By Tom Johnson

Jun 16, 2009 2:47pm

If Text Messaging is Cheap, Why Does it Cost So Much?

ABC's Tom Shine from DC: According to Joel Kelsey of Consumers Union, text messaging uses less data than almost any other service on a wireless network.  "The text message is a free rider inside the so-called "control channel" or space that is already being used to operate the wireless network.  In other words a text message does not use up any extra spectrum…"  But Kelsey says since 2003 the price of text messaging has quadrupled for some carriers.  More recently, since 2005, every major carrier has at least doubled the prices for text messaging from ten cents to 20 cents per message.  "Six hundred text messages contain  less data than  one minute of a phone call.  If we put that into dollars and cents, at twenty cents per text, those six hundred messages would cost $120 for the equivalent of a one minute phone call."
 
Cricket Communications, which operates in 32 states but doesn't enjoy a national network because they say the big guys are hogging the spectrum, doesn't charge its customers for incoming text messages, and that means no charges for those spam text messages either.  "We at Cricket are pleased to provide an alternative to parents who are shocked to receive a $600 bill caused by a child's text messaging frenzy."
 
So if text messaging is so cheap, why does it cost so much?  That's what Senator Kohl and his judiciary subcommittee colleagues want to ask the big guys at Verizon and AT&T who along with Consumers Union and Cricket will testify at a hearing getting uderway right now.

User Comments

The cell phone companies in America run one big racket. Shame on them.

Posted by: Scorpio Redhead | June 16, 2009, 3:51 pm 3:51 pm

The reason that the pricing for these messages has gone up is that there are only so many available “slots” in the control channel. If the control channel fills up noone can dial.
Besides, all carriers offer “messaging bundles” which tend to run around 500 messages for about seven bucks.
At least one carrier offers unlimited “in-network” messaging (i.e. to handsets on the same network).
The purported “text messaging racket” does not exist.

Posted by: John | June 16, 2009, 6:26 pm 6:26 pm

There are these things called unlimited text message plans. So why would you ever need to get a huge bill?

Posted by: Andy | June 16, 2009, 6:50 pm 6:50 pm

This is a non-story. People need to buy text-messaging packages. My family has unlimited text-messaging for @ $15 per month with US Cellular. If you send more than 10 or 12 text-messages a month, then you need to get a package. There is no racket; be a smarter consumer.

Posted by: James | June 16, 2009, 6:52 pm 6:52 pm

The phone companies are simply charging what the market will bear. You don’t want to pay the charge, don’t text. Additionally, where do you think the phone companies are getting to money to build new cell towers and new infrastructure for internet access?

Posted by: Eric | June 16, 2009, 6:52 pm 6:52 pm

They are not only making .20¢ per text, they actually make twice that since they charge both the sender AND the receiver-which hardly seems right as you cannot control who texts you.

Posted by: Lynn | June 16, 2009, 6:52 pm 6:52 pm

Why does the congress have to interfere with the phone companies charges. If the people don’t like price go with price is less costly. It is a competitive world of capitalism. If people would exercise their freedom to choose other plans then plans would be come more competitive.
Don’t let Gov’t regulate prices when we have so many choices.

Posted by: Rodney Buschman | June 16, 2009, 6:54 pm 6:54 pm

I think the phone industry (AT&T) should be investigated for the excessive charges for caller ID. A few years ago it cost me $4.95 a month. Now it is over $9.00 dollars a month. Info is all over the internet that it only cost the telephone companies 1/2 of 1 cent to furnish caller ID for the whole month. It is all done by computers.

Posted by: Robert | June 16, 2009, 6:56 pm 6:56 pm

This is simple, don’t like the price, don’t use the product. No body from a cell phone carrier has ever FORCED anyone to text. But then again, the tobacco companies never put a cigarette in anyone’s mouth, but it’s they were sued. I guess being a responsible person is no longer required, just get the government to bail you out. if you texting bill is to much, call Mr. Obama.

Posted by: Business Owner | June 16, 2009, 6:57 pm 6:57 pm

They can charge outragous amounts because the goverment has not passed any laws that prohibit it. Does that mean that they should regulate it? No, because this will probably cost us more. I would rather see them regulate gasoline prices and stop charging us taxes upon taxes for everything we do.

