Groups say AT&T, Verizon drive up mobile costs

Several public interest groups allege that AT&T (T) and Verizon Wireless (VZ) are forcing mobile carriers to charge higher prices for customers.

The groups claim that so-called roaming charges amount to "monopoly rent" the two biggest U.S. carriers use to prevent other companies from offering even lower prices. That harms competition, limits consumer choice and results in higher costs for mobile phone users, they say.

Individual mobile carriers have their own wireless networks, but often must use those of another carrier to complete a call or transfer data. Roaming charges are the bills mobile carriers send each other for that borrowed network use. The amounts are effectively like electronic road tolls. Because AT&T and Verizon are dominant and have the largest mobile networks, other carriers often must use that infrastructure.

The concern is that if the roaming rates are set high enough, smaller carriers must artificially increase prices for their customers. Unable to offer lower prices, these carriers are hamstrung in trying to compete with Verizon and AT&T in ways that might lower prices for consumers.

Carrier T-Mobile has asked the Federal Communications Commission for guidance regarding what kind data-roaming arrangements are deemed by the agency to be commercially reasonable. The company raised the question of whether other carriers -- specifically AT&T and Verizon -- charge "artificially high" rates that can exceed the "relevant retail rate" or the amounts charged to foreign carriers when their subscribers using roaming services in the U.S.

According to an FCC filing by Public Knowledge, Common Cause, Benton Foundation and the New America Foundation, there is "dysfunction in the roaming market" that creates "anticompetitive harm." As the groups wrote:

The ability of AT&T and Verizon to impose artificially high data roaming costs on rivals (or deny data roaming altogether) allows AT&T and Verizon to maintain artificially high prices for their own customers. In addition, AT&T and Verizon can maintain a highly aggressive cap on data usage, coupled with significant overage charges, by denying competitors such as T-Mobile the ability to offer truly unlimited data packages. As documented by T-Mobile in their Petition , the high price of data roaming effectively prohibits T-Mobile from offering uncapped and unthrottled mobile broadband access by making it impossible to offer such packages at anything close to an affordable price.

AT&T declined a request for comment. Instead, the company pointing to a company blog post that stated in part, "There is no justification for granting T-Mobile's petition -- in fact, according to T-Mobile's own economist, wholesale roaming rates have trended 'downward strongly' in recent years, and the average wholesale roaming rates paid by T-Mobile have fallen nearly 70 percent since 2011 and continue to decline."

In a FCC filing responding to T-Mobile's claims, Verizon Wireless said that since April 2011 the company has entered or renewed 48 data-roaming agreements and that since then average data-roaming charges have declined by roughly 40 percent.

  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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