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Verizon, AT&T defend text messaging price policies
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Executives from the nation's two largest carriers defended their respective text messaging rates at a Senate hearing yesterday, denying allegations of collusion among Tier 1 carriers to raise text messaging prices.
Randal Milch, Verizon's executive vice president and general counsel, said in testimony before the Senate Judiciary Committee's subcommittee on antitrust, competition policy and consumer rights that it was "absolutely false" that carriers conspired to raise rates on certain types of text messages.
Milch said that most Verizon customers buy their text messaging plans in buckets, instead of "by-the-drink" text messages, meaning text messages purchased outside of bundled plans. Customers pay a fee per text message in those cases. He also said that individual text messages not purchased through post-paid plans represent less than 1 percent of the text messages Verizon provides.
An AT&T representative made similar pronouncements. "The faulty notion that prices for text messaging have risen derives from an unduly narrow interest in the trend of a single pricing option for text messaging services, the pay-per-use option, when the vast majority of AT&T's customers do not choose that option," said Wayne Watts, general counsel of AT&T, according to Reuters.
Not surprisingly, industry association CTIA echoed the sentiments. "The U.S. wireless industry is the most competitive and innovative in the world. Third party organizations and influentials--from Consumer Reports Magazine to Former Vice President Al Gore--have echoed this statement," CTIA chief Steve Largent said in a release, which cited association figures showing 270.3 million U.S. wireless subscribers sent more than 1 trillion text messages in 2008, up from 2007 when 255.4 million subscribers sent 363 billion text messages.
Last fall, shortly after Sen. Herb Kohl (D-Wisc.), the subcommittee chairman, sent letters to AT&T, Sprint Nextel, T-Mobile USA and Verizon asking them to justify raising rates on "by-the-drink" text messages, the carriers were hit with lawsuits claiming the carriers conspired on test-messaging pricing. Verizon's Milch, in his testimony, said there was a great variation in the four carriers' prices for these messages for prepaid customers:
- Verizon charges 1 cent, 5 cents or 10 cents per message, depending upon the plan.
- AT&T charges 20 cents per message.
- Sprint charges 10 cents per message (or can have all of their text messages included for free, depending upon the plan).
- T-Mobile charges 5 cents per message on incoming messages, and 10 cents per message on outgoing messages.
These variations, as well as variations in how the carriers price bundled messages, show that there are more differences than similarities in how the carriers price text messages, according to Milch. "Nor is there any coincidence in the timing of price changes for the narrow category of post-paid 'by-the-drink' text messaging," Milch said in his testimony. "Different carriers changed prices for this product over a period of almost two years. There was no collusion or price-fixing."
For more:
- see this release
- see this Electronista article
- see this Reuters article
Related Articles:
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Comments
Posted by Bob F | June 16, 2009 - 10:08pm
Ask these telco reps if text message pricing is a rip-off.
We need to end the current FCC auctioned spectrum regime and implement municipal Wireless Internet across the entire spectrum regulated by the FCC.
Then we could just be sending instant messages, making audio calls, VoIP calls if we need to dial a landline, video calls, all without being nickel and dimed. Simple wireless internet bandwidth.
Prices would plummet for wireless internet plans and it would usher in a new era of mobile internet connected devices.
This current AM/FM/HDTV/HDradio/GSM/CDMA dinosaur needs to be put out to pasture, the sooner the better.
Posted by Anonymous | June 17, 2009 - 12:21am
Bob F - who would provide (and pay for?) the backbone communications? Or do you want to im, and make VoIP calls only within your own municipality?
Posted by Anonymoose | June 17, 2009 - 6:00am
This is very sad. The major carriers are working together to rip people off. The costs of sending texts are so low, they could be giving it to consumers at 2 or 3 cents and still make money. Heck, just two days ago I signed up for a Tracfone deal called StraightTalk. You get 1000 minutes, 1000 texts and 30mb of data for only $30. That works out to 2c a minute talk and 1c per text.
Now that's a decent deal! They're obviously not in on the collusion between the major carriers...
Posted by Anonymous | June 17, 2009 - 10:28am
If text messages are important to customers, then they will change the prices. Txt msgs are inherent to the wireless network. This means it is always on and the cost to maintain a txt only aspect of a wireless network is nominal. Txt msgs are pages/updates between sites and handsets. Charging 20 cent a msg is like charging 20 cent per site hand-off. I would say one txt msg is worth about 1/1000 of a cent to a carrier or less because, if there were 1 trillion txt msgs in 2008 there were 1000s more hand-offs, cell pages, handset registrations, etc.
Posted by Fair Pricer | June 17, 2009 - 4:30pm
Senator Herb Kohl is a reserved politician, and his scrutiny of text pricing needs a slogan such as "Basic Texting for Every American". Verizon's Randal Milch assertion of pay-per-text being 1% implies that texting is done 99% of the time by users who can afford a robust bundled plan with a text package. A lower income user cannot afford the monthly bundle that prices a text under ten cents. Similarly, AT&T stating that most Americans "do not choose that option" of pay-per-text indicates that it is not affordable. Senator Kohl has the business experience to understand that Americans are being baited into buying bundles by the lack of competition. Senator Kohl is showing that the basis user is being unfairly priced.
Posted by Andy Glad | June 17, 2009 - 10:21pm
i think everyone is getting a little fed up with text messages being so expensive. I use www.smstextnow.com to send text messages for free. I also can set it up to send to groups which is handy for work, group meetings and for sports teams. this way I don't have to worry about the cost of sending these messages and it's much easier to manage. I will continue to use sites such as this until the pricing gets back in line with what's fair.
Posted by Anonymouse | June 17, 2009 - 11:19pm
since tracfone does not have any infrastructure to maintain since they are an mmvo, they get wholesale rates on both voice and data from a tier 1 carrier who has to pass these costs onto their customers
Posted by Anonymous | June 18, 2009 - 1:32am
As I travel quite a bit I have found a few very handy tools (tinyurl.com/m5pf5c) in keeping roaming costs low as I am overseas (or when I send messages overseas). If the cost texting is expensive nationally, it's even more ridiculous while you are roaming.
Posted by Me | August 12, 2009 - 9:28pm
Somebody told me that since Verison and alltell merged, texting is now 40 Centz flat rate. Is that true?
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