4900% markup on text messages: report

[Martian]

4,900% markup on some text messages, researcher estimates

4,900% markup on some text messages, researcher estimates: CBC News   click to show 

4,900% markup on some text messages, researcher estimates

It costs a cellphone company a mere third of a cent to transmit a text message that it charges customers as much as 15 cents to send, estimates a University of Waterloo professor.

"Some people think it's not a big deal," Srinivasan Keshav told CBC Radio's The Current Thursday. "But others might think that the markup of 5,000 per cent is a bit excessive."

Two days earlier, Keshav testified as much to the U.S. Senate Subcommittee on Anti-Trust, Competition Policy and Consumer Rights, which was examining text messaging rates and competition among wireless carriers.

According to the Canadian Wireless Telecommunications Association, which represents the cellphone industry, Canadians send 77 million text messages a day. Like carriers in the U.S., most Canadian wireless providers charge 15 cents for each text message for customers who don't have a text messaging plan. However, most wireless users do have a text messaging plan that offers cheaper rates, Keshav said.

Keshav, who holds a Canada Research Chair in tetherless computing and has studied cellphone networks for the past five years, was asked by the U.S. Senate committee to:

* Estimate the cost to the carriers of delivering a text message.
* Give his opinion about whether recent increases in the price of text messages for customers without a text messaging plan were justified.

Keshav estimated that the cost of carrying the text message, based on the network equipment required and the billing costs, was "very unlikely" to exceed a third of a cent.

He told the committee he did not think price increase were justified, as they would only be reasonable if they were intended to decrease network congestion. Such congestion is unlikely being caused by text messages, given the number of messages transmitted compared to the number of available cell towers, he said.
Bulk pricing 'typical': Telus

But Telus spokesman Jim Johannsson defended the markup charged to customers without text plans as being similar to practices use by companies that sell other commodities.

"It's in line with bulk pricing that's used elsewhere in the world," he told The Current Thursday from Edmonton. "It's pretty typical."

He also challenged the accuracy of Keshav's estimates, saying they left out some big costs such as the cost of running secure data centres that the company needs for data storage.

Johannsson added that about 90 per cent of Canadian cellphone customers have a service bundle that includes text messaging. For Telus customers, prices range from $3 a month for 30 outgoing and unlimited incoming messages or $15 a month for unlimited text messaging. Customers whose plans don't include text messaging are typically people who don't use text messaging much, such as those over the age of 50, he said.

Some people wonder why I'm opposed to text messaging. I'll admit that part of it is the medium -- I don't enjoy typing things out on my phone, and I think that txtspk or whatever the kids are calling it these days is the bane of the English language. However, a big part of the reason that I'm opposed is because of this.

Text messaging costs the carriers virtually nothing to implement. The infrastructure existed before the service was widely adopted, and the data itself requires no extra overhead; it 'piggybacks' on the existing transmissions. A third of a cent is a reasonable estimate of the actual cost, I think, and I dislike paying an exorbitant mark-up. Since I send at most 2-3 text messages per month, even a $3 plan doesn't save me money. If I buy in bulk, I'm simply paying for unused capacity and the end result is that my per-message cost is even higher.

Sadly, my carrier is amending their policy next month to charge me for incoming text messages as well as outgoing. This change will likely result in them successfully extorting me into a paying for a feature I neither want nor need; I can't control who decides to send me text messages, my carrier does not offer any method of disabling the feature and I unfortunately fall into the demographic that heavily uses this feature, meaning I often receive unsolicited text messages from my friends. All of this together means I have to pay for outgoing messages simply to avoid being charged for incoming ones.

Needless to say, this is a situation that has me extremely irritated.

Thoughts?

Ed. Note - I was unable to find a by-line on the story, and so had nothing better for an attribution than the news service it came from; perhaps I'm simply being thick. If anyone can see who actually authored this article, please let me know so I can edit accordingly

[Willravel]

I'm in the wrong business.

[Punk.of.Ages]

This shit pisses me off too. If you're going to charge me for incoming messages, I would expect a way to block incoming messages.

