Telcos are likely making money hand over fist judging by the revelation that text messages cost them next to nothing. Considering how much their consumers for the privilege – we’ve certainly been had.

In the US, customers are already beholden to restrictive, expensive mobile contracts. But a New York Times article has revealed that wireless carriers are fudging costs and hiding profits, making unseemly amounts of money from our gullibility.

Senator Herb Kohl of Wisconsin, who happens to be chairman of the Senate antitrust subcommittee decided to investigate. He noted that text messages prices had doubled, when the industry had already consolidated from six companies to four.

Mr. Kohl sent the four – Verizon Wireless, AT&T, Sprint and T-Mobile – questions asking them about their costs and the reasons behind the pricing.  Text messages are now 20 cents to the 10 cents they cost before, though the volume has increased by 32 percent from 2007 according to Gartner Group.

Class action suits have been filed, accusing the telcos of price fixing. According to telcos, price isn’t an issue since the messages are part of a package deal but T-Mobile insisted on telling Mr. Kohl that its “average revenue per text message, which takes into account the revenue for all text messages, has declined by more than 50 percent since 2005.”

But Mr. Kohl noted in his letter that texts cost very little to transmit, and with the volume involved telcos should be able to recoup costs easily. What is obvious here is that consumers are being shortchanged and it just might be time for the regulators to come in and fix things.

Related:

Entry was posted on Monday, December 29th, 2008 at 12:20 pm under Cell phones.

Read more entries by Erna Mahyuni.
Stumble It!