Mobile Phone Companies Ask Court To Hang Up On Texters

Defendants in In re A2P SMS Antitrust Litigation are asking the U.S. District Court for the Southern District of New York to dismiss antitrust claims alleging that mobile phone companies conspired with wireless providers to control the price of application-to-person messaging.

Club Texting, Inc., iSpeedbuy LLC and Textpower, Inc. filed an antitrust class action against AT&T Mobility LLC, Verizon Wireless LLC, Sprint Nextel Corp., T-Mobile USA, Inc., U.S. Cellular Corporation and other “aggregator defendants” who work with businesses to send text messages providing such things as flight information, coupons, sporting results, or emergency alerts to large groups of customers through their wireless networks.     

According to the plaintiffs, instead of allowing businesses to send bulk text messages using low cost 10-digit numbers, the defendants agreed to only allow the use of more expensive five- or six-digit numbers called common short codes. 

The mobile service defendants argue that the complaint should be dismissed because it “describes nothing more than legitimate, independent business conduct couched in conclusory assertions of conspiracy.”

The motions to dismiss also argue that plaintiffs lack standing because messaging services were not directly purchased from all nine companies, and that plaintiffs’ claims are barred by the four-year statute of limitations because the alleged agreement barring the use of 10-digit numbers occurred in 2003.

U.S. Cellular filed a separate motion to dismiss, arguing that it does not conduct business in New York, so the Court does not have personal jurisdiction.

In addition to the motions to dismiss, Air2Web Inc., Ericsson Inc., Sybase Inc., SoundBite Communications Inc., Syniverse Technologies LLC, Vibes Media LLC and 3Cinteractive LLC, asked the Court to stay the case to permit the dispute to be arbitrated pursuant to an agreement to arbitrate.

The court’s final decision in this case could have a major impact. According to a 2011 Juniper Research study, application to person messaging is a rapidly expanding market that will generate over $70 billion in revenue by 2016.