Sen. to carriers: Why do text messages cost $1,300 per meg?

Sen. to carriers: Why do text messages cost $1,300 per meg?

Summary: Did you see CrunchGear on AT&T's text charges? (I found it via Ars) It seems at 20 cents per message, AT&T is charging $1,310.

Did you see CrunchGear on AT&T's text charges? (I found it via Ars) It seems at 20 cents per message, AT&T is charging $1,310.72 per megabyte at those rates. The rising rates for texting prompted Sen. Herb Kohl (D-Wisc.) to write a letter to the cell companies requesting information on the reasons why and wherefore.
Since 2005, the cost for a consumer to send or receive a text message over each of your services has increased by 100%. Text messages were commonly priced at 10 cents per message sent or received in 2005. As of the end of the month, the rate per text message will have increased to 20 cents on all four wireless carriers. Sprint was the first carrier to increase the text message rate to 20 cents last Fall, and now all of its three main competitors have matched this price increase.

... 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. ...Also of concern is that it appears that each of companies has changed the price for text messaging at nearly the same time, with identical price increases. This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.

And what was he expecting from our telecom policy?
I specifically ask each of your companies to explain why text messaging rates have dramatically increased in recent years. Please explain the cost, technical, or any other factors that justify a 100% increase in the cost of text messaging from 2005 to 2008. Please also provide data on the utilization of text messaging during this time period. Please provide a comparison of prices charged for text messaging as compared to other services offered by your companies, such as prices per minute for voice calling, prices for sending e-mails, and prices charged for data services such as internet access over wireless devices, from 2005 to the present. Finally, please state whether your text messaging pricing structure differs in any significant respect from the pricing of your three main competitors. Please provide this information no later than Monday, October 6, 2008.

Ars reports this is "more of an opening of the discussion about these issues," according to an anonymous staffer. "We have an open line, and we aren't condemning them without hearing what they have to say."

Topics: Collaboration, Hardware, Mobility

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • How about this Senator

    It's none of your damn business.

    Or, on a politer note, point him to a copy of anything written
    by Thomas Sowell.

    Or, I guess you could give the short answer: Because we can.

    To which the Marxist will reply: That's not fair.

    To which the Marxist loving tyrant will say: Cool, that means
    the ignorant masses will grant us power to control one more
    aspect of their lives, and then two years later wonder why there
    are shortages everywhere and blame the nearest Republican.
    • Not sure what planet you are on?

      Are you against him finding out why the charges are so high?

      You don't happen to be a SEO or senior manager of one of the said companies do you?
      • Yes, I am against him finding out

        because it's none of his damn business in a free society.

        And, no I don't work in the cell phone industry at all. I'm just
        becoming more and more alarmed at how the state feels it is
        entitled to interfere in the affairs of business because it
        ALWAYS leads to shortages, hardship and suffering.

        Fannie Mae and Freddie Mac are the latest examples.

        But, I am definitely the lone voice in the wilderness on this
        because most people, conditioned to think that business exists
        as a giant entitlement engine and that the state should
        guarantee "fair prices" and "fair wages," will be cheering this
        senator on.
        • Free Market / Antitrust.

          I don't think you are alone on this. I do like a lot of aspects of free market. I believe in free market, but I also believe there is an underlying set of ethics and intrinsic responsibilities tied to every single entity participating in free market.

          I am against the state interference of normal free market ecosystem. Our Cellular telecom industry isn't exactly healthy.

          1.) We rank on the bottom 30% of the world for quality of service in wireless services
          We have the among the worst cell networks, and prices are fairly comparable around the world (when you compare it with USD).

          2.) We pay both to receive / send calls or data.
          (The rest of the world only pays when they are the ones sending or calling.) I'm still unhappy with getting junk calls and having to pay for it.

          I however would like to know the answer to this inquiry as well simply because I am a tax paying consumer and under the law I do have a right to know what I am paying for. I'm not interested to find out if the prices are cheap or fair. I am however extremely interested as to whether prices are artificially manipulated by a combination of corrupt commercial practices in the telecom sector.

          Even most of the third world countries have better cell networks than us in the US. What's wrong with that picture? We basically invented the telecom infrastructure and as well as the concept and technologies used in today's wireless communications.

          Check this out: Heidi Lamar

          I fail to see why if we are being the #1 economic gorrila on this planet, that our cell networks are performing that much under par and not matching up to our economic prowess.
          • Bogus arguments

            You know exactly what you are paying for: cell service and text

            Regarding collusion? No evidence for that exists at all. There
            are a wide variety of plans offering a wide variety of options.
            You can get by message texting plans with prices varying by
            provider. You can get unlimited plans. You can get a data plan
            with a smart phone and use instant messaging to completely
            bypass texting.

            No, what this is about is a senator who wants to flex his power
            and stomp on some people.