Posted by: Tom | June 16, 2009, 6:59 pm 6:59 pm

Joel Kelsey needs to do his homework. The amount of network resources needed to send a text message depends on the message size, access network technology, and network configuration. The article stated that the average text message takes up only 1/600th the network utilization of a standard minute of use for voice. This is highly simplistic and wholly optimistic.
In the case of Code Division Multiple Access (CDMA) networks, Joel must be assuming that only the Access Channel and Paging Channels are being utilized. The Traffic Channel must be used for sending larger messages, and many carriers configure their networks so that text messages are delivered via the Traffic Channel. The use of Traffic Channels for message sending and delivery increases the amount of network resources required, and hence, the cost of a text message.
I agree, this is a non-story.

Posted by: Erik Neitzel | June 16, 2009, 7:02 pm 7:02 pm

They charge what they do because they can. The bottled water on the desk of the congressman cost outrageously more than it is worth also. Let the market determine prices, not the government. I’m sure there are more important things it should be investigating, like why they themselves are spending more money than they have to buy into other private enterprises.

Posted by: Jeff | June 16, 2009, 7:05 pm 7:05 pm

No regulation! Let capitalism prevail and limit government intervention. If you don’t like your service switch to a better provider. If you stay in your current plan with outrageous charges that’s on you! Don’t cry to the government because of your lack of intelligence.

Posted by: amy | June 16, 2009, 7:08 pm 7:08 pm

It is inverse economics based on the cost of the technology, but the price is based on supply and demand, not cost. In the not-so-free-market of China, the cellular plans are reversed. Texting is included at no additional cost to your basic plan whereas voice calls incur a premium. This really makes more sense technologically and it makes it easy for the Chinese Government to monitor their citizens. The ability to easily and automatically search millions of text messages is a bit spooky.

Posted by: Nick | June 16, 2009, 7:09 pm 7:09 pm

Stop spending my tax dollars. The gov. does not need to be concerned about this issue err.. non-issue. The parents of these kids need to pay-up or shut-up. The phone networks can charge what ever they want, you can pay whatever you want….YOU have a choice. Also the media needs to start reporting on these things as they are and quit putting their spin out it. They (the media) are ruining this country just as much as the liberals are. TEXTING IS NOT A NECCESITY IN OUR ECONOMY.

Posted by: Mike | June 16, 2009, 7:14 pm 7:14 pm

If the people using the texting do not like the price then don’t use it and the laws of supply and demand will be in effect. For your news show to act as if the phone companies should have a consciense and not charge whatever they can is crazy. You are acting as if we should get enraged over charging what the company can on a luxury item. Anyone can get unlimited texting programs and they are dumb if they don’t. Quit trying to push socialism on luxury items. How would you like to be told what you can sell your house for?

Posted by: Joan Kreinbrink | June 16, 2009, 7:16 pm 7:16 pm

I found a solution to help cut cost on texting at least from the standpoint of Computer to Mobile device texting. The website is [URL removed] The service is free to individual consumers and allows anyone to send unlimited text messages throughout each year from their Internet-enabled computer to any mobile device(s). As more and more consumers use a service like this, Mobile Carriers will see their enormous profits dwindle from their current outrageous per message fees.

Posted by: John | June 16, 2009, 7:31 pm 7:31 pm

They charge what the market will bear if you can not control your child you pay the bill or make your child be resposible like we did in my house not go to whashington and cry its like filling my gas tank and then going inside to complain about the price grow up america

Posted by: will | June 16, 2009, 7:42 pm 7:42 pm

I won’t buy until it works more like traditional phones.
I want to buy a phone from the store of my choice, that can be used on any network, that hasn’t had its features manipulated by the cell industry. I also want service without a contract where the person who placed the call or set the text has to pay for it.
Is that too much to ask?
Instead I what I am stuck with, is situations where I like an iPhone but I can’t use it with the Verison network which has better coverage. I have to subscribe to a data plan, even though I prefer to just use it more like an iTouch but with phone capabilities. However, even if it were available on the Verizon network, they would turn off Wi-Fi features forcing you to use their internet services rather than a free hot spot. So I could choose to go with AT&T with its lesser coverage and get the phone of my choice with all the features the manufacturer built into it. However, I might need a better phone and text messaging plan because all my friends are on the Verizon network and will hammer me merciless with what could prove to be unreasonably expensive out of network texts and phone calls.
Should buying a cellphone and service require this deep of an analysis? It seems to be too complicated to be described as honest free market forces at work.

