If Text Messaging Is Too Expensive, Why Are More And More People Using It?

from the trumped-up-controversy dept

Fri, Sep 12th 2008 12:52pm — Mike Masnick

Earlier this week, the chairman of the U.S. Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, Senator Herb Kohl, made a bunch of news for questioning why text message rates have become so high. He implies that because the number of national wireless carriers has shrunk from six to four thanks to mergers, that the four major carriers have too much market power. That sounds great, but is highly misleading -- as evidenced by a new report that notes that the number of text messages being sent is growing rapidly. If the price were such a huge problem, wouldn't that not be the case?

Part of the problem is that the Senator seems to only be looking at the a la carte pricing for text messaging. However, these days, most folks who use text messaging on a regular basis have signed up for some sort of bulk texting plan, that allows them to send hundreds of messages for a set price. The a la carte text message pricing is really only for those who rarely, if ever, use text messaging. Furthermore, if the mobile operators really are constraining the market and push things too far by driving the price even higher, then there are many alternatives that will quickly show up. As we've discussed in the past, it's only a matter of time until other options for messaging become popular on phones, such as instant messaging clients -- which can provide service for free. Once again, it seems like the gov't is stepping in and complaining where there's no real problem.

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Filed Under: antitrust, herb kohl, text messaging

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Mark Peskin, 12 Sep 2008 @ 1:12pm

Direction counts!
I think we need to make a distinction here. For outbound text messaging, I think the telcos should go ahead and charge whatever the market will bear. However, it's charging for incoming messages that is problematic. Consumers should have a choice as to whether they want to pay for text messaging - charging for incoming messages eliminates that choice.
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Kenn North, 12 Sep 2008 @ 1:21pm

agreed
Inbound messages are the problem for me too. I was just recently able to turn off text messaging. I was sick and tired of PAYING for advertising to my phone I didn't solicit. If they came free, than I don't have much choice, but to be forced to pay is annoying.

It took a class action law suit to get the carriers to move in that regard. So my trust of the cellular telcos is low to say the least. I wonder if the Senator got these two issues confused as well.

Don't care much about the price of text messaging, I don't want it at all.
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J, 12 Sep 2008 @ 1:22pm

I think this was taken out of context. The price per text message has been rising while rate plans have been dropping. The price per negabyte for a text is out of context with the cost of any other service the provider offers.
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NZTR, 12 Sep 2008 @ 1:27pm

Incoming and outgoing
The biggest issue I have with text messaging rates is how both the sender and recipient are charged.

Is this respect, it's similar to the idea of ISPs charging content providers for the connection to consumers.

It's like if the USPS charged the recipient of a letter for delivery in addition to requiring the sender to affix a stamp.
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Phil, 12 Sep 2008 @ 1:30pm

Idiots?
For the same reason that people pay $5 for a cup of coffee. Because all the other lemmings are doing it.
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Sierra Night Tide, 12 Sep 2008 @ 1:31pm

text message costs
Unlimited text messaging $14 to $15 a month

Having unlimited text messages has saved me lots of money! I save my minutes and type quick messages

1) Running late - be there in 15
2) W/C later (Will call later)
3) Lost! @ 35th & Main call me -- this one is great for loud places. My friends & I keep the phone on buzz. They feel it, see it and go someplace to call and give directions.

Only when a text message is going to take long than 2 or 3 messages do I call someone.

4) Bored I can't believe this stupid meeting
5) Help date sucks! (i.e. call me with an excuse to leave)
6) Traffic - running late
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Jake, 12 Sep 2008 @ 1:34pm

Re: Direction counts!
Regulations on excess charges such as roaming or calls between networks couldn't hurt either; over here in Britain the rule is that they should be the basic call rate plus whatever extra cost is incurred, and not a penny more. It's one of the reasons text-messaging and mobile phones in general are so popular, along with better availability of pre-pay SIM cards and a much more competitive market; we have twelve providers, about a third of the population of the United States and a country about the size of Pennsylvania.
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Tyler, 12 Sep 2008 @ 1:35pm

well..
the reason they keep increasing the prices is to make the texting packages seem like a better deal.

in addition, for those who do go over their text limit, and do not realize it, the penalty is much more severe. with verizon i have gone over a few times when i am traveling in the US... phone bill jumps from 50 bucks a month to 100-150 pretty quickly
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Anonymous Coward, 12 Sep 2008 @ 1:36pm

Agreed with #5 !!
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mobiGeek, 12 Sep 2008 @ 1:51pm

Re: Idiots?
Do you really want the government dictating how much a company is allowed to charge for a cup of coffee?