            But what also concerns me is this attitude that the state is
            always pure in its motives (except when they are Republicans)
            and that business is always evil. The classic recent example is
            the witch hunt on the oil companies (I also do not work in the
            oil industry), in which the state via Nancy Pelosi actually
            advocates the nationalization of the industry.
          • Bogus proxy

            First I am not an American but an Australian, Companies have a responibility to be fair, otherwise your banks could in theory up your interest on your morgage to the points it is loan sharking. Also the way those teleco are running over there amounts to conspricary acting as a monopoly, Why shouldn't a comapny be morally tied to better pricing ? Why should it be about money should it not be better serivce also, after all the goevernment around the world protect there markets (ie licensing for use of radio frequenceies as no one actually owns the the radio waves but society allow(thru government) to guareentee use of the frequecies by the companies to be for their exclusive use, now you defend so companies but they are answerable to the people because it a resource to be shared or agreed to used in the many to benefit all including your compaines. As for profit yes it has to be worth while but not extreme, ie sending out bills of thousands of dollars because so idiot teenage daughter is riduclous, they should be realise there is an out of control person and cut them off (ie like people at the bar), there is no doubt that big companies make enough. Big Oil and Big Telco dont need you defending them they got plenty of cash and lawyers for that so pull you narrow minded view up your arse, you bogus proxy of the companies... You wanna take a bullet for em sure go ahead but don't sell it to the more enlightened (no I am not religous )//
          • Referencing the oil companies right now...

            is just downright funny. Maybe you haven't been
            tuning into the news lately, but the oil companies
            have been plying federal regulators with illegal
            drugs, sex and money. Why do you think they'd be
            doing this, eh? Out of the kindness of their hearts?
            Or maybe because they want to skirt around the law?
            As for nationalizing the oil industry...oil is a
            natural resource and most of the major drilling is
            going on in publicly owned lands. That makes the oil
            public property, and I'm betting we'd get more money
            to pay off the trillions of dollars of debt this
            government has racked up keeping the oil revenues in
            our pockets rather than oil companies out to soak us.
            The people in Alaska understand this quite well, which
            is why they have a revenue sharing program for their
          • There must be collusion

            What we see in Canada is sort of reverse competition. When Cell phone company announces they are charging for outgoing text messages suddenly all the other match it. To me that just seem odd.

            If I have cell service with Company A and company A starts raises my rates then shouldn't Company B expect more customers? You'd think so but no. Company B raises their rates to match so there is no reason for me to switch providers. What's with that? Collusion maybe? Sure sounds like it.

            It's like all the companies got together and decide they all raise the their rates at the same time to maintain the status quo. This all run counter to free market where competition is healthy.
          • Maybe.. Maybe not..

            [b]If I have cell service with Company A and company A starts raises my rates then shouldn't Company B expect more customers? You'd think so but no. Company B raises their rates to match so there is no reason for me to switch providers. What's with that? Collusion maybe? Sure sounds like it.[/b]

            It could also be a case where Company B sees that Company A is getting away with charging more for a given service - so they figure "COOL! What the heck, if they can get away with it, so can we..." - and they raise prices. This, of course, is followed by Company C, D and E all running with the same mentality.

            All companies want to make a profit. If they don't have that as a primary goal, they usually aren't in business for very long. Witness the dot bomb bubble of the late '90's. Billions in venture capital blown through, many times without a business plan or a clue as to how the company was going to make any money.

            At least the cellular companies have the profit thing down. Collusion? Nah.. Doesn't have to be. It may look bad, but I don't see it being necessarily a given.

            At the moment, the cellular market is fairly saturated. If you can find a new means to increase the bottom line, and it means jacking up your prices, then what the heck. The share holders will be happy. Wall Street is happy. Given the CEOs of the other companies are also looking at ways to raise their gross income, they're likely to follow in your footsteps. Customers look at it as part of the fact that everything else is going up.

            I don't see texting as being a primary decision factor in choosing a cell carrier. If you're a heavy texter, you're likely to have an all you can eat text plan. If you're not, then you're not likely to be caring quite that much. You'd be more concerned with the cost of your voice minutes and the deal you can get for that.
          • Bear Sterns, etc.

            Bear Sterns wasn't a socialized private company yet our government still bailed them out. As they did with the airlines, as they did with Chrysler years ago, and the S&Ls in the 1980's..... Corporations can't have it both ways. They can't tell the government not to regulate them but then expect handouts when they're in need. Yet they do. So yes, the Senator has EVERY right to ask for the information.
          • Safeguards

            If it turns out that text messages cost the phone company 1/2 cent each and you are getting billed 20 cents, don't you think they are price gouging the public? And if they cost the telecoms 18 or 19 cents each then they are justified in their price structure.

            If the oil companies were not under any obligation to keep prices at a reasonable level our gas could be costing us $6 a gallon right now.

            It is a necessary evil for our government to watch out over these companies and make them justify their pricing. If no one did, these companies could all do as they please. Perhaps the Senator is on to something and perhaps the "jig is up" with the telecoms. They could lower the price as a result of being caught red handed.

            And, since you keep referring to Republicans..... oh, nevermind. That's another debate altogether.
        • Actually if you took 5 minutes to do some research

          you would find that both Fannie Mae and Freddie Mac failed because of a complete lack of oversight and regulation. The government had to step in and hopefully cover the loans they have and still not lose investor confidence.

