The chairman of a Senate panel on antitrust issues on Tuesday called on the Federal Communications Commission and the Justice Department to scrutinize competitiveness in the cellphone industry, pointing to a 100% increase in some text messaging charges by four companies that control most of the market.
Sen. Herb Kohl (D-Wisconsin) said that from 2006 to 2008, the price charged by the four biggest carriers for sending and receiving such messages rose from 10 cents to 20 cents.
And the increases seemed to occur in “lock step” — first from 10 cents to 15 cents and then from 15 cents to 20 cents, with each set of increases occurring within a period of months or even weeks, said Kohl, chairman of the Senate Judiciary Committee’s subcommittee on antitrust, competition policy and consumer rights.
“Are these price increases the result of a lack of competition in a highly concentrated market?” Kohl asked.
As a result of consolidation in recent years, four companies — Verizon Communications Inc., AT&T Inc., Sprint Nextel Corp. and T-Mobile USA Inc. — control 90% of the cellphone market, with Verizon and AT&T accounting for 60% between them.
[…]More than 1 trillion text messages were sent in the U.S. in 2008.
Found by Brother Uncle Don
-no brainer
Because profit margin on texting is f’n HUGE!
Lack of competition, they hit the nail right on the head. Just wait until Sprint and TMO get bought up and there is just Verizon and ATT left.
I have unlimited text messages, and 1000 talk minutes a month for 30.00 quid over here.
When I lived in America I was shocked over how badly they screw you guys for cell phones. The prices are bad enough, but when they told me I have to pay to RECIEVE calls, I was gobsmacked. I hope you guys manage to get that situation sorted out.
Monopolies are NOT capitalistic…as much as the republicans would like you to believe.
Here in Canada, we only have Telus, Bell and Rogers. Each offer a “retail” version to infer there is more competition than there really is.
We get even worse deals than the US carriers offer. Text has always been expensive, and data is worse. Rogers doesn’t even offer an unlimited data plan the way that AT&T does! We pay $30/month for 6GB of data, and even that plan was only offered for a limited time. The new competitors cannot hope to make a go of it when the incumbents have such a huge lead in tower real estate, market penetration, and cheap fibre optic backbone supply.
—-just listened to the video
observation 2 in 1a series..
First: (a somewhat..political dig)
A democrat wanting to deregulate and remove barriers to promote “free” competition?? …to prevent the large carriers from getting a stranglehold on the market..
wtf?
-what nefarious blasphemy is this?
–spilling from the mouth of the “Big government/Big Regulation / we need to regulate & control everything, right down to the gas coming out of your favorite Bovine’s ass party” ??
-surely this must be a fluke..
no way this was transmitted from Earth…this video had to of come from BizarrO World. -yes?
-me thinks further investigation is warranted.
-s
#3 – Fat_Anarchy – …I was shocked over how badly they screw you guys for cell phones.
It’s not the only area where they rip you off… broadband Internet connections are ridiculously overpriced. Oligopoly capitalism at work. 😛
Part of the problem is the consumer being completely ignorant of what things cost as well as simply not caring. We do have competition. I pay $50/mo for unlimited voice and text – what does that prove? And it’s prepaid.
I got a iPhone for my son. The price…$99. The sales tax; $47.25. None of this was disclosed on the website where you buy the phone, until the very end, when you pay for it. Reason? They “value” the 3G phone at $499, but Apple says they SELL for $99. What BS. I called ATT and complained, they knocked $25 off of my bill to shut me up. I took it, knowing I was not ever going to pay only the tax on the $99.
Why would they overcharge the tax? I think there is a kickback from the government.
Are these price increases the result of a lack of competition in a highly concentrated market?” Kohl asked.
No, it’s called inflation. Everything is going up. Have you eaten out lately, bought a movie ticket, gasoline, groceries, clothes, dog food, . . . ?
#3 Fat Anarchy
Monopolies are NOT capitalistic…as much as the republicans would like you to believe.
Corporate cronyism NOT capitalism defines the United States economy.
#9 – LibertyLover – No, it’s called inflation. Everything is going up.
So you claim that the US had an inflation rate of over 41% per year between 2006 and 2008?!
#9 – No. It’s not inflation. It’s greed. North America is just about the only place in the world where you pay to send AND to receive a message. Where you pay to place AND to receive a call.
Text messaging is just about the cheapest thing a phone company can offer. It utilizes otherwise wasted bandwidth as it is transmitted in the empty spaces between voice traffic.
I’m currently in SE Asia where it costs me NOTHING to send a text message and it costs me NOTHING to receive a text message.
The simple truth is the phone companies charge so much because nobody complains! It is greed, pure and simple.
Whining about the price of a service that is basically a luxury item. If he was smarter than he is, he’d come up with some better way to tax the thing so he could help pay for the rest of the crap he and his colleagues want to foist on us over the coming years.
# 9 LibertyLover said, in part:
“No, it’s called inflation.”
No, it’s called gouging — charging more than ten times the cost of providing a service, then raising the price to more than twenty times the cost, when the costs haven’t risen significantly, as Mr. Kohl mentioned in his remarks.
It’s also amusing seeing all this carping about competition from politicians from heavily unionized non-Right to Work states (like Wisconsin). I guess competition in labor markets is something he’s not at all interested in.
25 cents a text message for me, US Cellular.
Consumers being ripped off, what’s new. Just like there is not much difference in comparable plan prices among providers. You would think someone would compete on price, but they don’t have to unless the consumers says, “enough!”
