Senator Questions Rise In US Texting Prices 592
vimm writes "Senator Herb Kohl (D-Wis.) has started an inquiry on the rising prices of text messaging (up 100% since 2005) that has occurred almost in sync with the consolidation of 6 major carriers down to 4. In a letter sent to Verizon Wireless, AT&T, Sprint Nextel, and T-Mobile, Kohl said the increase 'does not appear to be justified by rising costs in delivering text messages.'"
Price-fixing? (Score:4, Interesting)
Kohl said he is particularly concerned that all four of the companies appear to have adopted identical price increases at nearly the same time. "This conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace," he wrote.
I wonder if things will get as far as a price-fixing investigations?
It's election time... (Score:5, Interesting)
Issues that matter to people will always get raised during election time. The price of gas will drop dramatically pretty soon just before the election and there will not be any connection to world events. It happened times before and will happen again. Everyone knows Oil Industry == Republicans and the easiest way for them to gain favor is to relieve people with lower gasoline prices for a short while.
But these tactics aren't limited to the price of gasoline... we will see more issues like the price of texting or all sorts of other nonsense that people can rally behind. It is unfortunately a part of the game and typically, even though people get excited about the apparent intention to reign in some justice and sanity, almost nothing ever really happens... except, perhaps, additional contributions from the accused industry.
SMS Prices Not Cost-Plus (Score:5, Interesting)
SMS prices are not based on what they cost to deliver they're based on what the market will bear. Downloading an mp3 over SMS would cost over 5 grand [mobilemessaging2.com].
I'm not sure there's so much collusion as a majority of people willing to pay insane prices for texting, and cell phones in general. I recently found a cell phone bill from about 10 years ago - it was $9.99 per line (times 2) plus tax (I got a local big-employer discount, the regular rate was $14.99 per line). It came with, I think 120 minutes, which is all I ever use anyway. My current Verizon bill is now easily $85/mo for two lines with a basic text package. Sure, there's been inflation, but there's also less competition.
I understand that in countries where the service providers are separated from the equipment providers the competition is fierce. I'm not sure but I'd guess that it's because people can jump from provider to provider on their non-crippled phones.
Re:Cynical (Score:5, Interesting)
For other senators, maybe. Look at Khol's record, though, and you'll see he's generally far more pro-consumer protection than nearly any other Senator.
Re:Are you interested in this story? (Score:4, Interesting)
Holy crap, just imagine if you had to pay for every comment on Slashdot, even the anonymous cowards that don't say anything useful, much like the advertisements I get about four times a week now because some assholes thought it would be +1 Funny and +1 Informative to randomly stick my cell phone number into all those stupid sites.
Re:I Can Think of Possibilities ... (Score:1, Interesting)
I used to work for one of the large telecommunications companies. 161 bytes plus a little bit of HTTP header overhead is nothing.
Most carriers don't use HTTP for SMS, but that's a different issue.
The cost of sending an SMS is not very high despite the infrastructure they need for porting the data between providers domestically and internationally. There's a platform behind that coordinates the interchange for people that costs a lot of money.
Despite the cost of the software to run it, the SMS part of the mobile phone business is the largest profit center right now.
It's worth hundreds of billions of dollars to phone companies and they will vigorously defend their pricing.
Can this be hacked around? (Score:4, Interesting)
As things like Android phones emerge, I wonder if there will be ways to hack around stuff like absurd SMS costs? Like:
The idea of getting IP-over-voice despite the carriers' rules strikes me as hilarious, even though it would be obscenely slow for anything bigger than text messages.
Re:Cost != price (Score:3, Interesting)
isn't e-mail from a cell phone free, it's the same thing isn't it, and you aren't limited to 160 characters. If you use SMS then can't you just switch to free e-mail?
Re:Wag the dog (Score:5, Interesting)
if we'd just established a national telecom network rather than give subsidies to the telecoms so that we can pay for the infrastructure they ream us for using, then this wouldn't be happening.