          They are two examples of how capitalism without control or constraint can and will destroy itself.

          that last link is a prime example of why special interest lobby's must be stopped or curtailed and castrated so as not to impose such a large amount of political clout.
          Jim Blaine - Bellingham WA.
          • Incorrect

            Fannie Mae and Freddie Mac failed because they are what Thomas
            Sowell refers to as socialized private companies. In other words,
            they can gain all the rewards, but never have to take any of the
            risks because the federal government ensures they will be bailed
            out at taxpayer expense.

            When you are guaranteed solvency by the federal government,
            you are the most federally regulated business possible.
          • That's it...ignore the facts.

            Stay on point, don't let pesky things like facts get
            in the way of a good argument. Ignore them when they
            point out that regulators were asleep at the wheel for
            years. Ignore also the little tidbit that pure
            capitalism, just like pure socialism, can't exist in a
            vacuum because of human greed. Ignore the history of
            this country when we didn't have federal regulation
            telling big business "you just can't do that" with
            things like sweat shops, forced child labor,
            indentured servitude and predatory monopolistic
            practices. Ignore all these things and more because
            big business is our would never do
            anything to harm this country.
          • No you are incorrect.

            In your fervor to assign a socialist tag to every gnat fart in existence you are incapable of seeing the evidence in front of your nose.

            Stop with your rhetoric for a minute and do some research. I would like an apology when you find that you are in fact wrong (again) but I know that you are not man enough to admit it, so I won't hold my breath.
            Jim Blaine - Bellingham WA.
          • no, it wasn't capitalism

            it was corruption
            senators and other politicians geting favors, people lining their own pockets, companies writing bad loans and selling them (knowing full well they were bad loans).

            people would go to one compan yand be turned down, then go to a corrupt one and get approved, all would pacoket the money and the loan would be sold.

            same thing happened with the World Bank and lending money to poor countried, the people doin the loans did not care, they go their money up front and went away....
          • It was

            a mix of unregulated capitalism which is easily corrupted by greed. And that is exactly why we are seeing the problems we see today.

            Now before someone decides I am a socialist, stop right there. I am all for capitalism. It's a wonderful tool for moving ahead, BUT it must be regulated so that things like the housing market, Enron, and many other impacting professions do not end up like they did.

            Enron occurred immediately after the energy companies we deregulated. This isn't speculation, this is hard and documented. The same is true of Fannie Mae and Freddie Mac, they were not regulated which led to book cooking, lies and outright deceit, which led to their current position of being bailed out and NOW they are being investigated and there is a lot of damming evidence that is going to put a lot of people away... so long as the judicial system works like it is supposed to.

            But the fact remains unregulated capitalism will destroy itself because of ignorance of those on the outside (consumers) and greed on the inside (CEO and such). And now the American tax payer in on the line.
            Jim Blaine - Bellingham WA.
          • even the forefathers of our nation

            realized that government should not have a hand in a free market society. look at what gov regulation has done to the air travel industry. How many airlines have gone under lately? The energy industry. How many new power plants have been contructed with all the new low cost electrical products we continue to buy today and add to our power grids, increasing our power demands and increasing the frequency of brown-outs and power failures across the nation.

            If your company fails because it makes poor decisions, it's not the people's responsibility to cover your loses and pay you 24 million to buy out your company that failed. because that 24 million you just got payed is coming out of every US citizen's pocket and that's a crime if I ever saw one.
          • You see you are making the same mistake that other make...

            it's not about saving the company but preventing the company from creating a monopoly (Standard Oil, Microsoft, AT&T, etc...) it's also about preventing the price gouging we have seen (Enron, AT&T, etc...).

            It's not about protecting the company at the expense of the tax payer. If you looked at the bigger picture of what is at stake here, you would realize that there is about 1.4 trillion dollars that had the government NOT stepped in when they did, would have taken our economy out completely. In other words making the great depression look like a small pimple on an elephants tush. And that would have cascaded into other world markets as well.

            I don't care if either company sinks or swims. BUT because they made illegal and bad choices the outcome would have been far worse had the government NOT stepped in. So now do you understand what is meant by regulation?

            Companies are free to do as the market will bear, so long as it is legal AND also does not jeopardize our economy. But because these two particular companies have such close lobbiest ties, they were able to literally get away with lying to the public and the government. Also they have very close ties to the Stock Exchange, so when they take a hit so does our economy.

            You have noticed that we are in a recession and that the dollar is very weak with the housing market crumbling all around us. It's because of a lack of regulations and oversight that this has happened. Like it or not, we are not mature enough to have a true free market. So the parents (government in this case) have to step in and make sure the children are playing by the rules.
            Jim Blaine - Bellingham WA.
          • Where are they?

            If the Government is going to bail out these company's, I want to see some people in JAIL!!! It's worse then Enron, so there should be some people in JAIL for LYING along with a lot of other charges. Not leaving and getting millions handed to them in the process. I also don't want the Government to handle half the Home loans in the country. That's NOT the Governments job at all. What other things is the Government going to cover the costs on for people's screw up's? Life can be hard, who says it's the Governments Job to make Idiots and Lazy people's life easier? The more money the Government STEALS from people, the more that's wasted.