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Jun. 18, 2009

Late yesterday, CTIA (Cellular Telephone Industries Association) CEO Steve Largent reaffirmed the wireless industry’s highly competitive nature.

His statement was presumably in response to allegations by the Senate Judiciary Antitrust Competition Policy and Consumer Rights subcommittee that Verizon and AT&T have colluded on per-text rate hikes since April 2007.

Largent added "in CTIA's 2008 year-end survey, we found that 270.4 million subscribers sent more than 1 trillion text messages, or about 3.5 billion per day! This is a significant increase to 2007 when 255.3 million subscribers sent about 363 billion text messages."

Largent also added that a recent Merrill Lynch study found that “the U.S. is the least concentrated and most competitive market out of the 26 Organization for Economic Co-Operation and Development (OECD) countries reviewed.”

In their testimonies yesterday, AT&T and Verizon denied allegations that they colluded to fix text messaging prices. Senator Herb Kohl of Wisconsin, the subcommittee's chairman, said the fact that text messages have doubled, from 10 cents per message in 2006 to the current 20 cents per message, at both Verizon and AT&T was cause for great concern.

"In 23 of the 26 OECD countries, the top four wireless carriers own 100 percent of the market. The U.S. is one of only three OECD countries with more than four carriers but the only one whose top four carriers represent 86 percent of the market," Largent stated.

Kohl said that while he was concerned with the rise in per-text pricing, he was more concerned that other mobile services may see similar rate hikes.

Randal Milch, executive v.p. and general counsel for Verizon Communications, denied any wrong doing, saying "market evidence shows fierce competition, not collusion, in text messaging and wireless generally.”

Milch also noted that only one percent of text messages sent through its network are pay-per text.

"AT&T sets the prices for all its products on a unilateral basis. There is no evidence that anyone at AT&T engages in anything inappropriate or illegal," said Wayne Watts, senior executive vice president and general counsel for AT&T.

Despite the mobile carriers' emphatic denials, the wireless industry may not have seen the last of government scrutiny.

Kohl expressed broad concerns about competition, noting that he’s also concerned about exclusivity deals between wireless carriers and handset manufacturers that may limit consumer choice.

A group of U.S. senators is reportedly set to discuss possible issues with handset exclusivity deals this week, and they've asked the FCC to look into the matter as well.

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Source: The CTIA.