Text messages cost 20 cents to send, even though they use a fraction of a penny of bandwidth. What gives? Antitrust authorities want to know.
Over at The American Spectator, I explain that it is likely a case of unbundling:
Maybe phone companies are unbundling texting from their other services. That way the only people who pay for text messages are the people who use them. If phone companies don’t have to provide texting service for people who don’t want it, they can keep costs down and charge lower prices.
This is much more fair to customers:
Why not just give all customers unlimited texting and charge a higher monthly bill? That would punish people who don’t text, such as this writer. By eschewing the flat rate and tolerating a few texts per month from family and friends who haven’t been properly trained, non-texters can save $50 or more per year.
Monopolists (and oligopolists) don’t behave that way. Companies competing against each other on price do. Trustbusters are forgetting something else, too. If a monopoly exists at all, it is very temporary.
It turns out that a young company called Beluga makes a free texting application for smartphones. Few things are as temporary as monopoly (or oligopoly) power. Since Beluga bypasses the texting cartel, you can have unlimited texting without the $5 monthly fee. Think of it as Skype for the text messaging set.
Read the whole article here.