Is that really the role of government?
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joe, 12 Sep 2008 @ 1:55pm

Crazy???
how much you get paid for writing that article? Text messages are way too expensive. and the reason more people use it is because it is more convenient than having a long phone conversation and cell companies are taking advantage of the situation. Unlimited everything from every carrier 50 bucks max. The price of cell service is stupid but you are forced to have one now to get by in society.
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Anonymous Coward, 12 Sep 2008 @ 1:58pm

I agree with #10. If people are still using a service, then what's the problem? As long as people keep paying, the price should keep rising. Once the price starts LOWERING the number of texts, then start lowering the price again. The market will set the price for these little faux e-mails.

And for #4, servers DO pay to connect to consumers. They have to pay for their bandwidth just like anyone else... The only way that simile would work is for users to have to pay per connection, which they don't. And this same reasoning would apply for incoming calls and outgoing calls.

Whatever, I love txt'ing. Keeps my business out of other people's ears and gives me a record of conversations.
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hex, 12 Sep 2008 @ 1:59pm

Re: Re: Idiots?
umm...yes! The government regulates the telcos ogliopoly. That way we don't get burned by greed, supposedly.
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Anon2, 12 Sep 2008 @ 2:02pm

nothing
While I agree that at least his letter does not appear to reflect the entire situation (i.e., that he's ignoring how many users choose a flat-rate plan for text messaging), I don't see how anyone can make the leap from one Senator inquiring about pricing and competitive conditions to it being an example of government "stepping in and complaining" at all, let alone the question of whether there is a problem or not. This is just an informal information request from a senator; it's not a demand, and it's not even on behalf of his subcommittee. Senators send all kinds of inquiry letters all the time, and most of the time they lead to absolutely nothing at all.

Come back and ring the alarm bell if and when he gets their responses and starts to try and get the subcommittee to do something about it. Though even then, it's quite a ways to actual legislation or pressure on the executive branch to take a look. But right now, it's just one guy on what might just be a fishing expedition for an issue to grab onto.
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Anonymous Coward, 12 Sep 2008 @ 2:03pm

There are more factors than price affecting the use of texting.

it's just very convenient. not only that, but it's the only way some services work. My work also sends text to me instead of a disrupting phone call.

I would love to use SMS texting but I think that it's ridiculous to pay another cent per month when I already pay and extra $40 for unlimited data. SMS really should be included in that.
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Woadan, 12 Sep 2008 @ 2:06pm

Re: Direction counts!
Management of who can send text messages is really needed. At best you can block individual senders, one at a time.

If I'm not paying for text messages, then I should have the option of simply turning it off. (Allowing for messages from the carrier, at their expense, would be acceptible as long as they do not send me upsell messages.)

So, the carriers charge me (either for a set number or even unlimited at a higher price than just voice, OR they charge me per message, AND they give you no easy way to block them all.

It's in their interest to keep things as they are. But the status quo is no quid pro quo.

Woadan
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JeromeLapoine, 12 Sep 2008 @ 2:10pm

Unholy Alliance?
Maybe there's just more spam then before. Maybe there's options out there to buy in bulk... or get unlimited messaging... options that were not there before.

If you're a telcom you want spammers...
they give you an excuse to randomly tax your customers.
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Anonymous Coward, 12 Sep 2008 @ 2:12pm

Re: Re: Re: Idiots?
How's that working out for you?
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Ljlego, 12 Sep 2008 @ 2:16pm

I don't see a problem with people in Washington making some noise and perhaps getting companies to rethink their business models, or maybe wake people up to things they may not have noticed. The problem is when Washington starts to (try to) make laws that will become obsolete in a couple of years. As long as all the guy is doing is complaining, then I don't see what the fuss is about.
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Woadan, 12 Sep 2008 @ 2:22pm

The carriers started out with no "X number of texts per month" plans, and they charged us a nickel per message. Then they saw people were texting a lot, and they gave us plans, and upped the price to a dime per message. Then they created plans which had included texts (even unlimited) and then they upped the price to 2 dimes per message.

They either hit you up front, or after the fact. So they get their duckies either way.

They almost can't not offer text messages because people would vote with their wallet and feet and go to the carrier that does offer them.

I think Gartner reported that texting has increased fourfold in 5 years. Which came first, the chicken or the egg?

The real issue, Mike, is that texting uses the voice line, not data. And at least Verizon (but possibly the other carriers as well?) control the user interface on non-PDA/non-Smart phones, and you can't send a text without incurring the usage hit. So IM clients aren't necessarily the answer, at least not in all cases.

