Text Message Prices

Recently, the Antitrust, Competition Policy and Consumer Rights Subcommitee examined the state of competition in the cell phone industry.

Senator Kohl stated that “[f]rom 2006 to 2008, the price of sending and receiving a text message among the four largest cell phone carriers increased by 100% from 10 to 20 cents per message” even though “the cost to the phone companies to carry text messages is minimal, estimated to be less than a penny per message, and has not increased.”

Here’s the funny part. Verizon and AT&T argued that the price increases only affect a small percentage of subscribers because most people purchase a text message package instead of paying a la carte. Actually, the price increases affect all subscribers because if the carriers charged 2 cents instead of 20 cents per message, then most subscribers probably would not purchase a package. Or, in the alternative, text message packages would be significantly cheaper.

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