[blahblah454]

Wow really? What carrier is starting to charge for that? I know I had Telus before in Alberta and they started to charge for incoming messages that came from a computer. So all those spam messages that I got from travel companies and other such shit was costing me like 15 cents a message. I probably got a few a week from that. I switched to Fido and never got a spam text even once.

[Xerxys]

You can block text messages. (at least with sprint/at&t/verizon majority of the US carriers) I think it's criminal for any company to not offer the option. That said, I use text messages heavily, I average at least 1000 monthly so I don't really think Ihave an option but to either switch carriers or pay what they ask for.

[laconic1]

It bothers me a lot how much they have raised the price of text messages. Like the OP I send just a handful of texts a month, if that. It used to be 5 cents a message without a text plan, now it is 20 cents a message. But the cheapest text plan my carrier has is 10 dollars a month. What happened to prices coming down as a technology becomes more widespread? I receive a handful of legit texts a month, and it pisses me off to no end to have to pay for the 3 or 4 spam texts or texts sent to the wrong number I get each month.

[Punk.of.Ages]

I've been with AT&T and T-Mobile. Neither of them allow you to block incoming messages.

[genuinegirly]

Originally Posted by Punk.of.Ages

I've been with AT&T and T-Mobile. Neither of them allow you to block incoming messages.

My husband has successfully blocked all incoming text messaging through his AT&T service. Perhaps they have only started offering this recently.

[Punk.of.Ages]

Maybe...

I was with them about two years ago, so it's quite possible they now have features that weren't available when I was with them.

[Martian]

An amendment is in order: It turns out that Rogers does allow one to block text messages, but does not advertise the fact or make it easy to do. After having heard from several others (albeit with other carriers) that they have the feature blocked entirely, I decided to make a phone call and investigate further. Naturally, the representative tried to sell me on a text message plan, but after making it very clear that I neither wanted nor needed the feature and that I had no intention of paying for it, my request to disable it was honoured and the block goes into effect on July 7th, which also happens to be the day the policy change will be implemented.

I seem to be in the vast minority on this, in that I want my cell phone to be a phone. I don't need to browse the internet or listen to mp3's. I don't need text messaging, video calling or games. I want to be able to dial out, and I want to be able to accept incoming calls, and I want to be able to do these two things as cheaply as possible. I accept the utility of call display and voice mail, and am therefore willing to pay for these features, but beyond that I don't care for anything else. The fact that I pay nearly $40 per month for this seems a bit exorbitant, but as I'm not willing to do without a cell phone that's the choice I have to make.

I'm not particularly happy with Rogers as a provider, but I was with Bell Mobility prior to this and was even less happy with them. On top of that I have a strong preference for a carrier using a GSM network, because that means I'm not tied to the service provider for hardware -- I can shop around and get the cheapest phone possible. CDMA doesn't use SIM cards, which means that it's not possible for me to do the same on Bell or Telus.

Perhaps once my contract expires I'll try Fido next. Sadly, that day is a long way off.

[Reese]

Can't say this thread hasn't told me anything I didn't already know. Cellphones are the biggest ripoff because the companies refuse to compete with each other. Sure, they try to steal each others' customers with gimmicks like exclusive phones and talk all you want to X amount of people but with all these gimmicks to use, they don't actually have to lower prices to compete. I'm glad I don't need a cellphone.

[Xerxys]

cybermike, I challenge you to get a cell phone, it will become like a parasite that your are unsure how you survived before it!

[grumpyolddude]

I'm a non-texter, under increasing pressure to get with the program, to the point where people are offering to upgrade me to a qwerty phone. Don't really want it, or currently need it.

A large part of my resistance is my opinion that the fees charged for text messaging are outrageous, and we can communicate quite well without it. The phone companies are rich enough.

I'll probably cave in sometime in the near future. I'm outnumbered.

---------- Post added at 06:54 PM ---------- Previous post was at 06:51 PM ----------

Originally Posted by Xerxys

cybermike, I challenge you to get a cell phone, it will become like a parasite that your are unsure how you survived before it!

