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June 21, 2009


CNET - Executives from the nation's largest phone companies went to Capitol Hill to defend themselves against allegations that they've been fixing prices on text messaging. Executives from AT&T and Verizon Communications testified before the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, saying their companies have not been involved in a conspiracy to hike text messaging rates. And they argued that competition is alive and well in the wireless market.

The hearing was called in response to a letter sent in September from Sen. Herb Kohl (D-Wis.) to the four major U.S. operators--Verizon, AT&T, Sprint Nextel, and T-Mobile USA--asking them to explain why their text rates had all increased to 20 cents per message. Kohl noted in his letter that these rates marked a 100 percent increase since 2005.

Shortly after the letter was sent, about 37 separate class action lawsuits were filed against wireless operators alleging price-fixing on text-messaging services. Both AT&T and Verizon have denied these claims. . .

AT&T and Verizon executives dispute that they have colluded to fix prices on texts, but they also deny that texting rates have increased. Instead, they claim that prices have fallen for text messaging as a result of robust competition.

Verizon's general counsel, Randal Milch, said in his written testimony that there are more differences in text-messaging prices among wireless competitors than there are similarities. And he noted that most Verizon Wireless customers subscribe to a texting plan, and as a result they "pay less than a penny per message," a reduction of almost two-thirds since 2006.


Anonymous Anonymous said...

It does seem like there is some collusion between the big four carriers, doesn't it? I think the rise in texting prices is a calculated move by the big carriers to 'persuade' (read: force) people into signing up for texting plans. Most people will opt for a higher plan than they need in order to avoid overage charges. So the carriers laugh all the way to the bank.
Plus, last time I checked, my carrier seemed to think any alteration to the contract, like signing up for a new texting plan, extended the contract period again...
Just yesterday I saw an interesting thing, though. I noticed a new prepaid plan by the Tracfone folks which if I remember correctly translated into 2c a minute and 1c per text. I think it was called StraightTalk. Prepaid, mind you, not a contract. So if they can give it at that price what is the excuse of the others? Anyway, this might be the future for those unhappy with the way the big four are going. It seems Tracfone is rocking the boat here. Good for them.

June 26, 2009 5:13 PM  

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