Congress demands to know why text message prices have skyrocketed
bySep 11th 2008 3:30PM
Count on it each election season: Our elected representatives finally get off their duffs and start working on things that will actually affect our pocketbooks.
Early this week, Sen. Herb Kohl, who chairs the Antitrust Subcommittee in the Senate Judiciary Committee, sent a letter to the big four cell phone providers to demand they account for their outlandish recent price increases on text messages. Since 2005, the price of a text message has doubled to an industry standard of 20¢, and perhaps not so coincidentally, it has done so with all four phone providers: T-Mobile, AT&T, Verizon, and Sprint.
Kohl, a Democrat from Wisconsin, demanded that the cell phone companies show him paperwork about their price structures, including evidence of what made them decide to raise rates in such a dramatic way. The rate hikes, Kohl says, were "hardly consistent with the vigorous price competition we hope to see in a competitive marketplace," and he intends to look into them.
My cell phone provider, T-Mobile, likes to pretend that I'm still getting a good value for my money. How does it do this? By slipping in the word "just" right before it drops the insanely overpriced charge. As in "send and receive messages for just $0.20 each," a quote taken from its website. Note the leading zero, which I assume is there to make the rate seem lower.
"Just?" That means if I send "just" five messages, I've already racked up a dollar. If a friend sends me "just" five messages, that's another dollar. And woe to me if any of my friends sends me a message more than 160 characters long, because my carrier will break it up into two dispatches and charge me twice for the same note. A standard quip out of Bartlett's Familiar Quotations takes more than 160 characters. This paragraph took "just" 370.
What's more, I have no control over who sends me text messages, but I still have to pay when I get them. Good thing the Postal Service doesn't do it that way, or we'd all be paying for each piece of junk mail we get. What's fair about a charge you have no control over?
"Just" 10 years ago, a text message cost a nickel. "Just" two months ago, one cost 15¢. Now each is 20¢. Don't tell me that jump matches the cost of living, T-Mobile, because it doesn't, and telecom services aren't tied to gas prices, so don't try that one, either. Last year, AT&T lured iPhone subscribers by including 200 free text messages in the standard plan, but in July, it started charging $5 a month for those same 200 messages. At the 20¢ rate, sending a mere megabyte of information would cost more than $1,300. I know that something smells funny, and I'm feeling ripped off.
I don't expect cell phone companies to squeak by without making a profit, but neither does Kohl. His main worry is possible price fixing among the cell phone companies. It should not escape our notice that this issue has been taken up by the branch of Congress, the Antitrust, Competition Policy and Consumer Rights Subcommittee, that attacks companies that collude to raise prices in a non-competitive atmosphere. (Veep nominee Joe Biden sits on it, too, as does Arlen Specter). Hey, you phone companies aren't talking to each other in secret to keep the prices high, are you? That's what Kohl wants to know, too. Go get 'em, bulldog!