With Smartphones and PDA phones you can install an IM client on most (which the carrier desn't control), and which uses your data plan.

Then all you have to worry about is not going over the 5GB data usage limit.

Woadan
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Russ, 12 Sep 2008 @ 2:24pm

Cos we have to?
I would venture to say it is becoming a social necessity. I write this message from an iPhone whereon I am being raped monthly for a text package, despite it being less data to send or receive than email. I assure you, it IS too expensive for what we are actually getting.
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hegemon13, 12 Sep 2008 @ 2:24pm

Re:
With some carriers, it is. You could vote with your walllet...except for the anti-competitive practice of dealer lock-in via ridiculous termination charges.
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hegemon13, 12 Sep 2008 @ 2:26pm

Re: Cos we have to?
Then don't use it. Dial the number and talk. It is absolutely NOT a social necessity.
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Anonymous Coward, 12 Sep 2008 @ 2:41pm

Odd Pricing....
I'm a Verizon customer. I've been very pleased with the quality of service and more importantly the areas covered by them. I've signed up for the unlimited data plan which gives me complete access to the internet with no limit on the amount of data I send or receive.

Oddly enough, I do have to pay an additional 15 dollars for 1500 txt messages a month. The Super-Dooper odd thing is that if I sign into MSN messenger on my phone the messages are considered text messages. I don't quite understand that...what is the difference between me sending a text message and watching a stream of pr0n on my phone? :)

Since I use my phone for business also it's a pretty easy decision. Do I try to save a couple bucks a month or just eat the extra cost to make sure my customers can call or txt me whenever they need to get in touch?

Free Market pricing works if there are numerous choices for service providers in the area that offer the same quality of service. Unfortunately for me, there are not.

It is similar to having only one ISP in your area.

You have two choices. You can pay the price they want you to pay, deal with the data limitations they want to enforce and put up with whatever polices they want to put in place or you can just not have internet access.

Do I think the gov. needs to step in and regulate the pricing? Not really. However, as a consumer I do appreciate them asking the same question I would like to ask because it can bring to light goofy quirks that get no attention when a regular Joe-Schmo like me asks.
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neil, 12 Sep 2008 @ 2:59pm

ok so music that cost tens of millions of dollars to produce should be free but it ok to charge unfathomable rates for text messages that cost the tel companies nothing to send
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sam, 12 Sep 2008 @ 3:05pm

Re: Crazy???
Text messages are pretty expensive considering its all data, you pay additional for data, voice, AND text. I certainly haven't heard about carriers spending billions of dollars upgrading their networks to enable texting. I don't think unlimited versus al la carte really makes a difference. 20 cents per message over a cell when i can call around the world with Skype, Yahoo, etc for 2 cents per minute...
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Gus Jenkins, 12 Sep 2008 @ 3:28pm

Re: Re: Crazy???
That works out to just over $1,300 per MEGABYTE!!! of text sent.

1,048,576/160 (bytes per SMS)*$.20=$1,310.72

I'd say that was excessive.
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Derek Kerton (profile), 12 Sep 2008 @ 3:42pm

Not Priced Per Kilobyte
Sure, any of you could point out that kilobyte per kilobyte, SMS is just about the most expensive kind of data tranmission one can make. You pay between 10 and 20 cents US to send 168 Bytes. No, not KiloBytes, Bytes. But so what? Consumers have never been so sophisticated that they buy services on a dollar ber byte basis.

What the carriers are charging for is a service, not a "byte transmission". The price is ridiculous, and yet people still find it WELL worth the price for the benefit of instant, short, silent, inobtrusive communications with just about ANYBODY who owns a cell phone.

There is competition. From unlimied plans and bundles, from other carriers, and from IM services you can install on a phone or smartphone. You could call. You could find a PC and type a message. You could email. These are all close substitutes, and yet people choose to pay the going rates for SMS.

Your perspective depends on whether you think a company should be forced to charge their cost plus a small surcharge for a product, or whether they should be allowed to charge whatever a competitive market will support - aka, what the service is worth.

RE #11, Joe, "the reason more people use it is because it is more convenient than having a long phone conversation and cell companies are taking advantage of the situation." Yeah, damn them for building the network, running it, subsidizing your phone, connecting to the other carriers, and providing you with a service that you call "more convenient" than prior services...and then having the gall to charge you what it's worth to you instead of their basic cost.