Posted by: NoCellBob | June 16, 2009, 7:54 pm 7:54 pm

This is exactly what you should expect in the United States. For all the talk of competition and the benefits you get in a free market, all we end up with are a bunch of collusion. And our government? they can’t find the to save their lives.

Posted by: Mark Johnston | June 16, 2009, 9:51 pm 9:51 pm

wow, who are some of these people writting in? Someone exposes the Fact that they are grossly being over charged for something that should costs just pennies a month and they are ok with it? Wow, we americans are stupid.
Big business has taken over, it’s too late for all of us sheep!

Posted by: Jeff | June 16, 2009, 10:28 pm 10:28 pm

Business is in the game to make money. A fool is born every minute and companies will take advantage of that. Who makes the policy up at these companies? Has to come down from the CEO or some other manager. They know what will make money and it doesn’t matter how full of fraud those ideas are – greed is good in their book. People have to be smart. That is the only way to combat this type of fraud.

Posted by: Bob | June 17, 2009, 8:57 am 8:57 am

One word – Greed

Posted by: Joe S | June 17, 2009, 1:02 pm 1:02 pm

I HAVE EVERYTHING MESSAGING PLAN THAT MEANS ITS TEXT UNLIMITED , INCLUDED. I WAS CHARGE FOR IT. THE BILL WAS UP TO $500. SO IF WE DON’T USE IT TO SAVE MONEY WHEN IN SOME CASES IT MIGHT BE NEEDED, THE COMPANY COULD LOSE MONEY INSTED OF BEING LIKE WALMART THE LOWER THE PRICE THE MORE SHOPPING PEOPLE WOULD DO. SO IF A MAD PERSON WAS TO HOLD A SCHOOL IN A LOCK DOWN I WOULD WANT MY CHILD TO BE ABLE TO TEXT ME FOR HELP, NOT BE AFRAID TO BECAUSE THE BILL WOULD BE TOO HIGH. i WOULD HAVE TO PAY FOR THERAPY FOR MY KID AND A CRAZY BILL FOR SOMETHING THAT COULD SAVE MY CHILDS LIFE. IF INSTANT MESSAGING IS FREE Y CAN’T TEXTING BE FREE?

Posted by: Chrissy | June 17, 2009, 4:38 pm 4:38 pm

THE PRICE THE MORE SHOPPING PEOPLE WOULD DO. SO IF A MAD PERSON WAS TO HOLD A SCHOOL IN A LOCK DOWN I WOULD WANT MY CHILD TO BE ABLE TO TEXT ME FOR HELP, NOT BE AFRAID TO BECAUSE THE BILL WOULD BE TOO HIGH. i WOULD HAVE TO PAY FOR THERAPY FOR MY KID AND A CRAZY BILL FOR SOMETHING THAT COULD SAVE MY CHILDS LIFE. IF INSTANT MESSAGING IS FREE Y CAN’T TEXTING BE FREE?

Posted by: christi | June 17, 2009, 4:41 pm 4:41 pm

If it’s determined that these cell phone carriers are charging outrageous prices for text-messaging, then I support a bill by congress to limit them. Why should the consumer be charged unfair prices just so that these companies can increase their profit margin? it is consumer protection!

Posted by: forza | June 19, 2009, 9:43 am 9:43 am

I’m sorry, but who ever said that these phone companies are not scamming us is really blind. SMS messages are designed to fit inside the bandwidth alloted to the “control channel”, which is used to establish communication between the mobile phone and the cellular tower. This channel is continuously active, so the messages are piggybacking on the control signal, for free. These companies are taking advantage of a trend. Have any of you compared what it costs you to send an average text message against what you are paying for your (unlimited) data plan? I think you will find out that you are paying over 10 times more for text messages (not sure about MMS) then data. How is this not a scam? Paying a lot for something that costs them nothing! Now I could be wrong, but not from the evidence at hand.

