CHICAGO (CN) – The price of cell-phone text messages has doubled since 2005 because Verizon, AT&T, Sprint-Nextel and T-Mobile conspired to fix prices, an antitrust class action claims in Federal Court. The four companies control more than 90 percent of the U.S. market.
Vodafone also is named as a defendant in the case that claims the conspiracy began “at least as early as Jan. 1, 2005” and continues today.
The complaint cites a Sept. 9 letter from Sen. Herb Kohl (D-Wis.), chairman of the Senate Antitrust Committee, to Verizon, AT&T, Sprint-Nextel and T-Mobile, “expressing concern over the sharply rising rates that those companies have charged customers for text messaging services since 2005.
“Senator Kohl’s letter noted that, according to industry experts, the increased rates for text messaging services did not appear to be justified by any increase in the costs associated with text messaging services, and instead reflected a decrease in competition, and an increase in market power among the Defendants.
“Senator Kohl also noted in his letter that those four companies, which collectively serve more than 90 percent of the nation’s wireless subscribers, had increased their rates for sending and receiving text messages by 100% since 2005. He also expressed concern that each company had changed its rates for text messaging at nearly the same time, with identical price increases, concluding that ‘this conduct is hardly consistent with the vigorous price competition we hope to see in a competitive marketplace.”
The complaint adds: “The costs to the cellular phone provider associated with transmitting text messages are minimal and have not increased appreciably since 2005. Text messaging files are very small and generally limited to 160 characters per message, and compared to much larger sizes of files associated with emails or downloads of music or videos. Increases in the prices for text messaging services charged by Defendants are therefore not justified by increases in the costs associated with providing those services and are more likely the product of collusion among Defendants.”Plaintiffs are represented by Mary Jain Fait with Wolf Haldenstein Adler.