What Carriers Aren’t Eager to Tell You About Texting

[arnisador]

I read this in the NY Times the other day and showed it to my family. My daughter incurs (and pays) high texting fees each month. She gets that they are charging that much because they can charge that much, but it certainly puts a "sting" in the bills!

 

[Carol]

Its possible to opt for different service plans as well. I have unlimited texting as part of the package on my phone even though I rarely text.

 

[BrandonLucas]

I just don't understand what the big deal is here. It's no different than Nike charging $100 + dollars for a pair of shoes that cost $5 to make, or for clothing stores to charge $75 for jeans that look like they've been worn for years right off the rack.

If there are enough people out there willing to pay for something they don't need, then the company gets to pick the price at which they want to sell it at. It's up to the consumer as to whether or not they want to pay the price for the product.

I choose to not wear $75 jeans, and instead I wear jeans that cost $20, and I don't worry about how much profit the company is making off of me, because I'm purchasing something that I need to be able to wear at a price that I know I can afford that fits into my budget.

If you can afford to pay for the extra charge for texting and feel like texting is important enough to use as a feature, then deal with it. Like Carol said, there are usually plans that allow you to have unlimited text for a set price anyway. If you feel like you can't live without text messaging as a feature, you may want to look into other options of communication.

It's as simple as that. The only thing I can see getting angry over is if you enter into a contract with the price of text messaging at "x" amount of dollars, and mid-contract, your phone company decides to raise the price "y" amount of dollars, then yeah, I would be pretty miffed. But even then, I'm pretty sure that I can live without texting.

As a side note, I just got my first cell phone since '99 for Christmas this year...so I know you can survive without it.

 

[Carol]

So what I'm hearing is that the real controversy isn't what the various mobile carriers are charging for their SMS (text) services.

The real issue is that there are some folks that find other people's texting (and perhaps mobile phone use in general) to be distasteful.

 

[AMP-RYU]

What Carriers Aren’t Eager to Tell You About Texting

December 28, 2008
The New York Times
EXCERPT:




By RANDALL STROSS
TEXT messaging is a wonderful business to be in: about 2.5 trillion messages will have been sent from cellphones worldwide this year. The public assumes that the wireless carriers’ costs are far higher than they actually are, and profit margins are concealed by a heavy curtain.
Senator Herb Kohl, Democrat of Wisconsin and the chairman of the Senate antitrust subcommittee, wanted to look behind the curtain. He was curious about the doubling of prices for text messages charged by the major American carriers from 2005 to 2008, during a time when the industry consolidated from six major companies to four.
So, in September, Mr. Kohl sent a letter to Verizon Wireless, AT&T, Sprint and T-Mobile, inviting them to answer some basic questions about their text messaging costs and pricing.
All four of the major carriers decided during the last three years to increase the pay-per-use price for messages to 20 cents from 10 cents. The decision could not have come from a dearth of business: the 2.5 trillion sent messages this year, the estimate of the Gartner Group, is up 32 percent from 2007. Gartner expects 3.3 trillion messages to be sent in 2009.
END EXCERPT
Those of you who are prolific texters will (hopefully) think of this all day.

I personally cant see the point in typing everything I say I would rather just call some one!

 

[MBuzzy]

This isn't capitalism. This is a monopoly and THAT is the issue here. Whether you like texting or not, when companies consolidate and then communicate with each other to raise prices, that is illegal.

Normally, when you reduce competition and the demand form something increases, the prices will rise anyway. There should be no need to commiserate.

In this situation, I am concerned about how the phone companies reduced their competition and exactly how they are cooperating to raise prices.

If you let these guys get away with forming a monopoly, we're only going to see more of it. And its bad enough already!

I have to disagree with this one. There is most certainly a great deal of competition. My particular cell plan charges me $0.30 per text sent or received...because I don't use it and don't need it. If I switched companies...or even plans within my company I could have it for $0.10 or less, if I paid a flat rate. there is widespread competition on pricing in the cell phone world.

This is one that I really can't see a conspiracy in. The cell companies are not intentionally consolidating so that they can raise prices and screw the consumers. The consumers are just paying for it. Corporations are taking advantage of that and making money on it.

I don't call that a monopoly any more than any other product. If two companies offer similar products and people WANT those products, the price will steadily increase until reaches the point that the market will bear, when it flattens out.

