Lawsuit filed over text-message rates
Complaint says four largest cellphone companies conspired to fix prices
WILMINGTON, Del. -- AT&T Inc., Verizon Communications Inc., Sprint Nextel Corp., and T-Mobile USA Inc., the biggest US wireless-phone companies, were sued by Illinois residents over claims they conspired to raise text-messaging rates.
The proposed class-action lawsuit seeks to represent all US customers who purchased text-messaging services since Jan. 1, 2005. The conspiracy led consumers to pay artificially inflated prices, according to the complaint filed Thursday in federal court in Chicago.
"Since 2005, defendants have changed their prices for text-messaging services at almost the same time and by identical amounts," lawyers for four residents said in the complaint. "These coordinated price increases have continued on a regular basis through the present."
Verizon Wireless chief executive Lowell McAdam on Tuesday defended the carrier's texting rates saying average charges have plummeted as many carriers now offer packages that are cheaper than individual rates. McAdam's comments contradicted assertions made by Senator Herb Kohl, a Democrat from Wisconsin, who gave the companies a month to explain why prices doubled to 20 cents a message since 2005.
Rate increases weren't justified because costs to transmit text messages haven't risen, according to the complaint. The price increases are more likely "the product of collusion among the defendants," the plaintiffs said.
Kohl, who heads the Senate Judiciary Committee's subcommittee that handles competition and consumer protection issues, called the price increases "alarming" in a letter Tuesday to the carriers' CEOs. "What has changed in recent years is the level of consolidation in the wireless telephone industry," Kohl wrote.
The senator's letter was cited in the consumers' complaint. Two of the plaintiffs subscribe to AT&T, while the others are customers of T-Mobile and Sprint.
The lawsuit is without merit, T-Mobile said in an e-mail. 