Carriers Respond To Text Messaging Inquiry - InformationWeek

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10/15/2008
04:36 PM
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Carriers Respond To Text Messaging Inquiry

The mobile operators deny claims they colluded on pricing, and AT&T blames a senator's inquiry for a spate of class-action lawsuits.

The wireless carriers are firing back over text message prices.

Last month, Sen. Herb Kohl, D-Wis., sent a letter to the heads of the four largest U.S. wireless carriers expressing concern that the price of text messages had doubled.

"What is particularly alarming about this industry-wide rate increase is that it does not appear to be justified by rising costs in delivering text messages," Kohl said in a letter. "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."

The senator also expressed concern that the carriers raised their prices almost simultaneously. Kohl also sought a thorough accounting of how much text messages cost carriers compared with transmitting e-mails, data, and voice calls.

T-Mobile's president and CEO, Robert Dotson, didn't agree with the senator's assessment of pricing.

"Although your letter states that carriers' prices for text messaging appear to have increased since 2005, the opposite is true," Dotson said in response. "Since 2005, the prices that T-Mobile charges for text messages -- 90% of which are purchased in texting package plans -- have fallen by more than half. Not only have our prices for text messages fallen, T-Mobile leads its competition in bringing lower prices to consumers."

Multiple class-action lawsuits have been filed over the last few months regarding text message pricing. AT&T said Kohl's letter could have been the catalyst for these legal actions.

"As you probably know, since your letter was made public, 20 class-action lawsuits have been filed around the country against AT&T and other national carriers, specifically alleging price-fixing for text messaging services," said Timothy McKone, AT&T's executive VP for federal relations, in a response. "All but one of these cases cite your inquiry as one of the bases of alleged collusion. We are therefore eager to clear up any misunderstanding."

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