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Senator Questions Rise In US Texting Prices
vimm writes "Senator Herb Kohl (D-Wis.) has started an inquiry on the rising prices of text messaging (up 100% since 2005) that has occurred almost in sync with the consolidation of 6 major carriers down to 4. In a letter sent to Verizon Wireless, AT&T, Sprint Nextel, and T-Mobile, Kohl said the increase 'does not appear to be justified by rising costs in delivering text messages.'"
Senator Herb Kohl (D-Wis.) has started an inquiry on the rising prices of text messaging (up 100% since 2005) that has occurred almost in sync with the consolidation of 6 major carriers down to 4.
Well, it could be that the competition was driving prices down to a lower level and then after the two consolidated, this (money losing) price reduction natural re-adjusted back up.
Another reason could just be that it's just as easy to sell plans at 10 cents a txt as it is to sell them at 5 cents a txt. We simply don't realize the cost adds up as consumers.
It could also be that people use text messages about twice as much now as they did in 2005 and the hardware just can't take it, so they adjust the price to reduce usage.
I think we've discussed this absurd price before. I am quite naive about the whole electrical engineering side to this but well versed in the software of it. If it costs nearly nothing for me to talk for a minute, why couldn't they wrap the txt into a digital signal identical to what our vocal signal is wrapped up in and just let the receiving unit decode it as a special text message across the same audio range (like the old phone modems)?
My work here is dung.
Sounds like the Cellular industry hasn't been contributing enough to a certain Senator's campaign.
Give me Classic Slashdot or give me death!
Another interesting question: my phone service (through Verizon) has free after-hours calling, but I pay the same rate for text messages and other data services regardless of time of day. Surely if the data from my phone call is cheaper to transmit at 10pm, then the data from my SMS message is too?
Yeah, that sucks. Text messaging should be dirt cheap. Yeah, they're making an enormous profit off it.
But text messaging is voluntary. You can stop any time you want. They're clearly charging what the market will bear.
Sure, it makes them look like scum when they're getting paid huge amounts for not doing very much... but c'mon, Senator Kohl, that's the American Dream! If y'all don't like it, get rid of your cellphones and use email.
Nostalgia's not what it used to be.
Or maybe a showy issue that most americans can identify with, will help non-technical americans realize how badly monopolies are robbing them? You know, and I know, that the cost of sending a text message is so incredibly small charging any amount of money beyond voice service is essentially highway robbery. But many people think it's new, and thus must be a huge complicated thing.
Yeah, text messages themselves are stupid secondary problems. But waking people up, and forcing them out of the idiocy of news tv talking heads, and forcing them into the cognitive dissonance caused when they realize businesses are hurting them because capitalism ISN'T working as designed... that helps a lot. Otherwise it sounds like a bunch of pompous academics in suits talkin fancy words and talkin smack about god and the president.
Companies only believe in the free market when it suits them, so they don't deserve it. The only way to keep prices low is to intelligently regulate and keep the corporations small and relatively powerless so they don't have the resources to buy their way into the government's good graces.
Without stiff and proper rules keeping corporate interests separate from government interests, you always end up with corrupted governments relaxing regulations and robbing public resources for private profit, or as they like to call it, privatizing. Notice under the Bush administration that all of the deregulation and plundering of public property has resulted in a highly unstable economy. When you eliminate so many rules that the only thing stopping the resulting mega corporation from ripping people off are the inherent ethics guiding a company, you'll quickly be reminded that the only moral standard they answer to is the bottom line.
But the price they charge customers will depend on what customers are prepared to pay. Network operators charge more, per amount of data moved, for text than they do for voice (a single SMS uses less bandwidth than a second of voice, yet costs about 20x voice on most plans). Since it is waste, they can afford to discount heavily to bulk buyers (who don't mind their SPAM taking a bit longer to get there).
Thus, network operators love text: it converts their waste into something more valuable than their main product. How cool is that!
Engineering is the art of compromise.
You're talking to a society of people that will spend $1.25 for a bottle of water out of a vending machine which is sitting right next to a water fountain.
Prices will go down when people stop using the service.
The fact that it hasn't implies that the cellular market is not free.
