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If Text Messaging is Cheap, Why Does it Cost So Much?

June 16, 2009 2:47 PM

ABC's Tom Shine from DC:

According to Joel Kelsey of Consumers Union, text messaging uses less data than almost any other service on a wireless network.  "The text message is a free rider inside the so-called "control channel" or space that is already being used to operate the wireless network.  In other words a text message does not use up any extra spectrum..."  But Kelsey says since 2003 the price of text messaging has quadrupled for some carriers. 

More recently, since 2005, every major carrier has at least doubled the prices for text messaging from ten cents to 20 cents per message.  "Six hundred text messages contain  less data than  one minute of a phone call.  If we put that into dollars and cents, at twenty cents per text, those six hundred messages would cost $120 for the equivalent of a one minute phone call."
 
Textmessage_bill_090422_main

Cricket Communications, which operates in 32 states but doesn't enjoy a national network because they say the big guys are hogging the spectrum, doesn't charge its customers for incoming text messages, and that means no charges for those spam text messages either.  "We at Cricket are pleased to provide an alternative to parents who are shocked to receive a $600 bill caused by a child's text messaging frenzy."
 
So if text messaging is so cheap, why does it cost so much?  That's what Senator Kohl and his judiciary subcommittee colleagues want to ask the big guys at Verizon and AT&T who along with Consumers Union and Cricket will testify at a hearing getting uderway right now.

June 16, 2009 | Permalink | Share | User Comments (29)

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The cell phone companies in America run one big racket. Shame on them.

Posted by: Scorpio Redhead | Jun 16, 2009 3:51:40 PM

The reason that the pricing for these messages has gone up is that there are only so many available "slots" in the control channel. If the control channel fills up noone can dial.

Besides, all carriers offer "messaging bundles" which tend to run around 500 messages for about seven bucks.

At least one carrier offers unlimited "in-network" messaging (i.e. to handsets on the same network).

The purported "text messaging racket" does not exist.

Posted by: John | Jun 16, 2009 6:26:40 PM

There are these things called unlimited text message plans. So why would you ever need to get a huge bill?

Posted by: Andy | Jun 16, 2009 6:50:40 PM

This is a non-story. People need to buy text-messaging packages. My family has unlimited text-messaging for @ $15 per month with US Cellular. If you send more than 10 or 12 text-messages a month, then you need to get a package. There is no racket; be a smarter consumer.

Posted by: James | Jun 16, 2009 6:52:02 PM

The phone companies are simply charging what the market will bear. You don't want to pay the charge, don't text. Additionally, where do you think the phone companies are getting to money to build new cell towers and new infrastructure for internet access?

Posted by: Eric | Jun 16, 2009 6:52:30 PM

They are not only making .20¢ per text, they actually make twice that since they charge both the sender AND the receiver-which hardly seems right as you cannot control who texts you.

Posted by: Lynn | Jun 16, 2009 6:52:41 PM

Why does the congress have to interfere with the phone companies charges. If the people don't like price go with price is less costly. It is a competitive world of capitalism. If people would exercise their freedom to choose other plans then plans would be come more competitive.

Don't let Gov't regulate prices when we have so many choices.

Posted by: Rodney Buschman | Jun 16, 2009 6:54:37 PM

I think the phone industry (AT&T) should be investigated for the excessive charges for caller ID. A few years ago it cost me $4.95 a month. Now it is over $9.00 dollars a month. Info is all over the internet that it only cost the telephone companies 1/2 of 1 cent to furnish caller ID for the whole month. It is all done by computers.

Posted by: Robert | Jun 16, 2009 6:56:39 PM

This is simple, don't like the price, don't use the product. No body from a cell phone carrier has ever FORCED anyone to text. But then again, the tobacco companies never put a cigarette in anyone's mouth, but it's they were sued. I guess being a responsible person is no longer required, just get the government to bail you out. if you texting bill is to much, call Mr. Obama.

Posted by: Business Owner | Jun 16, 2009 6:57:36 PM

They can charge outragous amounts because the goverment has not passed any laws that prohibit it. Does that mean that they should regulate it? No, because this will probably cost us more. I would rather see them regulate gasoline prices and stop charging us taxes upon taxes for everything we do.

Posted by: Tom | Jun 16, 2009 6:59:11 PM

Joel Kelsey needs to do his homework. The amount of network resources needed to send a text message depends on the message size, access network technology, and network configuration. The article stated that the average text message takes up only 1/600th the network utilization of a standard minute of use for voice. This is highly simplistic and wholly optimistic.