IT/communications infrastructure is just as important as roads and sewers these days. and there are much more efficient ways of managing our national communications network than the mess of private networks we have right now--which does not give us the benefits of consumer choice, yet still lacks any kind of centralized planning which a natural monopoly ought to have.
if all communications infrastructure could be nationalized, the first thing to do would be to:
compare the progress & development made on the internet/web as an open public communication network with that of our nation's cellular networks. very little innovation or technological progress has been made in cellular technology because these proprietary networks are closed to outside developers. only a small number of handset makers are given permission to build devices for use on these private networks, and the telecoms' tight grip of these networks preclude the possibility of adopting new features.
and since the internet can handle the transmission of digital video, audio & text just fine, there's no point in having redundant communications networks that are dedicated to TV/radio/telecommunication--especially in the case of long distance calls and text messages where telecoms charge extortionate prices for something which costs close to nothing to accomplish through the public internet.
and if cellular networks were converted into municipal wi-fi coverage, not only would it provide ubiquitous wi-fi internet access for everyone, but we'd stop having to pay extortionate rates for cellular data plans. we would be converting a highly specialized network of limited usefulness to a much more generally useful network that can accomplish all of the same things and more.
Re:Wag the dog (Score:5, Interesting)
That's the problem right there. In the US, the person *receiving* the message pays for part of it. In sensible countries (like Australia), the person *sending* the message bears the full cost - there is zero charge to receive a message.
As a result, there is a *lot* less SMS spam in Australia.
Re:Cynical (Score:2, Interesting)
A: The United States has never really been a complete free market. The government has participated directly in the economy from the very beginning of the republic.
More to the point, monopolistic or monopsonistic practices are very much against the public interest, and have been illegal for a century. When the number of players in a field are reduced, and prices subsequently increase for no readily explicable reason, chances are price collusion is at work.
That's almost definitely the case in this instance; since the cost of providing SMS service cannot rationally have gone up in a degree commensurate with the price charged, the providers are either actively or tacitly refusing to undercut each other. In case you weren't aware, that's against the definition of a free market.
B: It isn't correct to describe the companies involved as wholly private. Recall that they are in control of large sections of spectrum, which are---wait for it---public property. Even if the companies were doing nothing wrong (which they are) or illegal (which they are) the government has every right to dictate the terms in which the companies can utilize public property.
When radio broadcasts first became common in the United States, they were entirely unregulated. Radio stations, which were mainly confined to cities due to transmission range, simply outshouted one another, split airtime informally, and generally made a chaotic and unpredictable mess of things. Actually, if radio were still used for nothing but voice broadcasts, I would personally have no objection to returning to that system. If you read accounts of what radio was like in, say, Chicago in the 20's, it actually sounds like a lot of fun.
The government did eventually step in, however, and divvy up the spectrum for the sake of the public weal. And that's the situtation now. These companies may act like they have a God given right to their chunk of spectrum, but it simply isn't true.
The US federal government gave these companies exclusive rights to portions of the spectrum for the sake of the public good. If the companies are no longer acting in the public's interest, the government has every right to take that permission away.
In fact, doing so would be a pretty good expression of the free market, doncha think?
Re:What are you talking about? The market is fine. (Score:5, Interesting)
Did you know that people sell oil and gold for more than the cost to mine it?
Did you now the Oil companies are watched like hawks for trust violations? and that a large part of oil prices are set by the largest cartel in the world? Hardly a free market.
Did you know that that soft drink you pay $3.50 for at the movie theater costs the movie theater pennies worth of syrup and cold water?
Sounds like vendor lock in, which last time I checked was considered a coercion of the free market.
Did you know that many drugs sold for $10 or more a pill cost mere pennies to manufacture? All you have to do is invest a few billion in finding one that works
NO, bad idiot, read some facts. drug companies spend more on ads then R&D, it's just they get the govt. to strong arm everyone through intellectual property laws to pay more, Complete failure of the free market.
In the competitive free-market advocated by Milton Friedman, not The oligopolistic-market advocated by the modern republicans, the consumer demand and the cost of supply set prices, not the whims of some giant company that has strong armed govt. support and stifled competition.