Says who? There are four providers of text messages, and several other means of communicating data. Would you believe that for many people, the VERY SAME DEVICE that sends text messages for $0.10 can be used to send a one-minute voice communication for ZERO INCREMENTAL COST to the customer, but the customer chooses to pay the $0.10 anyway?
Not to mention the myriad of other ways people have to share information OTHER than text messages.
The high prices of text messages indicate that there's no competition in that market.
Except that YOU don't get to decide whether the price is high or not. The market does. And the *MARKET* has decided that the price of text messages is reasonable. People are willing to pay $0.10 to send a text message. What it COSTS to provide the message is irrelevant.
Did you know that people sell oil and gold for more than the cost to mine it? Did you know that that soft drink you pay $3.50 for at the movie theater costs the movie theater pennies worth of syrup and cold water?
Did you know that you can get a cell phone plan that lets you talk on your phone from nearly anywhere in the country and to anywhere in the country for *LESS* than it used to cost for a landline and long distance?
Did you know that many drugs sold for $10 or more a pill cost mere pennies to manufacture? All you have to do is invest a few billion in finding one that works.
And while the incremental cost of sending a text message may be $0, all you have to do to send them is invest a few hundred billion in a cell phone network....
At the end of the day, if people are willing to pay $0.10 a minute and $0.10 a message, then that's what people are willing to pay. Which one provides the better margins to the cellular company is irrelevant, as long as people are willing to pay the price charged and the company has enough revenue to stay in business.
paintball
No, they do it so that families who have teenagers have to have an unlimited plan or face a $2000 cell phone bill.
Taxation is legalized theft, no more, no less.
Prices will go down when people stop using the service.
That's exactly what I just did last month with my new iPhone. I asked AT&T to completely cancel my texting service.
I can still be reached via email, and I can even text other people at no extra cost using various internet services, but I can no longer be reached via text.
I encourage you to do the same if you have unlimited internet on your phone. I understand that not everyone's phone can send and receive email very easily (or at all), but why not start making that push now?
When people ask me if I got their text I explain my stance on absurd texting charges (for both sending and receiving) and tell them I canceled my texting service. People have been surprisingly understanding and I haven't had any problems so far.
Of course, I'm substituting an expensive internet plan for a cheaper texting plan. But I feel that unlimited internet on a good cell phone is worth the price, whereas texting is not.
What is really amazing is that people seem to come out in droves to defend the carriers. I wrote an article on the ridiculously high cost of text messages some time ago (which was also featured here on /. as well as several major media outlets - yes, I'm tooting my own horn) and couldn't count the people who came out and said "DUH! They're charging what they are because people are willing to pay it!"
These are the kind of assholes who troll around the web looking for any discussion in which to insert their derogatory "I'm smarter than you - it's so obvious!" attitude while ignoring the issue at hand. No, prices are not justified by the markets willingness to pay them. Do you think it is justified that a friend of mine had to go $400,000 in debt because he got brain cancer while he didn't have insurance? His family was willing to pay it, so it must be a great deal, right? Do you think that higher and higher gas prices are justified even while the price of oil drops and oil companies post record profits quarter after quarter?
No, of course those things aren't justified. Just like it wouldn't be justified if all the food manufacturers suddenly decided to charge 10x more for food. It's anti competitive and it's illegal for a very good reason. Price fixing ruins the free market and ensures that consumers get the crappiest possible product for the greatest price. It ruins innovation and takes a huge dump on everyone in the market. Several historical examples show this, but I won't get into that here. Two seconds of critical thinking will get you to the same conclusion.
Text messaging is a 100 billion dollar industry in the U.S. That's bigger than all the movies, all the music, and all the video games in the entire world put together. The current cost of a single 140 byte text message is 40 cents (which is obfuscated by the fact that the sender AND the receiver are both paying 20 cents each). I can get a letter hand delivered to any doorstep in the U.S. for about the same price. The cost of a text message to the carrier is virtually ZERO. Yet somehow, they are saying that 40 cents is a fair price. I want to know why, and I'm glad someone in congress is doing something about it.
My article on the subject is here, btw, for anyone interested or who hasn't already seen it: http://gthing.net/the-true-price-of-sms-messages
or else!
AC sucketh at logic. Every day thousands die in Africa from malnutrition, so should solving the problem of poverty in the US be abandoned?
