AT&T Inc., Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA Inc., the biggest U.S. wireless-phone companies, were sued by Illinois residents over claims they conspired to raise text-messaging rates.
The proposed class-action, or group, lawsuit seeks to represent all U.S. customers who have purchased text-messaging services since Jan. 1, 2005. The conspiracy led consumers to pay artificially inflated prices, according to the complaint filed last week in federal court in Chicago.
"Since 2005, defendants have changed their prices for text-messaging services at almost the same time and by identical amounts," attorneys for four residents said in the complaint.
Verizon Wireless chief executive officer Lowell McAdam defended the carrier's texting rates in a Bloomberg Radio interview Tuesday, saying average charges have plummeted as many carriers now offer packages that are cheaper than individual rates. McAdam's comments contradicted assertions made the same day by Sen. Herb Kohl (D., Wis.), who gave the companies a month to explain why prices doubled to 20 cents a message since 2005.
Rate increases were not justified, because costs to transmit text messages have not risen, according to the complaint. The price increases are more likely "the product of collusion among the defendants," the plaintiffs said.
The lawsuit is without merit, T-Mobile said. AT&T spokesman Fletcher Cook declined to comment. Verizon Wireless and Sprint did not immediately return phone messages seeking comment.