Posted by: A Johnson | July 19, 2009, 11:54 pm 11:54 pm

Wow, dumb####s who don’t understand capitalism here.
Capitalism works by consumers agreeing to the product and the price before having to make a payment. I have no problem with paying 25 cents for a message that I choose to send because I will not do it unless my benefits are greater than my costs. However, I have a problem with being required to pay for something that I do not control — receiving a text message. Someone sends me spam, I don’t want it, I still have to pay 25 cents for it. That is uncapitalistic.
And, no, a messaging plan would not be economical for me because of my low number of messages.
What would be perfectly capitalistic would be the sender paying the entire cost of the delivery — they are the one who made the choice. And you can note that this is exactly what happens with standard phone service — the caller pays any long-distance fees, not the recipient.
It was a very shrewd move on the part of cell phone companies to make recipients share the cost with the senders. Standard law of demand — lower the cost of sending, more messages will be sent, more revenues made for the companies which are essentially taken from recients who have no free choice about accepting any message. Shrewd, yes; capitalistic, no.
The dems screw up capitalism left and right, but I have to say, I would wish them luck with this.

Posted by: David | August 12, 2009, 5:28 pm 5:28 pm

I know this is old, but the whole “don’t let the gov interfere and market sort itself out” doesn’t work. It is market abuse, offer something cheap and once it becomes an integral part of society and then charge more for it is annoying as hell. Texting at this time is a highly used commodity in today’s world, especially with teenagers. Some sort of payment for texts makes sense, but the fast rise in cost seems odd. But the real kicker is being charged for incoming text, text our of your or your kids control that can cost you a pretty penny. Turning all text off is not an option either , because we want to text, just not with everyone, yet we cant block individual numbers or refuse incoming texts. This is where I feel there is an abuse of the market. I would not pay for it, but hate to see my kids being ridiculed because they cant text. These payment schemes van been designed to force people into plans that they otherwise would never need.

Posted by: angry customer | September 12, 2009, 10:39 am 10:39 am

The first comment says it all. If I did not understand how many Millions are spent by the telco lobbyist each week I would not understand this at all.
Hey “will” get a Nokia N900 or N800 and use WiFi, you will be unlimited. While the N800 does not have cellular, the N900 does, but I have not had a chance to see if you can turn off the cellular with the N900 and just use WiFi. My guess is that you can.
Later in 2010, the first Android, 100% unlocked phones with root access, should become available. If unlocked you are not tethered and prevented from using WiFi.
The current crop of Android phones released in 2009, prevent you from getting access to the root account. You need this access to install the software of your choice on the phone. Some other ingenious programmers have successfully rooted the new Androids, though Google is actively cracking down on them.
Just do not buy a phone that is not rooted (Linux) and prevents you from having WiFi access. The Nokia Nxxx WiFi only phones ahve been available since 2006!

Posted by: lamapper | December 18, 2009, 11:34 pm 11:34 pm

Why hasn’t the price come down? with such huge profit margins. In a truly open market one would try to undercut the other and the price would fall. There are 20 class action suits on-going saying it’s about collusion.

Posted by: Troy | February 26, 2010, 12:57 pm 12:57 pm

Cell companies do not build or maintain cell towers. Thats a different company all together. I manage a ranch and the cell towers are all maintained by a company who does nothing but the towers. I see and talk to these guys all the time. The big boys just pay rent. Att actually bought less than a 1/4 acre of land at 20,000 then built a junction building that cost 1/2 a million and have never used it. They actually asked the farmer if he wanted the building because they have no use for it. Thats where the BS high pricess come from. They waste money and hide profits then cry when their profit margins sink. Coporate America… at this point should we expect anything less!

Posted by: Bob | December 1, 2010, 6:32 pm 6:32 pm

Hey, SOME of you guys are so brainwashed by these corporate fools that you don’t see what is really going on in front of your face. These corporations are feeding the government, therefore, we are on the recieving end of the excriment with our mouths wide open. Don’t you see, all the tax revenues from cell phones and internet and cable television is astronomical $$ and not to mention the money that is deposited in politicians bank accounts from the lobbyists. Why would the government want to regulate the entertainment industry to give the American People a break? Hell, they already made it ALMOST impossible for people to watch TV without subscribing to a cable company wshen they took analog signals from local television networks and made them switch to digital CRAP! They’re reasoning, 911 and emergency response needed more bandwidth.. HA, what a laugh! Show me one example of an emergency not being responded to because of Analog Television taking up to much of the airwaves. Cultural awakening = change, not politicians! Oh and by the way, I could care less about YOUR opinions!

Posted by: Bret | September 1, 2011, 2:55 pm 2:55 pm

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