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“Cell Phone Text Messaging Rate Increases and the State of Competition in the Wireless Market

Wireless carriers have heavily adopted parallel, and increasing, pricing structures to maintain high text messaging rates. Since 2003, the price of text messaging has quadrupled for some carriers. More recently, since 2005, every major carrier has at least doubled the prices for text messaging from ten cents to twenty cents per message. This rising cost in service is a head-scratcher to consumers, because text messaging uses less data than almost any other service on a wireless network. Six hundred text messages contain less data than one minute of a phone call. If we put that into dollars and cents, at twenty cents per text, those six hundred messages would cost $120 for the equivalent of a one minute phone call. These price increases for text message services appear to indicate a failure of competition, because the increases are manifestly unnecessary to cover provider costs. The cost a carrier incurs by transmitting an SMS message has not increased in recent years.