I finally got a chance to comb through the response letters AT&T, Sprint, and T-Mobile sent to the Senate Judiciary Committee about their text messaging rates, and they all took offense to accusations of climbing prices.
"T-Mobile's average revenue per text message, which takes into account the revenue for all text messages, has declined by more than 50 percent since 2005," T-Mobile president and CEO Robert Dotson wrote.
In September, Sen. Herb Kohl, chairman of the Senate Judiciary Subcommittee on Antitrust, Business Rights and Competition, asked AT&T, Sprint, T-Mobile, and Verizon Wireless "to explain why text messaging rates have dramatically increased in recent years."
"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," Kohl wrote.
All four carriers responded to Kohl's inquiry, though Verizon did not consent to having its letter released to the public.
"While it is true that the rate for casual text message usage has increased, Sprint does not agree that its overall rate for text messaging have increased over the past three years," wrote Vonya B. McCann, vice president of government affairs for Sprint.
"T-Mobile's average revenue per text message, which takes into account the revenue for all text messages, has declined by more than 50 percent since 2005," Dotson wrote.
Sprint currently charges 20 cents per text message for those who pay on an individual basis, but offers 10 plans for text bundles that can bring prices down to around 2.5 cents per text. AT&T and T-Mobile have similar offerings.
All three providers gave themselves a pat on the back for handling the increased demand for text messages over the past few years.
In Q4 2005, AT&T processed 5.5 billion texts - a number that jumped to 32 billion in Q4 2007, said Timothy P. McKone, AT&T's executive vice president for federal relations.
"Meeting this exponentially growing demand requires real investment and innovation by the wireless service providers," McKone wrote.
Sprint compared text messaging bundles to DVD rental company Blockbuster, which offers an unlimited subscription for $20 per month or $4 per DVD in the store. "Sprint's variable text messaging pricing structure is not unique," McCann wrote.
AT&T was particularly concerned about lawsuits that have popped up in the wake of Kohl's inquiry.
"As you probably know, since your letter was made public, 20 class action lawsuits have been filed around the country against AT&T and the other national wireless carriers, specifically alleging price-fixing for text messaging services," McKone wrote. "All but one of these cases cite your inquiry as one of the bases of alleged collusion. We were therefore eager to clear up any misunderstanding."
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January 1, 2009 3:12 PM
While it's certainly a bad thing when one gets whacked with a large bill for individually priced test messages, the allegation that they "cost nothing" is not really correct.
The carrier has to run servers for them, has to have staff managing the infrastructure, has to interoperate with other services, back things up, keep software up to date, fix bugs, offer tech support, etc.
Anybody who has budgeted for operating a data center knows that there are many kinds of costs. Capital expense, fixed monthly and variable, per use, costs. The number of services operated in the data center drives the first two, even if there is no incremental cost per message.
I think that the solution here is to allow a consumer with a large number of individual text messages to convert retroactively to a package plan, that would be required to last some number of months. This would protect against surprises while allowing the wireless company a reasonable revenue stream for text messaging.
January 2, 2009 12:12 AM
Most, if not all, of the cell phone providers include voicemail at no extra cost. Doesn't it cost more to generate a voicemail than a simple text message?