Isn't this actually the definition of capitalism? A private corporation making a profit? Supply and Demand. They have a service, consumers want it, they are willing to pay for it. When the prices gets too high, they'll stop paying or find a work around.

Capitalism is an economic ideology in which wealth, and the means of producing wealth, are privately owned and controlled rather than publicly or state-owned and controlled. In capitalism, the land, labor, capital and all other resources, are owned, operated and traded by private individuals or corporations for the purpose of profit, and where investments, distribution, income, production, pricing and supply of goods, commodities and services are primarily determined by private decision in a mainly market economy.

 

[MBuzzy]

I really find it strange that people consider this pricing scheme to be greed. I guess I can't understand the whole concept of people hating other people for making money.

If you own a business, will you not try to make the largest profit that you can? For yourself, your family, and your employees? Will you not work the market to determine the best price for your goods and determine the balance between the price that you can charge, the cost that you incur, and what the consumers will pay?

If I was the CEO of a cell phone company, I would charge the same high prices. People pay them, right? They must want the service, right?

This IS NOT a necessity, though some people may think of it that way. This is not a moral question, people. The corporations in this case do not have any responsibility to the consumer to keep prices low, they have a responsibility to make money, like it or not. If consumers stop paying, prices will go down, plain and simple. Otherwise, prices will continue to rise.

If you like the service, you have to pay for it....whatever they charge.

 

[Makalakumu]

Its not a monopoly. The only monopoly that existed in the U.S. telecommuncations system was the Bell System which the target of a federal antitrust suit that began in 1972 and ended with the divestiture on January 1, 1984.

http://www.corp.att.com/history/history3.html

It all depends on how you define monopoly. The bottom line is this...when any company reduces its competition to a point where they commiserate with their competition for profit, THAT is a monopoly. That is what the spirit of the Anti-Trust Laws of this country.

Companies that do this are cartels and these will defeat market forces by using the power of government or some other external force to protect their interests.

It is my hope that people think very hard about this, because there are a heck of a lot of companies who are doing this very thing and at one point in time in our history, we collectively decided that we preferred the free market and more competition.

 

[MBuzzy]

It all depends on how you define monopoly. The bottom line is this...when any company reduces its competition to a point where they commiserate with their competition for profit, THAT is a monopoly. That is what the spirit of the Anti-Trust Laws of this country.

Companies that do this are cartels and these will defeat market forces by using the power of government or some other external force to protect their interests.

It is my hope that people think very hard about this, because there are a heck of a lot of companies who are doing this very thing and at one point in time in our history, we collectively decided that we preferred the free market and more competition.

I guess I'm just not following how Cell Phone companies are doing this at all, by any definition of the term. I mean, each company provides a similar service, each company charges different prices, consumers are free to change providers at any time.

You definition states that "when any company reduces its competition to a point where they commiserate with their competition for profit, THAT is a monopoly." So how is this being done in this case? There are many cellular phone providers....and I'm not seeing a whole lot of cross talk. It looks to me like a lot of real competition of a number of companies trying to hold on to their customers! People are CONSTANTLY switching providers.

 

[Makalakumu]

It doesn't matter who your service provider is, because they are all working together to fix a price. That is the problem. That is what Sen. Kohl is investigating. Those kinds of activities are against the laws of this country. Hopefully, this is the first in a long line of investigations into companies who do this.

 

[Makalakumu]

http://www.nytimes.com/2008/12/28/business/28digi.html

Here's the rest of the article. There's more too this then the excerpt lets on...

 

[MBuzzy]

http://www.nytimes.com/2008/12/28/business/28digi.html

Here's the rest of the article. There's more too this then the excerpt lets on...

Oh. Boy am I embarrassed now! I concede! I didn't read the article.....

I'll shut up now.

 

[BrandonLucas]

http://www.nytimes.com/2008/12/28/business/28digi.html

Here's the rest of the article. There's more too this then the excerpt lets on...

What I'm getting out of the article is that it is being investigated as to whether the carriers have increased the cost of text messaging as the popularity of texting grew over the last couple of years. Also, text messages cost little to nothing to transmit and receive, so virtually all of what is being charged for the service is 100% profit.

