Justice Department Finds No Problems With Text Message Prices

from the fair-enough dept

Every so often an article pops up here or there talking about how ridiculous text message prices are on a per-byte basis. Eventually one of those stories got politicians involved, and the Justice Department began an investigation. Thankfully, the inquiry has ended, and the Justice Department found no evidence of anything wrong. Looking at the pricing on a per-byte basis is pointless and mostly meaningless. Most people who use SMS text messages on any sort of regular basis have bulk plans included with their regular plan. The “list” prices are really a small part of the market. The fact that most of the operators raised prices is certainly not evidence alone of any kind of collusion. And if prices really get to be too ridiculous, then people will just start to move to alternatives. This seemed more like an investigation brought on for PR purposes because someone didn’t like the way something was priced.

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Companies: doj

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Comments on “Justice Department Finds No Problems With Text Message Prices”

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Matt (profile) says:

Unexpected response...

I have to say I am surprised by the response. It seems to me that investigating whether commercial actors are tipping the balance in the marketplace rather than permitting the free market to set pricing is a good thing, and one of the better roles of government. To be sure, this particular investigation did not net a conviction, but I’m glad they are investigating things that look suspiciously like concerted activity (like simultaneous pricing changes).

To be sure, consumers could move to other communication platforms, and given the current pricing models the per-byte cost may not be the most meaningful measure. But that argument misses (at least) two things: 1) the medium is the message. People use text messaging instead of email in part because texting fulfills a slightly different purpose. So it really is a meaningful drain if companies are unnaturally affecting demand for text messages. 2) competing uses are part of the market landscape. Depressing one use will favor another use, and thereby unnaturally distort that landscape. That interferes with good price signaling and market behavior in just the same way that government-endorsed monopolies (in content, inventions, spectrum, land, …) do.

milrtime83 (profile) says:

“Most people who use SMS text messages on any sort of regular basis have bulk plans included with their regular plan.”

That’s because individual prices are so outrageous. Also, it is only “included with their regular plan” because they pay extra for it. I for one refuse to use text message. I have an Android phone and pay $30 a month for data, there is no reason I should have to pay more for the couple bytes of data in a text message.

milrtime83 (profile) says:

Re: Re: Re: Re:

Could be similar to airline fees. One will try adding a new fee and then others will follow, it doesn’t necessarily mean they are colluding to all increase and add fees.

@Derek, I agree to an extent, but it’s just annoying that they charge extra for texts just because they consider it a different kind of data from the data I already pay for. Also, if there were any kind of regulation on text costs they would just add or increase some other fees to make up the difference.

Derek Kerton (profile) says:

Re: Re: Re:2 Re:

Yeah, you’re spot on. Collusion implies back room deals. But the act of raising the price is not collusion. If the other sellers also raise their price after, it is STILL not collusion. That is the market – if a competitor raises their price, you can raise yours without losing customers. Does anyone think that this is only fair when it involves price drops, but if the prices go up, it’s illegal? I explain in a comment way below why the market for SMS works thus.

And Milrtmime83, too true that it’s “annoying”. Heck, yeah. But the others should understand that “annoying” isn’t illegal, or cause for regulations.

bryan (profile) says:

Re: Re: Re: Re:

SMS text messages do have a cost to carriers, they have use the signaling portion of the spectrum which is intended to be used for the phone and the network to communicate, so the network knows where your phone is. Individual messages are extremely small but the spectrum they are allocated is also very small. Individual messages do not pose an issue, but when multiple millions of messages are being sent then they can cause issues. Additionally the back end systems that handle and the messages also have a cost.
Look at Boost mobile, they have an insufficient system to handle the number of text messages that their user submit, resulting in delays and unreliable message transmission.

:) says:

Telecoms want you hooked on data plans.


So I find that they will turn everything toxic.

I think they are herding people to the only acceptable outcome for one reason or another not sure is all greed there are some financial considerations about SMS that are hard for telecoms they didn’t find a common ground anywhere in the world as far as I know it.

Derek Kerton (profile) says:

Why SMS Rates Are So High

There is competition in the cellular market. That’s why you see steady and quite rapid declines in per minute voice rates. Just today, Verizon announced a lower all in plan which matches with Sprint, and puts AT&T on notice.

Why are these voice rates dropping? Because YOU, the customers, shop on the basis of voice rates.

Why do text message rates not drop? Because YOU, the customer, shop on the basis of voice rates. Not SMS rates.

Similarly, international roaming is priced almost abusively, international data roaming pricing is tantamount to a rough anal rape – not one of those pleasant anal rapes, more of a prison sort.

So long as customers walk into the AT&T store and ask “how much do I have to pay for 600 minutes?” and base their decision on that, then that is where carriers will compete. If people walked in, asked how much the SMS fee was, said sorry, I’m going to T-Mo, and walked out…then AT&T’s prices would drop. (not to pick on AT&T, just for example)

SMS in the cellular industry is like Satellite nav systems in cars. They are way overpriced, because buyers do not base their purchase decision on the price/performance of the SatNav. They base their decision on the car’s specs and overall price – so we get gouged on the Nav. If people shopped on Nav prices, they would drop. SMS is the same – it is an ancillary service tied to a main service. It is an option, and once you choose the main service, you have no choice of provider for the ancillary. That sucks, but it’s NOT collusion, NOT illegal, and NOT in need of regulation.

If you don’t like it, you need to vote with your wallet and use the market to send signals to the sellers: either seek the carrier with the lowest SMS price, and tell yours why you’re leaving, or just stop using SMS because you feel it’s priced to high. If demand dries up, prices will drop.

harbingerofdoom (profile) says:

Re: Why SMS Rates Are So High

do i like the pricing on cell phones rate plans? no.

but on the other hand I believe every carrier out there now has an all inclusive plan that is not too bad. probably overpriced yes, but still within sanity check levels… and its a product that has been introduced in response to people screaming about data rates SMS rates and GPS rates. not that you ever hear ANYONE talking about that side of it….

having said that, i am pretty much in agreement with Derek here in that you either are going to buy what they are selling or you’re not. you dont really get to take an option and then cry about it when you dont like the pricing. feel you got snookered into a deal unfairly? ok, gripe about the contract being unclear or sales people not being up front about potential hidden costs.
but there is not one single carrier out there that does not clearly state what is and is not covered and what charges exist if you only take the time to look at the pretty mulicolored fold outs that have the giant-assed coverage maps (att excluded of course) and all the tiny tiny words next to them.
as i am currently trying to teach my oldest kid about to enter into being a legal adult… those words are not there because they got a great deal on printing… they are there to be informative and there is a lot of important information that you need to know before you sign a deal…
R T F M! (or contract in this case…)

Anonymous Coward says:

Text messaging is one of the biggest scams out there. You cant tell me that cell phone carriers are unable to make text messaging work more like instant messaging. Just charge a fee for internet access and be done with it….oh but no…you have to have this unlimited texting plan to go along with that. Its complete bulljive and its utterly insulting.

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