RE #20, Woadan, "The real issue, Mike, is that texting uses the voice line, not data" Actually, Woadan, that's wrong. Texting uses the SS7 signaling system and the signaling interface between tower and cellphone, not voice channel or data channel. An IM client on the phone could be a patial substitute, but only to other people who use the same IM, and who are logged in - SMS has much broader reach.
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Rose M. Welch, 12 Sep 2008 @ 4:49pm

Re: Idiots?
No, no, no... It's because it's frickin' espresso through a drive-thru. I have three kids. I will so pay an extra two bucks to stay in my vehicle. Of course, parents who leave thier kids in the car probably don't care about that...

The price differences I've mentioned are based on the cafe mocha (largest size, whatever the hell it's called... venti, maybe?) I got today with extra vanilla and cinnamon that was 3.87 compared to the 1.99 plain coffee (sometimes with flavored creamers) offered at our local convenient stores.
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Woadan, 12 Sep 2008 @ 4:57pm

Re: Not Priced Per Kilobyte
I stand corrected. (I knew it wasn't sending via the data plan, and assumed [dangerous, I know], it was using the voice signal.)

The issue of compatibility is fairly moot when it comes to IM. Yahoo and MSN have by the far the biggest reach, and they are playing well with each other. AIM isn't. Even so, the apps are easy enough to install and configure, so there is no huge barrier. Plus, integrated IM apps will eventually make it to cell phones if there is enough interest.

The real issue is that the carriers, except for with PDA and Smart phones, control the OS and the interface to a large degree. And if they allow IM apps that use the data plan, they lose the SMS fees. (Though it would mean everyone would have to have a data plan, which some would not prefer perhaps.)

Doing so, however, would mean I get control over who can send me a message, and whether I even have the app up and running. SMS doesn't have that degree of granular control.

Woadan

Derek said: "Texting uses the SS7 signaling system and the signaling interface between tower and cellphone, not voice channel or data channel. An IM client on the phone could be a patial substitute, but only to other people who use the same IM, and who are logged in - SMS has much broader reach."
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Throw the damn thing out, 12 Sep 2008 @ 5:52pm

Phones are now useless
Charging the recipient of spam is both offensive and unethical. If they refuse to address the problem of spamming cell phones, which is I believe illegal, then at least they should stop charging the recipient. I would not however hold my breath on this one, because they are making money on the spamming and of course they know the source of the spam, they just do not care about you. The bottom line is all that matters, you're screwed again.
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Yakko Warner, 12 Sep 2008 @ 8:46pm

Bulk plan prices are going up, too
I used to get a handful of free messages each month. They dropped that. When it was 10¢ per message, I looked into the unlimited plan, which was $5/month. I decided it wasn't worth it compared to the extremely low volume of text messages I use ( < 50 = < $5 ).

When they upped it to 20¢ last month, I looked at the packages again. The $5 plan is still there, but it's not unlimited anymore; it's now for a set number of messages. The unlimited plan has TRIPLED to $15/month.

So no, this price increase is quite definitely NOT just limited to us "a la carte messaging" users.

I used to get spam (and have to pay for it) as well, because they had a "convenient" service where you could send a text message to any phone by email. Fortunately, that's one service you can voluntarily shut off using their web site. Now I just have to keep reminding my contacts to please not text message me from their phones, because I don't want to pay for it (and I have no choice but to pay for it if they send it).
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Clueby4, 12 Sep 2008 @ 8:49pm

Same reason Wide-screen Monitors are popular...
Same reason Wide-screen Monitors are popular:

The masses are ignorant fools!
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somedude, 13 Sep 2008 @ 6:21am

the problem is that when you RECEIVE a text message you have to pay for it. imagine if when the phone rang, even if you didn't answer, they charged you for a minute of calling?
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I need more coffee, 13 Sep 2008 @ 7:22am

misc rambling
Text Messaging is similar to Printer Ink.

A comapny will subsidize the initial product and make profit off of the use of that product. Text messages are priced quite high compared to other data. Printer ink is priced quite high compared to other liquids. People are becoming upset about text messaging prices. People are already pissed about printer ink prices ........ etc.

I do not think that either can be considered a competitive market. There is lock-in, contract, etc. Is this not a monopoly ?

The Justice Dept is tasked with investigating the market place and taking action where abuse is occurring. The present situation wrt text messaging and printer ink prices is much more abusive than anything Google has done. But then I suppose that there is politics at work here, so relief is not in your future.
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Russ, 13 Sep 2008 @ 12:29pm

Re: Re: Cos we have to?
Perhaps not in your circles, but most of my friends here in SF are late 20's to early 30's and 90% of them utilize SMS over voice or email. I stand by my statement that it is a necessity in this day and age.
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Original AMazed, 13 Sep 2008 @ 3:47pm

Text Messaging *IS TOO EXPENSIVE*
If you view what most wireless Carriers charge for "adhoc" or occasional text messaging, that is between 10 cents and 15 cents per message for a text message with a length of something less than 160 characters, then yes, text messaging is not only expensive, it's down right userous.

