Senator Herb Kohl (D-WI) struck a blow against rising text message prices by calling on the major wireless carriers to explain themselves (and their fees). Earlier in the week, Kohl, who chairs the Senate Antitrust Subcommittee, sent a letter to Verizon, AT&T, Sprint, and T-Mobile arguing that the increase in text message prices may be more about decreased customer choice, rather than rising costs. Kohl has given the CEOs of the Big Four until October 6 to respond, and wants to hear their rationale before deciding how to proceed--possibly even to an antitrust investigation, according to Ars Technica.
In his letter, Kohl points out that Sprint was the first major carrier to up its text messaging charges, increasing them from 10 to 20 cents. The others eventually followed suit. Kohl believes, as many others do, that text messages are so small that they do not warrant such a large rate increase. The senator also points out that since all four carriers raised the price around the same time, they have not engaged in the "vigorous price competition" that is expected in a free market. The big four wireless carriers serve more than 90 percent of the cell phone market, so the absence of competition for text message pricing is definitely worth looking into.
To be fair, cell phones are in everyone's hands these days because prices and packages from wireless carriers have made them affordable. However, when you consider that the average cost for sending a megabyte of text messages averages out to more than $1300 without a text messaging plan, it's clear that something is not right. Although text message costs seem to be hitting customers all over the world, earlier this month Twitter announced it was shutting down its outgoing message service from the U.K. after costs became prohibitive.
Back in the U.S., cell phone companies have been taking a lot of heat lately. This latest inquiry comes after a judge in California ordered Sprint to refund $18.7 million in early termination fees it had collected and to cease collecting ETFs worth $54.7 million from other customers who refused to pay.
