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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  • 66 Posted by lsanth on Thu Sep 3, 2009 6:58PM EDT Report Abuse

    I can send text messages to someone's cellphone free via my email. That they charge that much is outrageous and why I only send a text message once/twice per month.

  • 67 Posted by papaof_6 on Fri Sep 12, 2008 5:38PM EDT Report Abuse

    20 cents a message? Please, I'm with US Cellular and it has jumped to 30 cents a message. I don't have a bundled package, but with the individual messages getting so expensive, I may have to go to that. I think the cost of texting is ridiculous!

  • 68 Posted by theemailoftom on Thu Sep 3, 2009 10:04PM EDT Report Abuse

    i think im paying 15 0r 20 daollars a month for unlimited, rediculous, im already paying enough for just the rest of the plan, they should be free. used to only be 5 dollars with tmobile. and they should deffineately COME WITH any and all data packages, no reason for them to cost more.

  • 69 Posted by numba1goalie on Thu Sep 3, 2009 7:42PM EDT Report Abuse

    I couldnt agree with this article more. It seems every year the cost of these messages goes up. What's even more insane is they even charge you for messages RECIEVED. What bothers me about that is you cannot prevent people from texting you, even if your cell is off, they appear when you turb it back on. And the companies have no way of turning off the texting capabilities. The cell phone companies mut be run by the same guys who run the oil companies?

  • 70 Posted by moviewizman on Thu Sep 3, 2009 7:27PM EDT Report Abuse

    texting on a phone is as lame as it gets if i want to text ill use yahoo on my computer or something. a phone is to talk on. phones have gotton retarded over last 5 years and will get worse in the future. a phone should not be a computer, you want a portable computer buy a laptop jeez

  • 71 Posted by kartman9 on Thu Sep 3, 2009 4:47PM EDT Report Abuse

    Text messaging rates are a complete scam. In 2006 I had unlimited texts with T-Mobile; it cost me $6 a month. I got it again because my usage was going over, now it costs $12 a month!!! How in the heck can they jusitfy such an increase? Its not like the texts are using gas to get around. Cell phone companies are all scammers, it goes beyond text messaging.

  • 72 Posted by raven_cool_0704 on Thu Sep 3, 2009 8:29PM EDT Report Abuse

    The company shouldnt charge all of the incoming sms coz its already been paid by the person who send it. Its nice to receive sms, but the sad part is every sms that I receive cost more than i sent. I have a lots of friend sending me sms. SO INCOMING SMS SHOULD BE FREE.....

  • 73 Posted by moviewizman on Thu Sep 3, 2009 7:27PM EDT Report Abuse

    kids today are retarded and anyone else who thinks texting is awsome. i have a son who lives on his phone and never says a word wtf

  • 74 Posted by sunnyface1688 on Thu Sep 3, 2009 9:48PM EDT Report Abuse

    I was shopping in AT&T for my family mobile plan and I noticed that the text message options they are offering is ridiculous! The 200-txt one costs 5 bucks but the next available option is 1500-txt for 15 bucks!!! I only need 400 but it is NOT available at all! Why is there such a big gap between these two numbers? Because the company wants our money badly so we HAVE to pay a higher price just in case we go over the txt limit? That's so unfair!!!

  • 75 Posted by y2my2my2m on Thu Sep 3, 2009 10:54PM EDT Report Abuse

    I am one of those who prefer the impersonal text over the call. I am on the phones all day at work so last thing I want is to be on the phone more then I have to. One the "qwerty" keyboard phones came out it was over. So easy to do why not?

  • 76 Posted by delly15207 on Thu Sep 3, 2009 3:40PM EDT Report Abuse

    I don't understand why we have to be a prisoner to the big 4. Some of the smaller carriers have excellent plans. Cricket has an excellent plan. For 60 dollars per month everything is unlimited. Do the math. The selling point is that they give the phone to the customer for almost nothing, but they lock them into a 2 year or longer plan. Wake up buy the phone at full cost and get into an affordable plan with a not big four company.

  • 77 Posted by caps88 on Thu Sep 3, 2009 3:17PM EDT Report Abuse

    It's the digital natives that does most of the text messaging, and they are not of age to vote. As consumers we need to tell cell phone operators that they need to change the way they charge. United States, compared to Asia, is one of the worst cell phone providers.

  • 78 Posted by bikerdog65 on Thu Sep 3, 2009 3:07PM EDT Report Abuse

    I purchase a plan for texting, so i'm not so worried about all the extra charges. What we should be asking is why they get paid double for everything??? It not only costs the person sending the text or making the phone call, but also costs the person receiving the text or call. So in reality, they are not getting 20 cents, its 40cents. They also charge you air time minutes for texts as if it were a phone call. This is how Verizon works when you look at your detailed usage. Now that robbery!!!! CAN YOU HEAR ME NOW???

  • 79 Posted by genescampers on Thu Sep 3, 2009 4:07PM EDT Report Abuse

    I use twitter a whole heck of a bunch. I think that this whole text messaging thing can be parralled to the internet rumblings back in the 90's. Some people want to have unlimited internet because of heavy use. Others want to pay less because they use it less. Neither party should be penalized (over-charged, etc.) for choosing one or the other. Also, if you really want to complain about something, just stop using the service all together and let the people that want to use it be.

  • 80 Posted by etmoconnell on Thu Sep 3, 2009 3:56PM EDT Report Abuse

    The carriers need to explain their incremental costs associated with the increase in text usage. It would appear that increased margins by the carriers far exceed the costs involved with texting.

  • 81 Posted by dickweiss on Thu Sep 3, 2009 3:42PM EDT Report Abuse

    It's gouging if you're not bundled ad market manipulation if you are. While he's at it, the Senator should also question the practice of the company charging both sender and receiver for messages, voice or text. With scams and marketing use of cell phone and text messaging, the phone companies are reaping the benefits - not the consumer.

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

    Big industries like "the four" know that having a monopoly (when a corporation or industry takes control of the whole market) is illegal so instead they own the market together. They say competition brings the prices down so why are all of the prices are going up?

  • 83 Posted by ace.arbonne on Thu Sep 3, 2009 2:44PM EDT Report Abuse

    Even if a text per message was cheaper i would not pay per message apposed to buying a bundle.. As a bundle you get unlimited messaging for no extra cost. As we all know there is that hidden catch in there, that even opening a message "costs" you a message..bundle or no bundle, it counts as a message...they add up quickly and no one keeps track of how many they use!

  • 84 Posted by srussell0925 on Thu Sep 3, 2009 9:38PM EDT Report Abuse

    I dont care how much they go up!! I have unlimited and I will never change. The more we keep using it the more it goes up....some people need to get a life. Everything is going up so deal with it. Complaining isn't going to change. So what it's .20 a text if you dont like it don't use it.

  • 85 Posted by rcj2dotcom on Thu Sep 3, 2009 8:31PM EDT Report Abuse

    I don't text simply because if I want to get in contact with someone, I call them. Texting is basically saying "I want to tell you something but I don't want to hear your voice or actually talk to you". Besides, most people use text language and for the most part, that's "dumbing down" the kids of today to the point they can't spell even the simplest of words correctly.

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