Think for a moment. Most voice calls/messages are 10 cents per minute or less. Now consider standard SMS at less than 160 characters. The air time isn't just a fraction, it's exponentially less.

Just because Wireless service Providers *CAN* charge disproportionate fees doesn't mean they should be allowed to do so.

Also, don't forget Mike (the Author)Masnick is a Schill for the industry who's company depends on the good graces of the industry to pay for advertizing (including seminars, industry meeting announcments, new product announcements, etc.).

In the words of "Deep Throat", "Follow the money."
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nasch, 13 Sep 2008 @ 6:40pm

Re: Re: Re: Cos we have to?
And they won't talk to you if you call them? They would refuse to be your friend if you don't have SMS? If they're that shallow, then I would say, not flippantly, it's time to get new friends. And if they would still accept you without texting, then it is not a social necessity.
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Lucretious, 13 Sep 2008 @ 7:52pm

Re: Re: Re: Idiots?
They should regulate critical services because of the potential abuse of a captive customer base but, last I checked, text messaging wasn't considered a "critical" service.
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Mike Acker, 14 Sep 2008 @ 6:00am

Re: Phones are now useless
==>"the problem of spamming cell phones, which is I believe illegal,"

yup, it is a "trespass of chattels", actionable under Tort law. Further, if the return address is bogus as is generally the case then the UCE (unsolicited commercial e/mail ( spam)) is also a violation of the Federal CAN-SPAM act

actioning these complaints however is best done as a class action suit, brought by your carrier on your behalf. for that reason, if you start receiving what you feel are excessive UCE messages -- call your carrier and get on their case

UCE is often sent using "bot nets". the UCE then appears to have "come out of nowhere" as it is sent from thousands of different computers -- all using bogus return addresses

you should all know that when you execute the e/mail send program you can put *anything* in the return address-- "The Big Bad Wolf" {bbwolf@bbwolf.net} would work just fine

sending e/mail htat cannot be traced back to its source is illegal under the federal can-spam act -- but not hard to do. hard to trace though

until un-authorized programming is eliminated from the environment the problem will continue

change is comming. slowly.
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ben levey, 14 Sep 2008 @ 3:30pm

Take a look at Mexican tortillas. The government mandates the price and stabilizes the market. I guess we text as much as Mexican people eat tortillas. Ergo, Herb Kohl needs to step in and mandate messaging prices. 20 cents per message over is ludacris.
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r. decline, 15 Sep 2008 @ 7:34am

it is way overpriced
doesn't matter if it is the price of a single text, or some "cost savings" bundle package. either way you are overcharged for what it costs them. if anything your bill should be reduced for sending a text since its an easier load for their network to carry.
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nasch, 15 Sep 2008 @ 8:18am

Re: Text Messaging *IS TOO EXPENSIVE*
Just because Wireless service Providers *CAN* charge disproportionate fees doesn't mean they should be allowed to do so.

If it is a freely competitive market, then yes they should be allowed to. The only problem is if there isn't enough competition.

Also, don't forget Mike (the Author)Masnick is a Schill for the industry who's company depends on the good graces of the industry to pay for advertizing (including seminars, industry meeting announcments, new product announcements, etc.).

Mike doesn't make his money off of advertising. His company depends on the "good graces" of their clients paying their bills, just like anybody else's company. And it's "shill". And "whose". And "advertising". And "announcements".
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Derek Kerton (profile), 30 Sep 2008 @ 4:08pm

Shill For Industry?
RE # 37

"Also, don't forget Mike (the Author)Masnick is a Schill for the industry who's company depends on the good graces of the industry to pay for advertizing (including seminars, industry meeting announcments, new product announcements, etc.)"

Dude, you're so far off the mark it's a joke. Have you read this blog? I am an occasional writer here, so you could call me biased, but we've been called telco shills a few times over. The joke comes when the telco shills write in to call us anarchists, and anti-business.

Read the blog. Or just seach it for the term "telco". When telcos are abusive or knuckleheads, this blog says so. When telcos are innovative, this blog says so. When telcos do the right thing, this blog says so. If you added it all up, you'd see the first case happens more than the latter two. The total = integrity. Too bad it's such a foreign concept to most.
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