Has Consumer Reports discovered a case of price gouging? A quiz

(Warning: non-sports post)

In the latest issue of Consumer Reports, CR makes accusations of price gouging against a particular industry.


Here's a quiz. One of the excerpts below is the real CR article. The other I just made up. Can you tell which is which?

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1. Why texting is too $$$

Jerry Sobieski's teenagers are forever sending text messages to friends on their cell phones instead of calling them. What baffles and infuriates Sobieski, a computer network engineer from Woodbine, Md., are the rates wireless carriers charge their customers to send and receive text messages.

"Text messages take up almost nothing on their networks, but the carriers are charging much more for them than they do for phone calls, which use up a heck of a lot more space," he says. "The rates for texting are completely outrageous."

Three years ago, those rates were 10 cents per text at the nation's four big wireless carriers: AT&T, Sprint, T-Mobile, and Verizon Wireless. Each company raised rates to 15 cents, then to 20 cents.

Text files are small and cost carriers very little to transmit, so texting is exponentially more expensive to consumers in terms of network space than other cell services. Five hundred text messages contain less data than a 1-minute voice transmission.

Sen. Herb Kohl, D-Wis., also questions text-messaging rates. In letters to the above companies, Kohl, chairman of the Senate's antitrust subcommittee, demanded that wireless carriers explain why they've doubled the cost to customers in near lockstep. Kohl says he's particularly concerned that the rate jump appears not to be based on a rise in the cost of transmitting text messages.

Some carriers say that texting rates are actually lower now because most customers buy monthly buckets of messages. Consumers Union isn't swayed. Not all customers send or receive enough texts in a month to warrant a plan. Those who don't must shell out for messages they won't use or must pay the higher per-text rate.

In recent years, industry consolidation has greatly reduced the number of wireless carriers. That's troubling, particularly when carriers engage in anti-consumer behavior. CU has asked federal officials to investigate text-messaging rates in this supposedly competitive industry. They should ask tough questions about the actual costs to carriers, so that consumers aren't saddled with an unwarranted expense.

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2. Why the Consumer Reports Website is too $$$

Jerry Sobieski's family is forever going to the Consumer Reports website to look up which products are best. What baffles and infuriates Sobieski, a computer network engineer from Woodbine, Md., is the rate CR charges its customers to research products on its site.

"CR web traffic takes up almost nothing on the internet, but CR is charging much more for the website than they do the magazine, even though the magazine uses up a heck of a lot more physical resources," he says. "The rates for the CR website are completely outrageous."

It costs $5.95 to access the CR website for one month.

Internet data costs CR almost nothing to transmit, so the website is exponentially more expensive to consumers in terms of actual resources used. The bandwidth for five hundred website hits costs CR less to provide than a single print issue of CR.

Sen. Herb Kohl, D-Wis., also questions CR's pricing policy. In letters to Consumers' Union, Kohl, chairman of the Senate's antitrust subcommittee, demanded that CR explain its cost to consumers. Kohl says he's particularly concerned that the price appears not to be based on the cost of maintaining CR's internet connection.

CR says website rates are actually lower now because most customers buy an annual subscription to the website, which costs $26. Consumers Union isn't swayed. Not all customers research enough products in a year to warrant a subscription. Those who don't must shell out for access they won't use or must pay the higher per-month rate.

In recent decades, industry changes have greatly reduced the number of not-for-profit consumer magazines with websites. That's troubling, particularly when the only such US organization engages in anti-consumer behavior. CU has asked federal officials to investigate web subscription rates in this supposedly competitive industry. They should ask tough questions about the actual costs to CR, so that subscribers aren't saddled with an unwarranted expense.

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So did you guess which is Consumer Reports' real complaint? For the record, the answer is here.