In the case of Code Division Multiple Access (CDMA) networks, Joel must be assuming that only the Access Channel and Paging Channels are being utilized. The Traffic Channel must be used for sending larger messages, and many carriers configure their networks so that text messages are delivered via the Traffic Channel. The use of Traffic Channels for message sending and delivery increases the amount of network resources required, and hence, the cost of a text message.

I agree, this is a non-story.

Posted by: Erik Neitzel | Jun 16, 2009 7:02:37 PM

They charge what they do because they can. The bottled water on the desk of the congressman cost outrageously more than it is worth also. Let the market determine prices, not the government. I'm sure there are more important things it should be investigating, like why they themselves are spending more money than they have to buy into other private enterprises.

Posted by: Jeff | Jun 16, 2009 7:05:47 PM

No regulation! Let capitalism prevail and limit government intervention. If you don't like your service switch to a better provider. If you stay in your current plan with outrageous charges that's on you! Don't cry to the government because of your lack of intelligence.

Posted by: amy | Jun 16, 2009 7:08:40 PM

It is inverse economics based on the cost of the technology, but the price is based on supply and demand, not cost. In the not-so-free-market of China, the cellular plans are reversed. Texting is included at no additional cost to your basic plan whereas voice calls incur a premium. This really makes more sense technologically and it makes it easy for the Chinese Government to monitor their citizens. The ability to easily and automatically search millions of text messages is a bit spooky.

Posted by: Nick | Jun 16, 2009 7:09:42 PM

Stop spending my tax dollars. The gov. does not need to be concerned about this issue err.. non-issue. The parents of these kids need to pay-up or shut-up. The phone networks can charge what ever they want, you can pay whatever you want....YOU have a choice. Also the media needs to start reporting on these things as they are and quit putting their spin out it. They (the media) are ruining this country just as much as the liberals are. TEXTING IS NOT A NECCESITY IN OUR ECONOMY.

Posted by: Mike | Jun 16, 2009 7:14:50 PM

If the people using the texting do not like the price then don't use it and the laws of supply and demand will be in effect. For your news show to act as if the phone companies should have a consciense and not charge whatever they can is crazy. You are acting as if we should get enraged over charging what the company can on a luxury item. Anyone can get unlimited texting programs and they are dumb if they don't. Quit trying to push socialism on luxury items. How would you like to be told what you can sell your house for?

Posted by: Joan Kreinbrink | Jun 16, 2009 7:16:53 PM

I found a solution to help cut cost on texting at least from the standpoint of Computer to Mobile device texting. The website is [URL removed] The service is free to individual consumers and allows anyone to send unlimited text messages throughout each year from their Internet-enabled computer to any mobile device(s). As more and more consumers use a service like this, Mobile Carriers will see their enormous profits dwindle from their current outrageous per message fees.

Posted by: John | Jun 16, 2009 7:31:22 PM

They charge what the market will bear if you can not control your child you pay the bill or make your child be resposible like we did in my house not go to whashington and cry its like filling my gas tank and then going inside to complain about the price grow up america

Posted by: will | Jun 16, 2009 7:42:10 PM

I won't buy until it works more like traditional phones.

I want to buy a phone from the store of my choice, that can be used on any network, that hasn't had its features manipulated by the cell industry. I also want service without a contract where the person who placed the call or set the text has to pay for it.

Is that too much to ask?

Instead I what I am stuck with, is situations where I like an iPhone but I can't use it with the Verison network which has better coverage. I have to subscribe to a data plan, even though I prefer to just use it more like an iTouch but with phone capabilities. However, even if it were available on the Verizon network, they would turn off Wi-Fi features forcing you to use their internet services rather than a free hot spot. So I could choose to go with AT&T with its lesser coverage and get the phone of my choice with all the features the manufacturer built into it. However, I might need a better phone and text messaging plan because all my friends are on the Verizon network and will hammer me merciless with what could prove to be unreasonably expensive out of network texts and phone calls.

Should buying a cellphone and service require this deep of an analysis? It seems to be too complicated to be described as honest free market forces at work.

Posted by: NoCellBob | Jun 16, 2009 7:54:52 PM

This is exactly what you should expect in the United States. For all the talk of competition and the benefits you get in a free market, all we end up with are a bunch of collusion. And our government? they can't find the to save their lives.

Posted by: Mark Johnston | Jun 16, 2009 9:51:15 PM

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