The cost of text messaging is vastly disproportionate to the actual data transfer that takes place. VASTLY. If you paid the same amount for data transfer on your internet connection you would be shitting blood and blowing steam out of your ears instead of saying "Who cares.[sic]".
Solving the problem of over-priced text-messaging is as simple as changing a variable or a few in the billing systems of the main carriers, no doubt.
Even during an economic downturn, there are people who text-message. Lowering the cost of that text-messaging means they have more money to put into buying clothes or butter or cars or computer games or any actual goods that drive the economy rather than spending arbitrarily inflated amounts to the major mobile carriers.
Repeat after me: "THIS IS NOT A ZERO-SUM GAME!". Just because one Senator writes a letter on the subject of cell-phone company gouging, doesn't mean he can't also fight on any of those issues that you deem more important. It also doesn't mean that other Senators can't fight for those other issues. Or are you implying that all Senators are in collusion and fighting only for lower text-messaging costs?
No wonder America is eating itself if they allow people like the parent to vote...
Capitalism works just fine ... text messaging is too expensive, so I don't use it.
There ... capitalism at it's finest. If someone using text messaging is complaining it's too expensive, then maybe they should look at alternatives or STFU. THAT is what capitalism is all about.
Oh. So when I get a message telling me that Zoltan has prepared my fortune for me, or that my Perfect Crush is waiting for me, or I can find out my top five Perfect Lovers and I get dinged $0.10 apiece for receiving them, just exactly how is that "capitalism at its finest" and how, pray-tell, am I supposed to stop 'using' it?
Per-text messaging rates exist to punish those who send or receive the occasional message. It has nothing to do with the big "problem" the telecom companies are talking about - the power text users who're "clogging" the network with their flurry of messages. Those, you see, are on low-priced fixed-rate unlimited message plans so they remain unaffected.
It's simple math. At $0.10 apiece, unless and until I start sending/receiving more than 50 messages consistently each and every month it's not worthwhile for me to sign up for a plan - even though it's a mere $5.00 per month. However any time I talk to a rep from my phone company they tell me my option is to do just that.
This isn't capitalism; it's extortion.
BD Phone Home!
Shameless plug. Like you weren't expecting it.
What I don't fscking like is that they don't charge for SENDING text messages, they charge for RECEIVING them. If you don't want to pay for individual text messages received, you have to pay $5 each month for unlimited texts. So you either pay them 50 or 60 cents a month for some spam texts that you never wanted, or you pay them $5. It's theft. Imagine if the postal service charged you to receive mail. Think of all the junk mail out there that people would send you for free. Fsck that. They should charge for sending texts. Receiving should be free.
McCain/Palin '08. Now THAT's hope and change!
"Or are you implying that all Senators are in collusion and fighting only for lower text-messaging costs?"
No. They are all going after populist minor problems that everyone can agree on, but aren't major issues. Most of the time, the problems they examine aren't solvable by congress directly anyway and its a huge waste of time. Congress has examined Exxon multiple times, but usually only in an election year. They are letting the real problems slide in order to get re-elected more easily. The entire process has become circular. "If I vote for this my critics will tear me apart and I won't be re-elected to solve problems in the future". Sound familiar?
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
It's easier than that to sneak a lot (80oz per person) of liquid onto a plane, especially if you're skinny.
My blog. Good stuff (when I remember to update it). Read it.
that's the cost of having an unregulated corporate monopoly. and that wasn't a national telecom network. the Bell Telephone Company was an entirely privately-owned commercial enterprise which the government had no hand in running, and hence the public had no control over.
communications networks are natural monopolies. that's the most efficient way to run communications infrastructure. that's why it should have been nationalized instead of simply broken up into separate companies and remaining in the private sector--which are now re-consolidating whilst the industry continues to be de-regulated.
we can keep letting the pendulum swing back and forth between a regulated & fragmented and unregulated & consolidated corporate monopoly (depending on whether the republicans are in office), or we can nationalize our communications infrastructure once and for all and treat it as a true public resource/utility. then, instead of running our communications networks based on maximizing shareholder profits, we could run them based on maximizing efficiency and public good.
... the post office is charging $0.42 per text message, and it takes days to get there!
Yes, but a post office text message can contain about 840 Verizon text messages and a memory card with 16 GB of data. Trying to send that over a cell phone would take half a week of data transfer and cost you three arms and a leg!