With faster and faster switches and improvements in technology and technologies it is amazing at all the price drops and enhancements in service levels as well as the quantities of online product you get every day
Why the difference here ?
anti-trust, price fixing, anti-trust, price fixing, anti-trust, price fixing….
it’s everywhere from the food you eat, to what you watch, to what you pay for in our so-called “open” market. It’s not about supply and demand, it’s about how much can be squeezed out of us…
Net incomes:
Verizon: $5.67B
AT&T: $12.56B
Qwest: $2.83B
Gouging the consumer for all their worth, is apparently the order of the day now. And it’s only been getting worse, as new markets open up. Oil (or rather gasoline) prices are rocketing up again, even though supply is up and demand is down. It’s the speculators on Wall Street that are once again (as last year) buying up the oil stock, to take advantage of even a hint of early economic recovery. Which they will probably be responsible from squashing.
Of all the cabinet offices that have been created or proposed, over the last few terms. What America really needs is a Pricing Czar. An office to oversee the greed of corporations tendency to set prices, “what the believe the market will bare”, rather than a price with a fair profit margin.
The Texting “market” is a good example. It only cost a carrier about .3 cents per message. But they now charge 60 times what it cost the carriers to provide. You can bet some top telco executives are getting sloppy huge bonus increases over this. And maybe some of this profit is trickling down to the common shareholders (but don’t expect much). Which is another thing a Pricing Czar could be looking into and regulating. Executive pay and bonuses.
These clowns have been setting themselves up as minor kings, in the US. Sitting on multiple boards, and voting huge salaries for each other’s CEOs and such. Regardless of whether their company is doing good or poorly, for their presence. And the common shareholders have no power at all in determining what they’re paid. They’re just suppose to take it in the ass, and like it. In order to see any dividends at all, from their investment. Try investing elsewhere, and its the same thing. Cause the CEO and friends, of the prior company, are probably sitting on the next company’s board as well. It’s become a dirty little society of boardroom barons. Who set all their own pay scales, and bonuses. And sacrifice the jobs of useful employees, in order to maintain their own pay raises. Driving companies into the ground, like the US Automakers, and large banks.
Back in the days of the infamous “trusts”, anti-trust laws were enacted to prevent greedy and power men from monopolizing industry and setting their prices to milk the US economy dry. But decades later, few if any anti-trust decisions have been leveled at any companies. Resulting in their run-away pricing, and huge internal debts. Leaving customers and investors, holding the [empty] bag.
Ya know, I can’t help but wonder if the US government wants Text Messaging priced out of existence. Because it’s got to be harder from them to “spy” on so much badly spelled and archaically abbreviated wordage. Not like spying on our email packets. The cost increase may be the result of the Telco having to increase their archival storage of text messaging, in order to fulfill some FCC/FBI/NSA requirement. Whereas before, the Telcos were just relaying the text traffic, and losing it after being read by their customers. So these price increases, could be what’s paying for the US government’s paranoid domestic spying policy.
A pricing czar. Lol
#11, In some things, yes. I know our grocery bill has increased 50%+.
Remember that Bush II took Energy and Food out of the inflation calculations.
#13, Exactly. If you don’t like the cost, don’t frakking use it!
I would rather see text messaging go to 50c per letter and grocery prices come down then hear a bunch of people gripe about how they can’t live without text messaging. It makes me think all these people are bunch of HS kids who need the latest tool to keep in touch with their friends between class breaks.
As an early adopter of text messaging in Canada. I can say without question that the pricing for texting has increased over the years, not decreased. Early packages included unlimited texting messages.
My understanding of the technology is that the text messages are sent out over the backend channels of the wireless network that are used for managing the infrastructure. Not even utilizing the voice channel capcities… so I would think, well obviously they are running out of this backchannel space.
But of course, I just came back from France/Italy I there wasn’t one time I could say I was in a public place with people around that I could not find more than one person text messaging. There is no way we are close to the text messaging capacities that these countries are utilizing.
The answer is the same as the following question.
Q: Why does a dog lick his balls?
A: Because he can.
Because the world is chock full of really stupid people with nothing important to say who are willing to pay far too much to say it over a “service” that is just a control link used by the cell system that must be there for the system to work at all. So, people are paying for and “additional feature” that is an inherent part of the cell phone system and which costs the cell company virtually nothing more to implement than basic cell service (just hard drive storage of the messages).
I need to add that some of those stupid people are the same ones who talk about nothing while remaining parked for 50% of a short left turn arrow or who cause accidents while talking or texting about nothing while driving. My mesage to them: STFU! and pay attention to your driving.
I’m just disappointed the video left out the best part.
I love to watch multi-billionaire, corporate CEOs calmly tell outrageous, bald-faced lies to Congress and by extension, to every single one of the American people.
The very best part is when you can tell from their expressions and the tones of their voices, they could care less everyone knows they’re flat-out lying.
I find such breathtaking arrogance endlessly fascinating.
Q: What do you call an American with half a brain?
A: Gifted
All the phone companies are doing is, saying maybe talk shouldn’t be cheap; maybe, talk should be worth something. I agree talk shouldn’t be cheap.
This whole thing is ironic. We all have been taught that talk is cheap, and it is.
However, hearing cheap talking Senators beating their chest and saying phone companies are over-charging for a teenager luxury item is a hoot.
Congress having public hearings to just yap about something considered egregiously wrong and illegal is stupid and unproductive.
Both the American public and congress should just do something or stop complaining. No one is forcing anyone to buy these plans.
If American’s and their congress where smart with their money there wouldn’t be an economic crisis.
It’s really simple, STUPID AMERICAN’S Begets STUPID a CONGRESS.
The guy has the Milwaukee Bucks and Kohl’s Department stores. If he thinks these guys are colluding for high profits, how about he start his own cell phone company, and drive those guys out of business?
I also notice that the airlines charge the same amount for flights, all at exactly $227, raising and lowering their prices within hours of each other. Is this collusion too?