Hear Us Now: Now Hear This Newsletter, September 11, 2008

Now Hear This

An open and frank discussion of media and telecommunications issues - from the consumer point of view.

Now Hear This Newsletter, September 11, 2008

Posted by Bob at 09/12/08 11:10 AM

The U.S. Senate’s top antitrust watchdog is asking the nation’s leading wireless companies why they have recently doubled their charges for text messages.

Sen. Herb Kohl (D-WI), chairman of the Senate Antitrust Subcommittee, has sent a letter to the presidents and chief executive officers of the four largest U.S. wireless telephone companies asking them to justify sharply rising rates for customers to send and receive text messages. Kohl’s letter requested an explanation from Verizon Wireless, AT&T, Sprint and T-Mobile, which collectively serve more than 90 percent of the nation's cellular phone users.

In his letter, Kohl said was concerned about the market domination enjoyed by the four companies.

“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,” wrote Kohl. “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.”

Until recently, rates for text messages at the big four carriers was 10 cents. Sprint became the first carrier to increase the text message rate to 20 cents, jacking up its charges last fall. Now all of its three main competitors have matched Sprint’s price increase.

Kohl wrote that what he finds particularly alarming about the industry-wide rate increase is that 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.

Kohl notes that what has changed significantly in recent years is the level of consolidation in the wireless industry, where the number of national competitors has declined from six to four. And the large national wireless carriers continue to acquire their smaller, regional competitors, with the announced $28 billion 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,” wrote Kohl.

Among the specific requests from Kohl to the wireless carriers:

An explanation of the cost, technical or any other factors that might justify a 100 percent increase in text messaging rates.

Data on the utilization of text messaging from 2005 to present.

A comparison of prices charged for text messages to other services offered by the companies, such as prices per minute for voice calling, prices for sending emails and prices charged data services such as Internet access over wireless devices.

A statement of whether each company’s text messaging pricing structure differs in any significant respect from the pricing of its three main competitors.

Kohl requested the companies supply him with the requested information no later than Monday, October 6, 2008.

You can read Sen. Kohl's letter by clicking here.

Comments

1 Posted by tafida elsherif at 09/12/08 12:36 PM

I agree they are over charges for any reason even you pay for unlimited text and I pay every month between $150.00 to $200 for any exter charges ply taxes that is a ripoff

2 Posted by Jake at 09/12/08 05:41 PM

What I see on the highways and in the city streets
They should eliminate text messaging altogether.
It used to be when you saw a vehicle weaving down the road, drifting out of lane, or making erratic speed changes. You used to say another drunk driver. Now I see it 100 times more than with DUI's and they are all either talking on the phone or trying to read or send texts. I see a couple a dozen near misses everyday on my 7 mile drive.

3 Posted by Murray at 09/13/08 09:05 AM

This is the result of the complete communications industry control of our Federal, State, and local politicians by financiial campaign contributions and lobbying. Also the increased rates generate higher tax returns to our Government. Regulation is most necessary.
In the last three years my total billing for Telephone-Internet, Mobile and Cable has increased over 40%.

4 Posted by everett whitney at 09/17/08 03:23 PM

The era of "Ma Bell" ended back in '84 - but - there was never the assortment of incorrect billings, fees, add ons, penalties, mandatory contracts, etc., that are now commonplace.

Cell Phone versatility is awesome, of course, but as the world economies continues to drop, this too will finally meet it "doom", with ever-increasing total annual expenses eventually bringing about mass cancellations.

Now Hear This

An open and frank discussion of media and telecommunications issues - from the consumer point of view.

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