[ Photo courtesy of: kiwanja ]
Mystified as to why the cost of a text message from all the major cell-phone carriers rose to a hefty 20 cents apiece in recent years? This in spite of the continuing rise in popularity of messaging—and, presumably, its value as a competitive feature of cell-phone plans?
Joel Kelsey, an advocate with Consumers Union, the publisher of Consumer Reports, today called the price increases in text messaging “a failure of competition, because the increases are manifestly unnecessary to cover provider costs.”
Kelsey emphasized that text-message files are very small—with five hundred of them containing less data than a one-minute voice call, he says. Further, Kelsey points out, there’s been an “explosion of texting” in recent years, with carriers reporting up to a six-fold rise in text transmissions within just a few years.
“Carriers should be experiencing economies of scale and sharing that savings with consumers,” says Kelsey. Prices are discounted heavily for text messages bought in monthly bundles that typically run into the hundreds. But carriers have steadily, and in lockstep, raised the price of sending single texts.
As CU has noted, less than four years ago rates to send a text message were 10 cents per text at the nation's four big wireless carriers: AT&T, Sprint, T-Mobile, and Verizon Wireless. Each company then raised rates to 15 cents, then to 20 cents.
To CU, these text-message rates, along with exclusivity deals for certain cell phones, exemplify the need for “more oversight” into the wireless marketplace, to “determine if government intervention is necessary.”
You can view the testimony of Kelsey and others as part of a live webcast on the hearing, which is scheduled to begin at 2:30 pm today. —Paul Reynolds
[Update: Read Joel's testimony here (PDF) ]