Unfortunately, this is all too true. I was the last person I know to get a cell phone. Now,I rarely use my land line.

[Martian]

I got a cell phone around the time I acquired my first car. I reasoned that my CAA membership wouldn't do me a lot of good if I couldn't call for roadside assistance in the event that I needed it, so I decided that the phone was worth the cost. I no longer have a car, but find that the cell phone offers too much utility to be done away with it. It's convenient to be able to call people whenever I need to, and it's equally convenient for people to be able to get a hold of me whenever they need to. Doing this on the cheap has proven to be an ongoing challenge. The providers are always come up with new and interesting ways to part me from my money.

For a while I lived without a landline. I decided that it didn't make economic sense to do so, and got one put in when Magpie and I moved in together. The landline costs me $24.48 with voicemail. I could add call display for another $3 per month, but don't have a phone that supports the feature at the moment. My long distance is 2.9 cents per minute across Canada and the US, and if I were to get rid of it I would pay $12 per month more for my internet, since my DSL would have to be moved to a dry loop (and would still be cheaper and better than cable). Given that, my actual cost on the landline is just over $12, and could be reduced to just over $9 if I were to decide that the voicemail was unnecessary. At that price it hardly makes sense not to have one.

If my cell phone could compete with that pricing I might decide to get rid of the landline again. I don't foresee that happening any time in the near future.

It's a cost/benefit thing. I begrudgingly pay the price for the cell phone, even though I think it's excessive, because I'm not willing to do without. Text messaging I can live just fine without, and so I'm getting rid of it.

EDIT - Stay strong, grumps. I'm assuming that anyone with the manual dexterity to type text messages can handle dialling a number and leaving a voicemail. I suggest this as an alternative to anyone who thinks I should text more.

[blahblah454]

Hey Martian have you ever looked into Kudu? I know absolutely nothing about them other than the gay ads they post all over the city of people in spandex workout gear holding the phones. From what I gather their whole purpose is a cheap phone with no features. That is all I know.

[Xerxys]

Now I think your just overdoing it Martian. You want to save $4.00 monthly? On phone service? Well, I guess that's cool to penny pinch but I really doubt it's at all significant. I pay $10 monthly for unlimited text messaging. My sister pays $15 fot T-mobile and she avareges 2500 texts monthly. I'm not sure what the difference is in Canada and USA but I'm of the mindset they're quite similar.

In the US, Sprint is by far the best service there is out there. I'm not advertising, I have AT&T and I'm quite happy with them. But not only does Sprint have service almost everywhere, they offer the cheapest cellular services compared to other networks. Plus before GSM phones introduced 4G, CDMA was the way to go.

My advice for folk in the US, get on craigslist, get a stupid beat up phone. Call up company, start service with no contract. They will bow to your every whim! Just make sure you have insurance on the device. Why stupid beat up phone ... well, because YOU DO NOT BUY NEW PHONES!!! Cell phones are the worst electronics to sink more than $20 on them. Think about it, you go everywhere with it ... the wear and tear is monstrous. It's not like a DVD player that sits at home.

Smart phones are for people who actually have connectivity needs during their days. The avarege joe does not need internet on the go and half the newer cheaper phones can actually support google maps, (I can't think of another reason for internet on your cell phone).

cybermike, Priceplans do exist for your every need and tailoring purposes. I have a philosophy, If your stupid enough to call tech support you deserve to be ripped off. Using the same double edged sword, as long as you call the people and speak to the right person you will get a price plan for your needs for your price.

[Halanna]

It's a ripoff for those that don't text. There absolutely should be an option to block incoming text messages.

I pay $9.95 a month with T-mobile for unlimited text messaging on 3 phone lines. It's well worth it. Once you have unlimited you find reasons to text.

It's actually handy foreplay. Take it to texts and out of voice, watch what happens.

[Glory's Sun]

I pay $140/month for two blackberry's with unlimited everything. I am a heavy data user and my wife is a heavy texter. So it works out fine for us..

