Major cell phone service providers under even more government scrutiny
Shortly after four lawmakers decided to request the Federal Communications Commission (FCC) look into cell phone exclusivity, service providers are being accused of text message price-fixing.
Representatives from Verizon Wireless and AT&T testified in front of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, saying the two largest U.S. providers aren't in collusion to increase text message prices.
Last November, Sen. Herb Kohl (D-Wisconsin) called out Verizon, AT&T, T-Mobile, and Sprint Nextel on why text message rates have increased 100 percent in less than four years. Furthermore, each company raised prices after one company bumped up prices, and the cost of texting continues to rise if a subscriber avoids a text messaging plan.
Phone providers are focusing less on marketing voice plans, instead choosing to focus on convincing subscribers to pick up data and text message plans.
"Especially in light of this litigation firestorm, we want to make it perfectly clear that AT&T sets the prices for all of its products on a unilateral basis," said AT&T's general counsel, Wayne Watts. "The allegations in the complaints are patently false."
The 20 cent per message sent and received clearly doesn't match any major increases in the infrastructure of phone carriers.
Verizon and AT&T will likely be able to walk away from this matter unscathed -- but getting called to Washington D.C. is a sign that the government is indeed watching the companies. Verizon defended itself in D.C. by noting most subscribers pay for a monthly texting plan, which means subscribers reportedly pay less than one cent for each message.
Each company said there is new competition than collusion between Verizon, AT&T, Sprint, and T-Mobile.
There is a lack of competition in the mobile phone market at the moment, industry critics fire back at the big four companies. The number of exclusivity contracts -- each major company has sole access to at least one phone -- and the issue isn't going to go away any time soon.
"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il
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