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AT&T and Verizon Deny Text Message Price-Fixing

by Terrence O'Brien on June 18, 2009 at 07:10 AM


The Senate investigation into anti-competitive practices among the major cellular carriers is moving forward, and AT&T and Verizon have vehemently denied any accusations of price-fixing, Reuters reported earlier this week.

A few years ago, every major carrier decided that individual text messages should cost $0.20, instead of the $0.10 that had been the standard for years. But, as Democratic Michigan Senator Herb Kohl noted, and Ars Technica points out, companies usually drive each other to lower prices, not raise them. But Verizon and AT&T argued before the Senate Judiciary Committee that prices for text messaging have actually fallen over the past several years, despite the increase to $0.20.

The carriers claim that due to the increase in popularity of bulk messaging plans, the average price per message has actually decreased. AT&T offers a 1,500-message plan for $15 a month, leading to costs as little as $0.01 per message. It's likely that the increase in single-message rates was meant to lure customers into such package plans, thus providing carriers with more reliable streams of revenue.

Chances are that Verizon and AT&T are being honest when they claim there was no conspiracy over texting prices. In all likelihood, the carriers realized the shrewd business move and simply followed one another in the price increase. Now, when it comes to carrier-locked phones and handset exclusivity, perhaps the government has a case. [From: Reuters/FOX News and Ars Technica]

Tags: antitrust, att, government, price fixing, PriceFixing, senate, texting, top, verizon

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