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AT&T and Verizon called on carpet for text pricing

by on17 June 2009

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Collusion on pricing? Never!

The U.S. Senate Judiciary Committee's antitrust subcommittee head, Senator Herb Kohl, has taken the four largest U.S. cell phone companies to task for doubling their data rates (which includes text messaging) from 2006 to 2008 from 10 cents to 20 cents per text.  "These sharp price increases raise concerns. Are these price increases the result of a lack of competition in a highly concentrated market?" Kohl asked, adding that the Senate antitrust subcommittee had urged the Department of Justice to scrutinize future mergers or allegations of anticompetitive practices in the industry.

The general counsels for both Verizon and AT&T responded with a hue and cry that their companies did not act to fix data prices, insisting that most customers have flat rate or fixed rate data plans and do not pay per text.  They did admit, however, that the price increases affected only one percent of text messages sent since most consumers purchased volume plans that lowered the per-message cost (out of necessity, we might add).  They claim that only about 17 percent of their customers are on a pay as you go plan that is a pay per text message price.  The cell phone companies insist that competition is healthy.

Our question is this: which came first?  The higher per text prices or the higher fixed plan fees for any affordable data and texting?  They seem to go hand in hand these days, since consumers want data options and are a captive audience for cell phone providers.

Last modified on 17 June 2009
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