US Senator puts Verizon, AT&T, others on blast for texting prices

Washington D.C. is looking more and more like a high school popularity contest where everyone dresses in expensive suits and drives around in luxury cars provided by tax-payers, doing whatever they can to get as many people to think they’re “cool.” And, just like high school, the kids on Capitol Hill tend to flock to the same fads. Which isn’t always a bad thing. The latest fad seems to be all about consumer protection from wireless industry giants like AT&T (NYSE: T) and Verizon (NYSE: VZ) Wireless. More specifically, our politicians are apparently becoming more and more concerned with consumer choice, fair pricing and competition in the US wireless market.

US Senator Herb Kohl (D-Wisconsin) has asked that the Federal Communications Commission (FCC) investigate the competitiveness of the US wireless market. As chairman of the Senate Judiciary Committee’s subcommittee on antitrust, competition policy and consumer rights, Senator Kohl is concerned that the 100% increase in the price of SMS text messages from 2006 to 2008 might be “the result of a lack of competition” in a wireless eco-system where 90% of the market is controlled by a select few – Verizon Wireless, AT&T, Sprint (NYSE: S) Nextel and T-Mobile (NYSE: DT) USA.

The issue at hand is whether the Big Four wireless carriers, especially AT&T and Verizon Wireless, violated anti-trust laws by colluding to increase SMS text message prices over the years. On the surface, that does indeed seem to be the case. All four major US wireless carriers have increased the price of their text messages from 10 cents to 20 cents. But, Verizon Executive VP and general counsel Randal Milch denies any collusion – pointing out that carriers offer different pricing for prepaid plans.

Both AT&T and Verizon Wireless defended their position by noting that only a small percentage of their customers (17%) were affected by the text message price increase. Most text message customers opt for text messaging bundles that offer cut-rates on SMS messages. Big Blue and Big Red say that just 1% of all text messages sent through their networks are not tied to text messaging plans.

More competition is always good for the consumer. And, it’s important to ensure healthy competition in a market that’s controlled by just a handful of huge companies. With a little luck, the past few days of political posturing will keep consumer rights at the forefront of Congress’s agenda (but not ahead of the economy, of course).

[Via: LATimes]