AT&T: High SMS Prices A 'Faulty Notion'Carrier insists 200% price hike is your imagination...
08:59AM Wednesday Jun 17 2009 by Karl Bodetags: competition · business · wireless · Op/EdTipped by tmpchaos 
Yesterday AT&T and Verizon were
hauled before Congress to explain why text messages have jumped 200%, when text messages piggyback on secondary control channels within wireless transmissions, costing carriers virtually nothing. Applied to real world bandwidth, sending 2560 songs via 160 byte SMS would cost an estimated $61,356,851.20, but according to AT&T and Verizon -- that's perfectly reasonable, and evidence of a highly competitive wireless market. In a classic telecom lawyer maneuver, AT&T attorney Wayne Watts first denies that prices had risen, then justifies the price by suggesting people could sign up for bulk SMS deals:
"The faulty notion that prices for text messaging have risen derives from an unduly narrow interest in the trend of a single pricing option for text messaging services, the pay-per-use option, when the vast majority of AT&T's customers do not choose that option."
 The faulty notion that prices for text messaging have risen derives from an unduly narrow interest in the trend of a single pricing option for text messaging services, the pay-per-use option, when the vast majority of AT&T's customers do not choose that option. -AT&T General Counsel Wayne Watts, "spin of the year award" finalist |
AT&T also insisted the market was "fiercely competitive," though the fact carriers can engage in non-price competition on SMS does hint to competitive issues. And of course, were AT&T and Verizon not so resistant to open networks and handsets, the idea of SMS would quickly become archaic, replaced by third-party text communications applications of all stripes.
Meanwhile, Verizon
took the distortion of logic even further by not only denying that prices have risen, but insisting that prices have decreased -- if you look at it just the way Verizon would like you to:
Verizon's general counsel, Randal Milch, said in his written testimony that there are more differences in text-messaging prices among wireless competitors than there are similarities. And he noted that most Verizon Wireless customers subscribe to a texting plan, and as a result they "pay less than a penny per message," a reduction of almost two-thirds since 2006. "As the result of the price cuts, usage has grown six-fold," he said/
Of course the reason carriers uniformly raised SMS prices from ten cents to twenty cents (in
both directions) was to drive customers to these bundle deals, which still tacks $5 to $20 per month on to subscriber wireless bills
for a service with virtually no delivery cost. Of course, as with yearly oil industry price hearings, the government inquiry into the high prices likely ends here, despite all the bluster and fear about regulation and nanny states.
You really can't regulate customer stupidity away anyway, and stopping AT&T and Verizon from nickel and diming their customers is kind of like trying to stop the Earth from spinning. But consumers
can be educated, and perhaps if they understood the degree to which they're being ripped off -- they'd be less likely to smile and take it.
