Mobile text messages a rip-off

MOBILE phone firms stand accused of profiteering over text messages. The cost of sending a message has soared by a startling 30% over four years as the practice has become massively popular.

The 'big four' mobile networks have pushed up the average price from 6.7p to 10p. Some companies now have a standard fee of 12p. Yet handling a text message costs the companies less than 1p.

More than 40m texts are sent in the UK every day, sending the value of the sector spiralling from less than £100m to a staggering £1.7bn since 1999.

While this is hugely profitable for the networks, it has meant increasing problems for many parents. Bills of more than £100 a month for their youngsters' texting are common, with money often deducted direct from the bank accounts of parents who act as guarantors on contract phones.

TV and radio companies fuel the craze by encouraging youngsters to send text votes to shows such as Fame Academy and Big Brother.

Now consumer groups are demanding Government watchdogs mount an investigation. The National Consumer Council said last night: 'An increase of more than 30% in just four years is well ahead of the inflation rate. We need to know why this is happening. Text messaging has become a vast and profitable industry in its own right. We are asking whether the regulators should take a look at these charges.'

Earlier this year, the Telecoms regulator Oftel ordered a reduction in the high cost of calling mobile phones. This meant a sharp drop in income for the phone giants, who are now pushing up other charges.

The NCC warned: 'The mobile phone industry must not be allowed to replace one rip-off, on call charges, with another, on text messages.'

The spokesman added: 'Text messages have been marketed to the young as a cheap alternative to a voice call. But they are not being used as an alternative, rather they have become the new gossip tool and can generate extremely big bills.'

The text charge figures, which were calculated by Oftel, were challenged by the networks.

O2, which charges 12p a message, said: 'We can't see how they translate into customer experience. We say consumers are getting cheaper text messages. High-use texters are getting particularly good value because they can add 'bolt-on' bundles of cheap texts to their existing deal.'

One package offers 400 messages for £16, 4p each. But they all have to be used within one month and cannot be carried over.

O2 accepted that its cost of processing a text is less than 1p, but said the networks have other marketing and business expenses.

Almost 20% of O2's revenues come from 'data services', which is predominantly text messaging but also includes picture messages, ringtones and downloaded games.

Orange raised the cost of a basic text message from 10p to 12p in April. But it also offers bundles which can bring down the price to 7p or even 1p a time.

A spokeswoman said that reductions in income from call charges following the Oftel ruling had led the company to raise other charges. But she was reluctant to blame the decision for the text message increase.

'I cannot say we are recouping cash lost on call charges by increasing the cost of text messages,' she said. 'That is too simplistic.'

Vodafone charges a basic text fee of 12p a time, but also runs bundle options which can cut the price to 6p.

T-mobile introduced a new price range in March last year which increased the text fee of 5p on some packages to a standard 10p. The cheapest rate with a text bundle is 6p a time.

The industry says Oftel's calculation is skewed because the 10p average it produced includes messages to expensive premium rate services such as polls, sport information and quizzes.

But Oftel's Stuart Campbell said: 'In black and white terms the average message price has risen from 6.7p to 10p. However, there is a wide range of packages and bundles available so consumers can choose a deal which best suits them.'

He admitted that the watchdog's powers to regulate mobile charges are limited because the industry was set up on the basis that prices would be set by competition and market forces.