The problem in itself is that these companies appear to be greedy...but the larger issue is that they're being greedy with a service that is optional.

Sending text messages is not vital to the phone's operation. It's an option that you can choose to add to your plan. It's not necessary that you do so.

In my opinion, the issue of the phone companies marking up optional parts of the sales plan is not that big. I don't agree with what they're doing, but I also don't have to have text messaging enabled on my phone, either. I would be alot more upset if the price of the batteries were marked up and sold seperately and put in the same scenerio.

But, to me, it's just par for the course of buying a product. If you buy a pair of shoes, they come with laces. If you don't like the laces that come with them, and you want to be stylish, then you can certainly buy a seperate pair of laces for your shoes, and laces can cost anywhere from $2.50 to $10 a pair, depending on what kind you want. $10 for shoe laces is a bit extreme, but you don't have to buy those, either. Your shoes already come with perfectly good shoe laces.

Now, I'm not going to raise a big stink to the shoe lace company because they choose to charge $10 for shoe laces. All they're going to tell me is that I don't have to buy them. And if my shoe laces break and I just need to put a new pair of laces in them, that's why they sell laces at $2.50 a pair...but they may not be as stylish.

That's where I have the problem with people texting and getting all bent out of shape about being charged to do so. Is it necessary that you text? Is a cell phone necessary at all?

Like I said before, I lasted almost 10 years with no cell phone, and I was the only person in my crew of friends and family that didn't own one. I didn't die. I didn't shrivel up and blow away with the wind just because I didn't have the latest technological gadget.

Now, for people who are hearing impaired, it would make sense to have this feature. That's really the only thing I can say about it...and maybe, like I said in a previous post, maybe if someone comes out with a mobile device that only texts and doesn't have phone capabilities, then that issue would be cleared up as well.

I know I sound like a crotchety old man, but it's really one of my biggest pet peaves when everyone wants to jump on the latest bandwagon and be cool...and it becomes an almost life-or-death struggle to stay in the cool loop. Texting is not vital to our survival, or even vital to the operation of the phone. If you don't agree with the pricing of text messages, then don't subscribe to it. If everyone did this, the phone companies would think really, really hard about how much they charge for their service. I can gaurantee that.

But, since it's such a huge part of our wonderful pop culture, I don't think that will ever happen.

 

[Steve]

You've touched on exactly why I see this as being different than gas or other industries.

What I'm getting out of the article is that it is being investigated as to whether the carriers have increased the cost of text messaging as the popularity of texting grew over the last couple of years. Also, text messages cost little to nothing to transmit and receive, so virtually all of what is being charged for the service is 100% profit.

The problem in itself is that these companies appear to be greedy...but the larger issue is that they're being greedy with a service that is optional.

Sending text messages is not vital to the phone's operation. It's an option that you can choose to add to your plan. It's not necessary that you do so.

In my opinion, the issue of the phone companies marking up optional parts of the sales plan is not that big. I don't agree with what they're doing, but I also don't have to have text messaging enabled on my phone, either. I would be alot more upset if the price of the batteries were marked up and sold seperately and put in the same scenerio.

But, to me, it's just par for the course of buying a product. If you buy a pair of shoes, they come with laces. If you don't like the laces that come with them, and you want to be stylish, then you can certainly buy a seperate pair of laces for your shoes, and laces can cost anywhere from $2.50 to $10 a pair, depending on what kind you want. $10 for shoe laces is a bit extreme, but you don't have to buy those, either. Your shoes already come with perfectly good shoe laces.

Now, I'm not going to raise a big stink to the shoe lace company because they choose to charge $10 for shoe laces. All they're going to tell me is that I don't have to buy them. And if my shoe laces break and I just need to put a new pair of laces in them, that's why they sell laces at $2.50 a pair...but they may not be as stylish.

That's where I have the problem with people texting and getting all bent out of shape about being charged to do so. Is it necessary that you text? Is a cell phone necessary at all?

Like I said before, I lasted almost 10 years with no cell phone, and I was the only person in my crew of friends and family that didn't own one. I didn't die. I didn't shrivel up and blow away with the wind just because I didn't have the latest technological gadget.

Now, for people who are hearing impaired, it would make sense to have this feature. That's really the only thing I can say about it...and maybe, like I said in a previous post, maybe if someone comes out with a mobile device that only texts and doesn't have phone capabilities, then that issue would be cleared up as well.