[Martian]

Originally Posted by Xerxys

Now I think your just overdoing it Martian. You want to save $4.00 monthly? On phone service? Well, I guess that's cool to penny pinch but I really doubt it's at all significant. I pay $10 monthly for unlimited text messaging. My sister pays $15 fot T-mobile and she avareges 2500 texts monthly. I'm not sure what the difference is in Canada and USA but I'm of the mindset they're quite similar.

Originally Posted by Martian

It's a cost/benefit thing. I begrudgingly pay the price for the cell phone, even though I think it's excessive, because I'm not willing to do without. Text messaging I can live just fine without, and so I'm getting rid of it.

It's less about the cost ($3 actually, if you're curious) and more about the principle of it. I have no problem paying a reasonable fee for a service I use. My objection to text messaging is twofold:

1) A 1500% markup on a service is not reasonable in any way, shape or form, and

2) I do not use it, and therefore do not believe I should have to pay for it.

I was unaware until today that I had the option of disabling the feature, and am quite happy to have learned this. I wonder how many other customers there are out there who are similarly unaware of that capability? How many of them are going to end up paying for a feature they don't want or need?

If you're curious, I have sent a grand total of 7 text messages since I signed on with my current carrier in March of this year. Had I signed on for a text messaging plan, I would've paid $12 for those 7 text messages, or $1.71 per message. Each was sent as a response to one I received, and was done solely out of convenience; in each of those cases I chose the immediate option rather than taking the trouble to respond in an alternate manner. I'm as guilty of the occasional bit of sloth as the next man.

By contrast, I have received a great deal more than 7 text messages since receiving the phone; I'm unsure of the exact number, but there are 19 of them in my inbox right now and I delete them regularly. None of them were critical and in each case alternate methods of communication existed, yet my twentysomething friends have embraced the medium. As long as I wasn't paying for them I didn't particularly care, but as soon as it starts costing me money I start raising objections.

$3 may not seem like a lot of money, but then again there's the old maxim: take care of the pennies and the dollars take care of themselves. I'll happily fork out $3 for something that's useful to me. I will not give my phone company $3 for something I didn't ask for, don't want and will rarely if ever use, and quite frankly I'd question the intelligence of someone who would.

[blahblah454]

Xerxys everything in Canada is horribly expensive. We get absolutely shitty phone plans for gigantic amounts of coin.

[Reese]

Originally Posted by Xerxys

cybermike, I challenge you to get a cell phone, it will become like a parasite that your are unsure how you survived before it!

I have a cellphone. I never use it. I put a 25$ prepaid card on it and the minutes expire every 3 months. I just don't like using phones. I'm the same way with landlines. I will not talk to you on a phone unless it's business, emergency or if you're 100s of miles away and I can't just meet you. It's funny that I've pretty much embraced technology from a business and entertainment standpoint but socially, I like to do things the old fashion way.

[Lindy]

Originally Posted by Martian

....1) A 1500% markup on a service is not reasonable in any way, shape or form, and...

The old saying, figures don't lie, but liars figure comes to mind. I'm curious, is the 1500% markup figure based on the person who pays .15 per message or the person who pays $15 for unlimited texting and texts thousands of times per month, which comes out to well under .01 per message???? I'll bet the "researcher" chose whichever plan would make the provider look the worst.

My viewpoint is that I don't care how much someone makes of of me as long as my cost is reasonable. Especially low priced things. If I could get a good cup of coffee for $1, I wouldn't care if it cost them a nickel, and they made 2000% markup.
Having said that, I agree with Martian (mostly) 'cause I'm one of those that just wants a cell phone to be a phone. I don't need or want another camera, and I don't want a "center to my digital universe." I just want a phone.

