Class action targets text-message charges: Litigation follows Senate panel letter

A class-action antitrust lawsuit accuses AT&T Mobility, Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA Inc. of acting together to hike the price of wireless text messages. The new litigation comes on the heels of a Senate lawmaker’s probe into rising text charges and adds to the mounting litigation on texting practices by national cellular carriers.
“Plaintiffs allege that during the class period the defendants conspired to fix, raise, maintain or stabilize prices of text-messaging services sold in the United States. Because of defendants’ unlawful conduct, plaintiffs and other class members paid artificially inflated prices for text-messaging services and, as a result, have suffered antitrust injury to their business or property,” stated the 16-page lawsuit filed in U.S. District Court in Illinois.
The lawsuit, which defines the class period as Jan. 1, 2005, through the present, appears to have been prompted by Senate Judiciary antitrust subcommittee Chairman Herb Kohl’s (D-Wis.) probe into why the cost of text messages levied by the four national wireless operators has risen from 10 cents per message a few years ago to 20 cents per message today. The lawsuit was filed two days after Kohl made public his letter to the four CEOs of AT&T Mobility, Verizon Wireless, Sprint Nextel and T-Mobile USA and makes detailed reference to Kohl’s inquiry.
Kohl, who asked wireless executives to respond to questions on text-message price increases by Oct. 6, strongly suggested higher charges are related to increased consolidation in the cellular industry and thus greater market power by the four companies.
“We just received the lawsuit and are reviewing it,” said Marty Richter, a spokesman for AT&T Mobility. Richter noted the wireless industry is intensely competitive and that rates for a variety of text-messaging plans offered by the No. 1 operator are driven strictly by market forces.
Matthew Sullivan, a spokesman for Sprint Nextel, said the No. 3 wireless provider has not yet reviewed the class-action complaint.
Verizon Wireless did not immediately respond to a request for comment.
“T-Mobile believes this lawsuit is without merit,” stated the No. 4 wireless operator. “Wireless consumers enjoy a dynamic market that offers many choices in communications carriers, and plans and services. T-Mobile is extremely proud of the great value we provide to our customers every day.”
In addition to the new antitrust lawsuit and Kohl’s investigation, national wireless operators face a slew of class-action lawsuits on unexpected monthly charges on consumers’ bills for allegedly unauthorized services , including texting. The most recent lawsuit of this kind was filed late last month against Sprint Nextel in U.S. District Court in Kansas City.
Texting constitutes an increasingly important revenue stream for cellular operators. According to mid-year figures by industry association CTIA, 75 billion text messages are sent every month. Overall, CTIA said wireless operators generate $27.5 billion a year from wireless data, a big chunk of which is generated by text messages.