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Senator accuses carriers of abusing SMS fees

updated 04:10 pm EDT, Wed September 10, 2008

Senator on US SMS Fees

Wisconsin Democratic Senator and Antitrust Committee head Herb Kohl today submitted an open letter to the heads of all four major carriers in the US challenging them to justify the reasons for what appear to be unnecessarily high fees for SMS text messaging. The representative notes that non-plan text rates have doubled on AT&T, Sprint, T-Mobile and Verizon since 2005 but that the cost of transferring a message across the network should have remained the same or declined since that point, suggesting attempts to inflate profits per message.

Kohl also indirectly raises the possibility of collusion between the carriers and notes that the most recent batch of price increases, to 20 cents per message, all happened within a short space of time starting from fall of last year. The Senator sees this as unusual given that the carriers' rivalry should logically dictate a gradual lowering of prices rather than an increase.

"This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace," he says.

Text messages in recent years have become steadily inconsequential as a portion of US carriers' rates; a single message represents a maximum of about 160 characters and is widely known to cost just a fraction of a penny in most cases. Most providers offer unlimited data for as little as $20 or as part of bundle plans but in many cases break out SMS as a separate service that either requires an extra plan or else the high per-message fees.

The Senator accordingly plans to have the carriers illustrate the relative pricing of their SMS messages versus voice, e-mail and other data features as they have changed over the past three years.

Carriers have until October 6th to respond with the relevant data but haven't publicly commented on the letter.

It's unclear if any particular event triggered the investigation, though text messaging became a point of contention with the introduction of the iPhone 3G, when AT&T both switched the Apple device to a more expensive smartphone plan and dropped previously bundled SMS message allotments, asking customers to instead pay at least $5 per month more to add a block of messages to avoid incurring higher per-message costs.



By Electronista Staff
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Comments

  1. greenG4

    Grizzled Veteran

    Joined: Aug 2002

    +4

    Finally!

    It's about time. A couple years ago wouldn't have been bad either...

  1. jameshays

    Fresh-Faced Recruit

    Joined: Mar 2003

    -7

    Consumers

    But yet, Consumers are dumb enough to buy these unneeded services. The 5 dollars I spend for my 200 messages is well worth it to me.

    The dollar bill should always trump regulation and in this case it has. The American public has spoken and they have no problem with their Cell bills.

  1. greenG4

    Grizzled Veteran

    Joined: Aug 2002

    +1

    Re: Consumers

    I am all for consumers dictating pricing and a free-market economy as much as possible. But, consumers don't have a choice at the moment when all major carriers are jacking up SMS charges. No matter, I expect I will no longer need them when iPhone background apps are approved and I have a good messaging application.

  1. jhawk95

    Fresh-Faced Recruit

    Joined: Oct 2006

    -2

    jameshays

    That is the most ridiculous thing I have heard in a long time.... So I assume the American public has spoken with their dollar each time they have filled up on $4.65 a gallon gasoline too. So let's not let the price of it drop down. Let's keep paying it.

    People pay the text fees because they have to, not because they are overjoyed with them and think they are a good price. They have no choice, just as most of us, who do not live in the major cities where great public transit is located, have no choice in whether we buy gasoline or not.

    Which carrier do you work for and how much extra is your bonus going to be for seeding that comment?

  1. TheBum

    Mac Enthusiast

    Joined: Sep 2001

    +3

    Coming and going

    My biggest complaint with SMS fees is the way US carriers get you coming and going. On my Family Plan, every message between me and my wife costs double: one fee for the sent message and one for the received message on the other phone.

    I think the UK is doing it the right way: only charge the sender, especially since you can't necessarily control who sends messages to you.

  1. Flying Meat

    Dedicated MacNNer

    Joined: Jan 2007

    -2

    It seems, the more

    I hear proponents of free market systems, the less I like free market systems.
    There's nothing free about lobbyists buying our representatives off, making the world safe for greedy corporate leaders espousing "shareholder value" while stuffing their pockets.

  1. Ted L. Nancy

    Mac Enthusiast

    Joined: May 2008

    -1

    inflation, senator?

    Sadly comical for a politician in the federal government to scold- not just one - but four corporations on income and expenditures. Perhaps they are raising their rates to combat the weak(ening) dollar, brought on by excessive debt to finance war, social programs, the paper used to print the senator's stupid letter, and other things that the illegal income tax doesn't pay for because it only goes towards paying the debt.

  1. JackWebb

    Fresh-Faced Recruit

    Joined: Aug 2007

    0

    Unlike gasoline

    Unlike gasoline, it is easier to live without SMS messages.

    But I'm sad to see the congress having to take the bully position. If congress ends up acting on things like this then the power is even further taken out the hands of the customers. We are even less in control when we make congress and lobbyists the middlemen for this sort of thing. They'll serve themselves and the customer will be served even worse. We still have some control if we keep congress out and hopefully the threatening will wake companies up.

    FM: Read Milton Friedman's Free to Choose. Power to the people with freer markets than we have!

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