Over the past year I’ve closely followed how the government had been closely watching the mobile industry. Last Friday The Wall Street Journal reported that the U.S. Department of Justice had closed its investigation of text messaging pricing plans, without taking any action against the wireless operators. This investigation was launched after Senator Herb Kohl (D-Wisc.) had asked the agency to delve into why the pricing for text-messages essentially doubled in price from 10 to 20 cents per message, suggesting that the industry had colluded to increase the price.
Of course the wireless companies offered the response that they did not set prices in accordance with each other, and then suggested that consumers had the advantage of plans with unlimited messages. The counter argument here is that those plans require the consumer to pay more, and the one hurt most by this pricing is the occasional texter. While teens may use texting more than actual calls, small business users who still rely on voice, but need details sent to them – such as an address for a meeting, or a say an airline flight number – might only need a few texts a month, and thus they’re forced to pay more for these!
Fortunately, business travelers have options, at least if they have a more expensive smartphone. Google Talk, Yahoo! Messenger, Windows Live Messenger, AIM and of course, BlackBerry Messenger are free to use without any need to pay IM costs. The issue with these programs is that not all are supported on feature phones, and in the case of the latter example, all the employees would need a BlackBerry. And more importantly, these require a data plan as well, so again, business users are still paying for a more expensive plan.
The other irony in the dropping of this investigation by the DOJ is that the Federal Communications Commission is still looking into competition in the wireless market, specifically regarding exclusive handset deals and early termination fees. Personally, I think the government dropped the ball on dropping the wrong issue.
As I’ve often written about, you can’t really regulate innovation, and when it comes to wireless that’s what will happen if you try to regulate the competition when it comes to exclusive deals. Likewise, those early termination fees are an issue, but as long as end-users want affordable handsets they need to understand that it comes at another price, which is being locked into a contract.
The Google Nexus One is a great example. The unlocked handset costs nearly three times as much as it does with a two-year T-Mobile contract. The problem for users is that time flies, except when you’re waiting for your contract to run out.
So again, I say that the government targeting innovation is wrong. The marketplace might not be level when it comes to service and phones available, but there is no reason it should be. Consumers have choice and plenty of options. On the other hand, the marketplace isn’t fair when it comes to text messages. Not being one to use many text messages, and the fact that I rely on mobile messaging from one of the aforementioned services or mobile e-mail, I personally cringe every single time someone sends me a mobile text because I know those things add up quickly, all too quickly.