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Scott Jagow: This week, several of the major cell phone companies made a big move: Flat rate, all you can talk plans. So, for a hundred bucks a month or so, you can yak all you want and never worry about going over your allotted minutes.
Now, for texting, you may already have a flat rate plan. And if you don’t, it could be trouble. Lisa Napoli has more.
Lisa Napoli: Doug Patterson watched his teenaged daughter go from “eh” about text messaging to being a much-more-than frequent user.
Doug Patterson: We started off at the beginning of 2006 with her doing eight text messages in January. Last month, it was 2,211 messages.
Patterson kept upping his flat-rate plan to keep pace with the texting. But the plans kept going up in price — to five times what they started at.
It’s a good thing he had a plan at all. These days, an individual message that used to cost a nickel now can cost 20 cents.
Texting has become the crack of modern communication. Industry analyst Ian Gillot says your cell phone company likes it that way.
Ian Gillot: So they’re really promoting more and more text message usage, because it does lead to more usage of ringtones and games.
All these extras are where cell phone companies are staking their financial futures. For now, they’re raking it in with text. More than a fifth of Verizon’s revenue is coming from these texting and mobile Net connections. AT&T’s data revenue shot up 57 percent over this time last year.
Industry analyst Glenn Fleishman says text messages are pure profit:
Glenn Fleishman: It’s so vastly profitable that there’s no reason why they can’t just give you everything by charging you a fee that is entirely gravy.
That hasn’t gone unnoticed by entrepreneurs like Ralph Herreida. His company makes a new device called a Zipit that doesn’t make phone calls. It only lets you instant message and text — for a flat fee.
Ralph Herreida: There’s a $5 a month plan for 3,000 messages.
But the Zipit costs $150, about what you could pay for a phone.
No matter how you slice it, using your thumbs doesn’t come cheap:
Fleishman: I think the carriers have figured out that they can just keep tweaking the price upward, and they haven’t hit the limit of what they can charge yet.
Experts like Glenn Fleishmann say don’t be surprised if eventually, you end up paying 40 percent of your cell phone bill for something other than plain old talking.
In Los Angeles, I’m Lisa Napoli for Marketplace.
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