Cell Phone Execs Grilled By Senate Over Texting Charges
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Cell Phone Execs Grilled By Senate Over Texting...
Members of the Senate grilled executives from the wireless phone companies...about their massive profits...from text messaging. This is big business: more than 3,000,000,000,000 (3 trillion) text...
Members of the Senate grilled executives from the wireless phone companies…about their massive profits…from text messaging. This is big business: more than 3,000,000,000,000 (3 trillion) text messages will be sent this year…but with success comes scrutiny, and members of Congress want to know how the companies can charge so much for a simple text message. ABC News’ Elizabeth Leamy has more.
Published: June 18, 2009
Washington, D.C.—Texting is a lifeline for so many people, and a goldmine for cell phone companies…14-year-old Lena Dangerfield, of Atlanta, estimates she sends as many as 100 text messages, some days.
Lena Dangerfield, texting teen: “I don’t think about how much it costs, because really, I’m not paying the bill.“
Her parents say the family’s cell phone bills tripled when Lena went from just talking to texting.
Maria Dangerfield, Lena’s mother “I don’t think it’s fair that the phone companies are gouging us, the consumers.“
Why is it so profitable? Because, while the companies charge you 20 cents to send or receive a text, on a per text plan, experts estimate it only costs them .3 cents to transmit it.
Elisabeth Leamy, ABC News: “Why? Because texts are tiny. In fact, a one-minute phone call uses up the same amount of the network as 600 text messages.“
And, that’s what had Senators and consumer advocates so steamed at Wednesday’s hearing on Capitol Hill. The major carriers all raised their per text prices within months of each other, and they now charge quadruple what they did, 4 years ago.
Sen. Herb Kohl, (D) Chmn, Senate Subcommittee on Consumer Rights: “these lockstep price increases occurred despite the fact that the cost to phone companies to carry text messages is minimal.“
Joel Kelsey, policy analyst, Consumers Union: “This is a head scratcher to consumers because these rising costs are not at all related to the pricing incurred by the carrier.“
The cellular industry counters that unlimited texting plans have gone down in price, and are their most popular plans.
Wayne Watts, Sr. Executive VP, General Counsel, AT&T: “The U.S. wireless marketplace is, and will remain, effectively competitive.“
Leamy: “The days of charging an arm and a leg for something so cheap may be coming to an end. With more and more of us texting, the companies profiting may finally be getting the message.“
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Reader Reactions
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.
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