It's basic morals, universalize the maxim: if every company did the same you'd only have on company left after a while, it would be the one who controlled the food and you'd have to sell your life away for just enough food to survive. It happened in the past, it was called feudalism, and is basically what your view of business advocates at it's extreme.
Re:Wag the dog (Score:1, Interesting)
Imagine if cell phone service had been a national government run service with no competition from the beginning.... I bet you'd we'd still have giant brick phones that had voice only, maybe just now in 2008 adapting to digital service, to free up bandwidth, but definitely no text messaging, data plans, multimedia messaging, etc...
Lack of competition and government control mean one thing... complete lack of innovation.
Re:Q & A (Score:3, Interesting)
Those texts are sent over radio frequencies owned by the public and licensed to the carrier via the government.
If you don't want to see me sitting naked on your couch, leave the room! Freedom to choose, isn't it great?
Re:O RLY? (Score:4, Interesting)
If they are not serving the public interest their licenses can be revoked.
It couldn't happen to nicer guys!
Re:Wag the dog (Score:4, Interesting)
what if it was modeled after academic/research institutions like Bell Labs, Xerox PARC, Los Alamos National Laboratories/DOE, CERN, etc.?
the belief that commercial competition is the only driving force for innovation is a myth. ARPANET was not born of commercial competition. ask Tim Berners-Lee if his vision of the World Wide Web was spurred by competition.
in any case, these are cultural problems. perhaps we _are_ becoming a world full of 'Thomas Edison's rather than 'Nikola Tesla's. if you build a society in which money & wealth are what makes the world turn, then that is what people will aspire towards. likewise, if you build a communications infrastructure which is operated by commercial corporations, run by businessmen & CEOs with MBAs rather than PhDs, then of course all technological progress will rest on the actions and decisions of people driven purely by financial motivations.
however, if you establish a communications infrastructure which operates like an academic/research institution, as is done with most cutting edge research/technology (ex. the LHC), then it'll be intellectually-driven individuals who rise to positions of power and push the technology forward.
Re:Wag the dog (Score:3, Interesting)
Or maybe a showy issue that most americans can identify with, will help non-technical americans realize how badly monopolies are robbing them? You know, and I know, that the cost of sending a text message is so incredibly small charging any amount of money beyond voice service is essentially highway robbery. But many people think it's new, and thus must be a huge complicated thing.
A couple of comments:
1) I'm not sure why people seem to believe the cost of producing a good should determine the selling price. Demand and the manufacturer's desire to maximize profit does that. Simply becaasue something can be produced cheaply does not mean it should be sold cheaply as well.
2) I would not call US cellphone industry a monopoly - Not only have prices dropped considerably we have a variety of providers and plans to chose from. For example, I can get unlimited text and calls for $38/month with no contract;$35 if all you want is unlimited text with minimal minutes.
Yeah, text messages themselves are stupid secondary problems. But waking people up, and forcing them out of the idiocy of news tv talking heads, and forcing them into the cognitive dissonance caused when they realize businesses are hurting them because capitalism ISN'T working as designed... that helps a lot. Otherwise it sounds like a bunch of pompous academics in suits talkin fancy words and talkin smack about god and the president.
Let's see - companies compete; prices go down; new companies spring up in the market - it isn't perfect but it's better than the alternative.
Re:Cost != price (Score:2, Interesting)
so then I guess he is not sitting next to you, is he?
How about reality rather than a "scenario" (Score:3, Interesting)
Don't have to use your imagination on this one, it really happened: ...several Middle Eastern Looking Men rise from their seats and head for the front of the plane.
On the way, they kill a flight attendant that was standing in their way.
The unarmed passengers are unable to stop them.
The MELM eventually take over the plane and crash it into a large building.
Thousands die.
Thousands of children cry.
Feel Safer?
Just because you don't trust yourself with a gun does not mean that I, my brother, wife, father, son, daughter, ... cannot be trusted with ours.