Text Rip-Off? Pricey Messages 'Cost Virtually Nothing' to Carriers

In the past few years, people seem to have forgone the conventional phone conversation in favor of punching in short text messages on tiny keypads, all while mobile phone carriers have cashed in lucratively.

In 2008, 2.5 trillion messages were sent from cell phones worldwide, up 32 percent from the year before, according to the Gartner Group and reported by The New York Times.

But what also went up in the last three years was the price — doubling from 10 to 20 cents per message while the industry consolidated from six major carriers to four.

Sensing a potential rip-off, Sen. Herb Kohl, D-Wis., chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, began to take a closer look at the doubling of prices American carriers were charging customers.

Kohl soon discovered that text messages are essentially very small files, costing carriers close to nothing to transmit.

"Text messaging files are very small," the Democratic senator said, "as the size of text messages are generally limited to 160 characters per message, and therefore cost carriers very little to transmit.”

Srinivasan Keshav, a professor of computer science at the University of Waterloo in Ontario, told the Times, "Messages are small. Even though a trillion seems like a lot to carry, it isn't."

Text messages aren't just tiny, they're also free riders tucked into control channels, or space reserved for operation of the wireless network. The channel uses space whether or not a text message is inserted.

This explains why a message has limited character space. It must not exceed the length of the message used for internal communication between tower and handset to set up a call.

AT&T, Sprint and T-Mobile explained their pricing plans in a request made by Kohl, but failed to relay information about the cost of text messages. T-Mobile and AT&T said their message costs are unimportant, since they are part of a package deal.

With a $10 or $15 monthly plan, users can bring the price per message to a penny, if they use the monthly allotment.

In addition to Kohl's investigation, 20 class-action lawsuits have been filed around the country against AT&T and the other carriers, alleging price-fixing for text messaging services.

Timothy McKone, AT&T's executive vice president for federal relations, told the senator that the suits had been filed "since your letter was made public" and said that he was "eager to clear up any misunderstanding."

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