Lindy

---------- Post added at 08:51 PM ---------- Previous post was at 08:39 PM ----------

Originally Posted by cybermike

I have a cellphone. I never use it. I put a 25$ prepaid card on it and the minutes expire every 3 months. I just don't like using phones. I'm the same way with landlines. I will not talk to you on a phone unless it's business, emergency or if you're 100s of miles away and I can't just meet you. It's funny that I've pretty much embraced technology from a business and entertainment standpoint but socially, I like to do things the old fashion way.

cybermike, you hit the nail right on the head! I basically don't like the phone. Landline, cellphone, corded, cordless, smartphone, dumbphone, I don't care! The phone is mostly an annoying distraction that interrupts something else.
I have a cell because I travel crosscountry by car. I have a landline because I like to talk to my family in Kansas. And I get DSL internet access. But I don't like the telephone.

Lindy

[Martian]

I actually mis-spoke, as the markup is closer to 5000% according to the article. That's based on the $0.15 pay per use rate -- bulk plans are more difficult, because the per-message cost varies depending on how much you actually use. If you actually send a thousand or more text messages per month, a $15 flat rate is cost effective for you. I don't doubt that there are people who send that many, but it breaks my mind a bit -- if I'm doing the math right, that's more than 30 text messages per day, or if we take out time for sleep an average of a text message every half hour. I can't even imagine what I'd write that frequently. Perhaps I'm just not sufficiently attuned to the Twitter/Facebook culture; I don't think my life is that interesting.

I take issue with price gouging. I especially take issue when a provider attempts to force an artificially inflated price on me. There's no reason for text messaging to cost so much aside from flat out greed, and charging me for incoming messages is a transparent attempt to try to get me onto a block plan (where incoming messages are still free), thus getting my money whether I use the feature or not. Nobody from Rogers ever mentioned to me that text messaging is an optional feature despite my explaining what I wanted (a basic phone with call display, voicemail and nothing else) every single time I've dealt with them; further, there's absolutely no mention of the option on their website that I've ever seen. Even when I made the specific request I had to jump through hoops. An option that nobody knows about isn't an option at all.

[Xerxys]

When I'm at home, Martian, the phone is plugged onto the computer. I use this software to connect my phone the computer and voila, I dont have to type with the phone. I get charged for incoming as well as outgoing so the average I gave you was inclusive of both. My sister, on the other hand, I am pretty sure she sends more than 500+ alone (excluding incoming).

PS I use the software pretty much the wherever the laptop is BTW!! It's awesome!!

[Jozrael]

@ the OP (sorry, I didn't read the whole thread because I don't use a cellphone often, and don't text, so it's not important to me): AFAIK, you aren't charged for text messages you don't open.

[Cynthetiq]

Originally Posted by blahblah454

Xerxys everything in Canada is horribly expensive. We get absolutely shitty phone plans for gigantic amounts of coin.

but you get healthcare!

I'm totally against the exorbitant cost of texts. Fucking shit pisses me the fuck off... the whole gross receipts tax, the Federal telephone excise tax... the telephony companies are making money hand over fist.

View: What Carriers Aren’t Eager to Tell You About Texting
Source: Nytimes
posted with the TFP thread generator

What Carriers Aren’t Eager to Tell You About Texting
December 28, 2008
Digital Domain
What Carriers Aren’t Eager to Tell You About Texting
By RANDALL STROSS

TEXT messaging is a wonderful business to be in: about 2.5 trillion messages will have been sent from cellphones worldwide this year. The public assumes that the wireless carriers’ costs are far higher than they actually are, and profit margins are concealed by a heavy curtain.

Senator Herb Kohl, Democrat of Wisconsin and the chairman of the Senate antitrust subcommittee, wanted to look behind the curtain. He was curious about the doubling of prices for text messages charged by the major American carriers from 2005 to 2008, during a time when the industry consolidated from six major companies to four.

So, in September, Mr. Kohl sent a letter to Verizon Wireless, AT&T, Sprint and T-Mobile, inviting them to answer some basic questions about their text messaging costs and pricing.

All four of the major carriers decided during the last three years to increase the pay-per-use price for messages to 20 cents from 10 cents. The decision could not have come from a dearth of business: the 2.5 trillion sent messages this year, the estimate of the Gartner Group, is up 32 percent from 2007. Gartner expects 3.3 trillion messages to be sent in 2009.

