Legal Commentary

Competition and Text Messaging

By TChris

This isn't the most pressing problem facing the country -- it isn't even in the top twenty -- but Sen. Herb Kohl nonetheless has a point when he wonders why it should cost 20 cents to text a question mark to a friend.

In his letter, Kohl points out that Sprint was the first major carrier to up its text messaging charges, increasing them from 10 to 20 cents. The others eventually followed suit. Kohl believes, as many others do, that text messages are so small that they do not warrant such a large rate increase. The senator also points out that since all four carriers raised the price around the same time, they have not engaged in the "vigorous price competition" that is expected in a free market. The big four wireless carriers serve more than 90 percent of the cell phone market, so the absence of competition for text message pricing is definitely worth looking into.

Examining the larger problem of lax antitrust enforcement -- the Justice Department's current philosophy that if two or three or four huge companies share an entire market, that's all the competition we need, even when it amounts to no competition at all -- might be a more productive use of the senate's time.

Full post as published by TalkLeft on September 11, 2008 (boomark / email).