuse

    I text out of country. They have no bundled plan for that. How convenient!? Still 20 cents per text for me. And it doesn't matter if I send OR receive them. I had some trouble with one text being sent to me over and over more than 25 times. That's five dollars for the same text. They were nice enough to deduct that from my bill though. I have switched to mostly email due to too many phone bills over $250 (mostly from S/R texts.

  • 65 Posted by primalfear6662006 on Thu Sep 3, 2009 8:18PM EDT Report Abuse

    No one gives a crap about all of you punks texting. You should be charged a dollar per text if it were my choice. All your heads are always so shoved into a phone all the time, the real world has escaped you. People at work are always texting and not doing there jobs...and you wonder why amaerica cant compete with anyone anymore. I suggest you run your stupid gadgets over with your car, oh yeah you cant its glued to your ears and your not paying attention to the road...you deserve to be charged the money your charged cause if you would back down from using your gay lil phones all the time the companies wouldnt charge yuo so much.

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