The written responses to Senator Kohl from AT&T, Sprint and T-Mobile speak at length about pricing plans without getting around to the costs of conveying text messages. My attempts to speak with representatives of all three about their costs and pricing were unsuccessful. (Verizon Wireless would not speak with me, either, nor would it allow Mr. Kohl’s office to release publicly its written response.)

The carriers will have other opportunities to tell us more about their pricing decisions: 20 class-action lawsuits have been filed around the country against AT&T and the other carriers, alleging price-fixing for text messaging services. Timothy P. McKone, AT&T’s executive vice president for federal relations, told the senator that the suits had been filed “since your letter was made public” and said that he was “eager to clear up any misunderstanding.”

T-Mobile and AT&T contended in their responses to Mr. Kohl that the pay-per-use price of a message is relatively unimportant because most messaging is done as part of a package. With a $10 or $15 monthly plan for text messaging, customers of T-Mobile, AT&T and Sprint can effectively bring the per-message price down to a penny, if they fully use their monthly allotment.

T-Mobile called Mr. Kohl’s attention to the fact that its “average revenue per text message, which takes into account the revenue for all text messages, has declined by more than 50 percent since 2005.”

This statement seems like good news for customers. But consider what is left out: In the past three years, the volume of text messaging in the United States has grown tenfold, according to CTIA — the Wireless Association, a trade group based in Washington. If T-Mobile enjoyed growth that was typical, its text messaging revenue grew fivefold, even with the steep drop in per-message revenue.

The lucrative nature of that revenue increase cannot be appreciated without doing something that T-Mobile chose not to do, which is to talk about whether its costs rose as the industry’s messaging volume grew tenfold. Mr. Kohl’s letter of inquiry noted that “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.”

A better description might be “cost carriers very, very, very little to transmit.”

A text message initially travels wirelessly from a handset to the closest base-station tower and is then transferred through wired links to the digital pipes of the telephone network, and then, near its destination, converted back into a wireless signal to traverse the final leg, from tower to handset. In the wired portion of its journey, a file of such infinitesimal size is inconsequential. Srinivasan Keshav, a professor of computer science at the University of Waterloo, in Ontario, said: “Messages are small. Even though a trillion seems like a lot to carry, it isn’t.”

Perhaps the costs for the wireless portion at either end are high — spectrum is finite, after all, and carriers pay dearly for the rights to use it. But text messages are not just tiny; they are also free riders, tucked into what’s called a control channel, space reserved for operation of the wireless network.

That’s why a message is so limited in length: it must not exceed the length of the message used for internal communication between tower and handset to set up a call. The channel uses space whether or not a text message is inserted.

Professor Keshav said that once a carrier invests in the centralized storage equipment — storing a terabyte now costs only $100 and is dropping — and the staff to maintain it, its costs are basically covered. “Operating costs are relatively insensitive to volume,” he said. “It doesn’t cost the carrier much more to transmit a hundred million messages than a million.”

UNTIL Mr. Kohl began his inquiries, the public had no reason to think of the text-messaging business as anything but an ordinary one, whose operational costs rose in tandem with message volume. The carriers had no reason to correct such an impression.

Professor Keshav, whose academic research received financial support from one of the four major American carriers, discovered just how secretive the carriers are when it comes to this business. Two years ago, when he requested information from his sponsor about its network operations in the past so that his students could study a real-world text-messaging network, he was turned down. He said the company liaison told him, “Even our own researchers are not permitted to see that data.”

Once one understands that a text message travels wirelessly as a stowaway within a control channel, one sees the carriers’ pricing plans in an entirely new light. The most profitable plan for the carriers will be the one that collects the most revenue from the customer: unlimited messaging, for which AT&T and Sprint charge $20 a month and T-Mobile, $15.

Customers with unlimited plans, like diners bringing a healthy appetite to an all-you-can-eat cafeteria, might think they’re getting the best out of the arrangement. But the carriers, unlike the cafeteria owners, can provide unlimited quantities of “food” at virtually no cost to themselves — so long as it is served in bite-sized portions.

god damn this shit pisses me off!

