AT&T Increases Prices on Text Messaging In the Name of Streamlining

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Last week, AT&T quietly “streamlined” their text messaging offerings by eliminating the $5/200 message/month plan and the $15/1,500 message/month plan.  This leaves customers with two options – pay $10 a month for 1000 messages or $20 a month for unlimited messages.  In doing so, AT&T doubled the cost of text messaging for a significant percentage of their customers – a service that costs AT&T essentially nothing to provide.

Admittedly, it is true that the per-message cost of the text message buckets decrease with this change.  The $5/200 plan cost 2.5 cents per message, while the $10/1000 works out to just 1 cent per message.  Similarly, the $15/1,500 plan worked out to 1 cent per message, while the $20/unlimited plan means that each message costs, well, approaching zero.

However, that calculation is only correct if you use all of the messages in your bucket in a given month.  If you only send and receive 100 messages in a month, it is much cheaper to pay $5 for the 200 message bucket than $10 for the 1,000 message bucket.  Under the new plan, $10 is the buy in for text messaging no matter how many texts you plan to send and receive.  That is the root of the problem with AT&T’s streamlining of its plans.  

There are plenty of people who use text messaging that do not send and receive anywhere near 1000 messages per month.  These are the people who were paying $5/month for 200 messages.  For them, the cost of text messaging just doubled for no real benefit.

These people are not just theoretical, or anecdotal. Amanda Lenhart, of the Pew Internet & American Life Project has studied just how many text messages are sent and received by adults who send text messages on a typical day.  Part of the most recent report specifically examines how many text messages adults send and receive on a typical day.  Multiplying those numbers out over a full month, it is clear that most adults send and receive much fewer than 1000 messages in a month.

In fact, 70% of adults (and again, these are adults who send at least some text messages) send and receive 600 messages or less in a month.  Over 50% of adults send and receive 300 messages or less.  For many of these adults, streamlining simply means paying more for exactly the same service.

Normally, this is the type of unjustified price increase that the Federal Communications Commission would look in to.  Unfortunately, the FCC has ignored problems with text messaging and refused to move forward on a petition that we and others filed over three years ago.  Until the FCC moves, carriers will continue to nickel and dime consumers.  Those new buckets will just be pretty wrapping on higher prices.

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