Operators deny wrongdoing over text price hikes

The four major U.S. operators have denied any wrongdoing in instituting recent price increases for text messages, countering the criticisms of Senate Judiciary antitrust subcommittee Chairman Herb Kohl (D-Wisc.). In a letter mailed to the CEOs of AT&T, Verizon Wireless, Sprint Nextel and T-Mobile USA, Kohl cited his concerns over a 10-cent increase in the cost of text messages over the last three years, writing "Some industry experts contend that these increased rates do not appear to be justified by any increases in the costs associated with text messaging services, but may instead be a reflection of a decrease in competition, and an increase in market power, among your four companies."

But according to RCR Wireless News, the four carriers have responded to Kohl with letters of their own, arguing that bundled data plans have actually reduced text costs for subscribers. "Although your letter states that carriers' prices for text messaging appear to have increased since 2005, the opposite is true," writes T-Mobile USA president and CEO Robert Dotson. "Since 2005, the prices that T-Mobile charges for text messages--90 percent of which are purchased in texting package plans--have fallen by more than half."

At the same time, AT&T charged that Kohl's inquiry into operator practices is the catalyst behind a rash of antitrust class-action lawsuits now facing the carriers. "As you probably know, since your letter was made public, 20 class-action lawsuits have been filed around the country against AT&T and other national carriers, specifically alleging price-fixing for texting messaging services," writes Timothy McKone, executive VP for federal relations at AT&T. "All but one of these cases cite your inquiry as one of the bases of alleged collusion. We are therefore eager to clear up any misunderstanding."

For more on the Kohl controversy:
- read this RCR Wireless News article

Related article:
Verizon denies text fee hike imminent