[JumpinJesus]

It seems pretty simple to me: if you choose to have a cell phone and choose to go with a particular carrier, then you agree to pay their prices. I think we've argued plenty of times here on tfp that the market sets the price, regardless of the product.

Unless and until the law compels you to carry and purchase a cell phone and a carrier service, you're complaining about paying for something you voluntarily use.

[Martian]

The market sets the price, true. At the same time, if there's no competition on pricing within the market, and if the market provides a highly useful (bordering on necessary) product, than it's at best a bit immoral for the provider of that product to set the price arbitrarily high.

My complaint is not about the cellular phone itself. You'll note that while I acknowledge that I consider a cell phone to be expensive to operate, I consider it worth the cost due to the utility of the service provided. My objection is to this specific function. There's no opt-out offered at sign up, there's no alternative and pricing is uniform across providers, meaning there's no competition. The fact that the price is artificially high is simply icing on the cake.

Some consider market forces to be a strong regulating force, but I'm of the opinion that pure capitalism does more harm than good precisely because it leads to price fixing and monopolistic practices. It's my opinion also that one of the functions of government is to step in and regulate industries that prove incapable of regulating themselves. I don't think I'm alone in this view.

Microsoft gets a lot of flak for Internet Explorer, because they bundle it with Windows and don't provide the option to uninstall it. I can only imagine the furor that would follow if they decided to start charging for this non-optional component, particularly if the price demonstrably had absolutely no relation to the cost incurred to provide it. Why should other industries be held to different standards?

[stnichola]

I'm surprised to learn all that as regards text messaging. I wonder does O2 permit one to block a particular number or must you block all text messaging ?

[genuinegirly]

I don't know about British services - hopefully some of the others here know the answer to your question, stnichola.

[Cynthetiq]

View:
Source: Cbsnews
posted with the TFP thread generator


June 17, 2009
Wireless Giants Deny Price-Fixing Texts
Lawmakers Question Whether 20 Cents Per Message Over-Values Service

(CNET) Executives from the nation's largest phone companies went to Capitol Hill Tuesday to defend themselves against allegations that they've been fixing prices on text messaging.

Executives from AT&T and Verizon Communications testified before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, saying their companies have not been involved in a conspiracy to hike text messaging rates. And they argued that competition is alive and well in the wireless market.

The hearing was called in response to a letter sent in September from Sen. Herb Kohl (D-Wis.) to the four major U.S. operators - Verizon, AT&T, Sprint Nextel, and T-Mobile USA - asking them to explain why their text rates had all increased to 20 cents per message. Kohl noted in his letter that these rates marked a 100 percent increase since 2005.

Shortly after the letter was sent, about 37 separate class action lawsuits were filed against wireless operators alleging price-fixing on text-messaging services.

Both AT&T and Verizon have denied these claims. And the companies came to Capitol Hill to clear their names.

"Especially in light of this litigation firestorm, we want to make it perfectly clear that AT&T sets the prices for all of its products on a unilateral basis," said Wayne Watts, general counsel for AT&T, in his written testimony. "There is no evidence to support an accusation that anyone at AT&T engaged in any inappropriate, much less illegal, behavior as alleged in these lawsuits."

Watts also noted that none of the lawsuits name a time, place, or person involved in the collusion, and all but one of the suits filed cite Kohl's letter as the basis for its allegations.

Plaintiffs in the lawsuits point to the fact that all four major U.S. carriers now charge customers 20 cents to send and receive a text message if they don't have a monthly texting plan. In his September letter, Kohl pointed to the 20 cent per text price tag and asked if this price hike really justified the cost of the service.

In his letter, Kohl also suggested that the wireless industry is not competitive enough. He noted that the four carriers combined currently serve more than 90 percent of wireless subscribers in the U.S.

AT&T and Verizon executives dispute that they have colluded to fix prices on texts, but they also deny that texting rates have increased. Instead, they claim that prices have fallen for text messaging as a result of robust competition.