I know I sound like a crotchety old man, but it's really one of my biggest pet peaves when everyone wants to jump on the latest bandwagon and be cool...and it becomes an almost life-or-death struggle to stay in the cool loop. Texting is not vital to our survival, or even vital to the operation of the phone. If you don't agree with the pricing of text messages, then don't subscribe to it. If everyone did this, the phone companies would think really, really hard about how much they charge for their service. I can gaurantee that.

But, since it's such a huge part of our wonderful pop culture, I don't think that will ever happen.

 

[Archangel M]

Why sign a service plan with "pay per text"?? My plan has unlimited texting.

 

[Makalakumu]

Optional is in the eye of the beholder. Anything can be optional except some form of food, water, and shelter. The bottom line is that a cartel is a cartel. We have monopoly laws that are meant to protect the consumer from cartels. Your personal feelings should be of little issue in this matter.

What interests me about this case is why this particular cartel is being singled out. We have so many other trusts, cartels and monopolies that control the price of valuable commodities that I'm assuming that most Americans, deep down, feel that this should be a non issue.

What is the point in busting a cartel that controls the price of texting? Is this a symbolic show of force that is designed to make people think the law still has meaning? Maybe the fact that this is an issue that really doesn't affect big business makes it a perfect example.

Imagine what would happen if the full force of government explored what happened to oil prices this summer?

 

[BrandonLucas]

Why sign a service plan with "pay per text"?? My plan has unlimited texting.

Well, the argument there, according to that article, is that it's still overpriced, even when paying a flat rate for text messaging.

But I agree, the flat rate is the best option...if you must have text messaging.

I know I sound like some kind of old crotchety man, but it really irritates me that there are people out there that must have text messaging...if it's that important, then priorities need to be recalculated.

I agree that the companies are charging too much...but it's not something that's going to break my bank...it's an extra $10 per month on my plan, and I only have it because my wife insists on texting me while I'm at work (which isn't a bad thing, considering I'm not allow to make personal calls and I hate working and would rather talk to my wife). So what if they're making a killing off of text messages? So what if it doesn't cost the company one red cent to send and receive the messages?

I think the questions people should ask themselves here are:

1. Why do I need to text, and how important is texting to me?
2. Are there alternatives to texting?
3. Can I afford the price that the company is charging?
4. Are there other options on the plan that are more affordable?
5. If I can't afford the plan for texting, is it going to kill me?

People (around here, anyway) act like texting is the new talking. Take away their cellphone, and they're like a fish out of water. That's what burns me up. I'm not against texting, not at all, but geez, how freaking important is it????

I remember when I got my first cell phone in '99, my parents got it for me...I was a junior in highschool, and the phone was huge...too big to sneak into school. They got it for me in case of emergencies...if the truck ever broke down, if there was a bombthreat at school, etc. Of course, that's not what I used it for, and soon had to give it up because the battery life on those old Nokia phones was about 3 hours.

So, I went from about July of '99 until December 25, 2008 with no cell phone at all. No texting. No caller ID. No call waiting. No contact list. No calling my buddies. If I had an emergency, I either borrowed someone else's phone or got to a pay phone...and there were a few occaisoins where neither was available, but a cell would have done no good, since I was out of signal range anyway.

Cellphones are not necessities. They are conveniences. They are nice to have "just in case", and nice to have so people can keep up with their buddies. Everyone's lives are not going to come to a standstill just because they don't have their cellphone in their hand...and the people's lives who do just annoy me.

Gas prices rising...yeah, I had a problem with that. But I need gas to drive my car back and forth to work...I can't walk as I work out of town...so gas is something I depend on.

Sorry for ranting...it just aggrivates me.

 

[arnisador]

Why sign a service plan with "pay per text"?? My plan has unlimited texting.

There are always trade-offs, dude.

 

[MBuzzy]

There are always trade-offs, dude.

Exactly, I don't use it and it would add an extra $10 to my plan, plus, I can get a cheaper general plan by having a higher price per text, since I don't use, I couldn't care less how much my texts cost. Even if 5 people send me texts in a month (which I never reply by text to), it is still FAR cheaper for me. I save about $20 per month by not having or using it.

 

[crushing]

This reminded of this thread: