Senator calls out carriers on rising cost of texting : Kohl: ‘This conduct is hardly consistent with the vigorous price competition we hope to see’

A key Senate Judiciary Committee member directed AT&T Mobility, Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA Inc. to explain why text message rates are increasing, suggesting price hikes are due to decreased competition and greater concentration in the wireless space.
In a letter to CEOs of the four national wireless providers, Sen. Herb Kohl (D-Wis.), who heads the panel’s antitrust subcommittee, said he was perplexed about the price jump from 10 cents for a text message a few years ago to 20 cents for each one today.
“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 stated. “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. Text messaging files are a fraction of the size of e-mails or music downloads. Also of concern is that it appears that each of companies has changed the price for text messaging at nearly the same time, with identical price increases. This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”
Kohl observed the doubling of texting charges has paralleled further consolidation in the cellular industry in recent years.
“The number of major national competitors has declined from six to four. And the large national wireless carriers continue to acquire their smaller, regional competitors, with the announced acquisition of Alltel by Verizon Wireless being just the latest example,” Kohl stated. “As chairman of the antitrust subcommittee, I am concerned with whether this consolidation, and increased market power by the major carriers, has contributed to this doubling of text messaging rates over the last three years.”
Verizon Wireless $28.1 billion play for Alltel Communications L.L.C. is currently under review by the Federal Communications Commission and Justice Department.
The Wisconsin lawmaker called for a full explanation by Oct. 6 of increased charges for text messages in letters to Verizon Wireless CEO Lowell McAdam, AT&T Inc. CEO Randall Stephenson, Sprint Nextel CEO Dan Hesse and T-Mobile CEO Robert Dotson.
Further texting issues
In addition to the text pricing issue flagged by Kohl, unexpected monthly charges levied on consumers for allegedly unauthorized services — like texting — have prompted a flurry of class-action lawsuits against top wireless service providers. The most recent was filed late last month against Sprint Nextelin 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, the lion’s share of which is generated by text messages.