Verizon's general counsel, Randal Milch, said in his written testimony that there are more differences in text-messaging prices among wireless competitors than there are similarities. And he noted that most Verizon Wireless customers subscribe to a texting plan, and as a result they "pay less than a penny per message," a reduction of almost two-thirds since 2006.

"As the result of the price cuts, usage has grown six-fold," he said.

Milch also called claims that the wireless companies were improperly setting rates "absolutely false." And he said that "market evidence shows fierce competition, not collusion, in text messaging and wireless generally."

The CTIA, the trade association representing wireless carriers, also said that competition in the wireless market is thriving.

"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," Steve Largent, head of the CTIA, said in statement.

Despite these claims, Kohl said he is still concerned about the state of competition in the wireless market, according to a report from the Dow Jones Newswire. Specifically, he pointed out exclusivity deals for popular cell phones, such as the Apple iPhone or the Palm Pre, that limit some consumers' ability to have access to those devices.

collusion and racketeering.

not much different than thos ATM fees that they couldn't agree on the "cost of transaction prices" to explain the $1-$10 ATM fees.

[Tully Mars]

I text more often then making a call, though I admit I hate typing stuff out on the phone. Mainly I do it because it's free with the phone. I pay about $16 USD a month and get 5 numbers I can call for free anytime, 120 minutes anytime to all other cell phones and free unlimited text messages. I never use my cell to call a land line as it costs about .25 a minute regardless of location. I learned that the hard way after regularly calling my friends house on my cell. My first bill was about $75 and I really didn't talk that long when calling him.

[tisonlyi]

If you have a legitimate harassment case, then you can get individual numbers blocked in the UK. I've never heard of anyone having the SMS service completely switched off.

Also, North American mobile phone services, companies and pricing seems to suck total donkey balls if this thread is anything to go by...

Europa:

No Incoming SMS Charges.
No Incoming Call Charges.
'Free' Text messages bundled in with most deals.
Decent amounts of minutes bundled in with the monthly fee.
Subsidised phones (in most countries and by the networks, not the govt. ).

Europe 1 N. America 0

Asia's better than both, though.

[flat5]

I'm in Holland. I use the phone I got in 2003, Nokia 3310. Keep it in a holster and it's good as new. Battery was changed once.
I almost never get a call and make fewer than that. Perhaps I make two to 8 calls a year.
Network is Vodaphone. Prepaid must be updated every 6 months (20 Euros) but the credit is added.

[Baraka_Guru]

Originally Posted by tisonlyi

Asia's better than both, though.

Asia generally leads in all things technological.

As for this issue of text messaging, it's shocking to see this number, but that the markup was high is not surprising. Canada is generally overcharged on all cell services, especially data plans. Things are still set up as though data transfers are a casual thing: checking the weather, downloading ring tones, etc. You know, the extent of what people did five years ago.

Have a look see:



This one's from a couple of years ago:

[Xerxys]

B_G, those numbers in the graph and chart are too high, the price has dropped competitively and it's much easier to get service without a 2 year agreement. I agree with the OP that they are very similar hence no seems as if there is no competition but there is. Even for the nuts who have smart phones and they really don't need them.

[Baraka_Guru]

Originally Posted by Xerxys

B_G, those numbers in the graph and chart are too high, the price has dropped competitively and it's much easier to get service without a 2 year agreement.

I should have noted that the numbers are from 2008. But the illustration is to point out the difference in cost nation to nation.

[Shaindra]

I've been known to do over 3000 texts in a month. I did lower my text plan when a frequent texting partner got a blackberry and we could do PIN messages, which are off the SMS network and free of any texting charges. I like texting because I can have a conversation where voice calls are inconvenient or impossible. I work in an open cube and I don't know that my boss would appreciate overhearing me talking dirty to my boyfriend.

My phone is my lifeline. I don't have a landline. If I'm without my phone for longer than 24 hours, I get twitchy. As for costs, the companies charge what they can get away with charging. I foresee more companies offering "everything" bundles that make more sense.

My daughter is 8, she just informed me that she doesn't want a new iPod for Christmas. She wants an iPhone.