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Hong Kong's Lessons on Number Portability
Dr.Hair writes "Dan Gillmor once again hits the nail on the head with his comparison of Hong Kong's competitive mobile phone market to the United States. Experiences of incumbent carriers trying to thwart competition and stifle the free market in Hong Kong should be remembered as the FCC nudges US carriers to carry out number portability. In the end competition should provide better customer service, better coverage, and better pricing in the US, all of which will eat in to carrier profits. But it also might bring the US out of the tech backwaters, where customer lock-in is the marketing strategy and "innovation" is the spin of the day."
And its the governments job to see they don't get it. Free markets aren't a naturally occuring phenomena any more than a bonsai tree. The FCC would do very well to remember this.
If you look at the current homogenized radio market you could argue that the FCC has encouraged filesharing by ruining radio. Television the less said the better. At least, there is hope for phones and the internet.
Things will be interesting for a while starting tomarrow as people take advantage of this new policy, but I think soon enough we'll see the phones change to everyone's benefit.
OK, I've said that 3 times now, so what do I mean? I mean that right now my Sprint phone wouldn't work if I go to AT&Ts network or Cingular's network or someone else. They all use different systems. It's mentioned at the end of the article that that just isn't the case in Hong Kong (and I believe in Japan and Europe and other places where they have number protability). The having to get a new phone part is still going to be a little bit of a wrench in this plan, but soon enough one or two carriers will try to make it so competitors phones will work on their network and maybe we'll end up with a standard (or just 3 standards that work everywhere). When this happens, our mobile phone market will be better.
It's about time this is fixed. Imagine if the government allowed TV to develop this way. You'd either be able to watch NBC, CBS, or ABC, but not all 3 unless you had 3 TVs. And if you tried to switch, you'd have to buy a new TV. Yeesh.
Horray for number portability, it's time to let the free market decide what sucks so things can improve more.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
I'm looking forward to this, but how about equipment portability? Carriers refuse to move your ESN over from an older carrier. Since the device is "activated" with a particular carrier from the start, what's to stop it from being re-activated with a new carrier? This is costly to me, and forces me to discard an otherwise perfectly functioning mobile phone. I know there are charities that take this old equipment as a donation, but I'd have a lot more cash to donate directly if I didn't have to pay an extra $40 to $100 USD every time I switched carriers.
Fred
"A fool and his freedom are soon parted"
-RMS
Then I took it with me this summer to Malaysia and Singapore. That is when I found it was also crippled. The only frequency it would work on was the N.American 1900 band.
When I got back I contacted VoiceStream and Motorola to ask what it would take to restore the phone to allow it so work with the frequencies it was advertised as being capable of.
The response was that as VoiceStream ordered these with only 1900 capability the rest was "turned off" in the ROM version shipped to VoiceStream.
Then file a complaint for false advertising.
What do you mean nobody talks about phone SERVICE? Can you hear me now? Huh?
And as the article points out, there are rural areas in Hong Kong (NT and Outlying Islands) that aren't served by all mobile carriers. But they do get served.
Some of the low cost companies will cherry pick the big cities, but as long as there is a market, the free market says a player will exist to exploit it.
Just an idea.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
I couldn't possibly disagree more with your post. Firstly, the one thing that unites just about every civilization since Sumeria is a free market. The practice of barter is just about the most ancient one in human history.
Secondly, I would argue that the FCC contributes to a poor market in this case, by shutting out all but a few players. These companies have licenses which amount to an effective monopoly over a segment of bandwidth. They have little incentive to be good to their customers, since the range of competition is also limited and like-minded.
Ironically, the reason why the FCC exists is to allocate interference-free frequecy bands, but the most advanced communication methods in use (i.e., spread spectrum) are expressly designed to tolerate interference. Perhaps the FCC has outlived its usefulness.
Toronto-area transit rider? Rate your ride.
On paper, yes, capitalism works. In reality, however, capitalism is often times the practice of analyzing your competition to discover how you can offer the same or similar [sub-par] service or goods with only a slightly shinier silver lining. Clever marketing has been capitalism's greatest acheivement thus far, recently trumping free market (eg, wireless annual contracts: "Stay with us for 1+ year(s) on pain of an early termination fee and we'll give you fluff in return"). Most companies would never settle for less profit unless it is the very last option left on table, even after trimming the fat around the office. The US wireless market is a prime example of this. Apart from fancy new phones with near useless features, when is the last time there was major innovation in the US wireless marketplace? As far as I can tell, the dead zones have increased, reception has not improved, and, quite frequently, conversations still closely resemble arguments with the Jack in the Box drive thru speaker.
...an opinion, anyway.
What you are talking about has a different name - Idealism - and unfortunately it only works on imaginary paper.
It goes from God, to Jerry, to me.
The American cellular telephone market has evolved differently than the rest of the world. In Europe and Japan, you (gerneally, there are exceptions) go buy a nice phone or a cheap phone; whatever has what you need. You can expect to pay from $50 to over $500 for a phone, depending on the features you want.
;-)
Compare it to buyinga PDA or a laptop computer.
Then, you went and picked a phone plan you want and they gave you the account information in a SIM card, which you put in whatever phone you got and you're off to the races.
But in the US, phone prices were deemed too high to make good inroads, so providers subsidised the cost of the phones. So you buy your service and it comes with a "free" phone, or a "$30" phone.
When someone's phone breaks, they take it in and find that to get a new phone, they will have to pay over $100 for essentially the same model phone. Outrage ensues!
Of course, the subsidising didn't work out exactly well because people got unhappy with some aspect of the service and left for another company. That's where the 1- and 2-year contracts started coming in, so the providers could recoup the costs of subsidising the phone.
In the mean-time, US cellular phone customers have come to believe that cell phones truely cost around $30-$50 and balk at paying what amounts to actual retail price for one. It doesn't help that many of these cell phones look and feel like $30 pieces of electronics rather than the $180+ pieces of highly engineered hardware that they really are.
These people have such an bizzare facility with language that it would make Orwell's Big Brother blush. "Innovation" is NewSpeak for thwarting innovation, and "competition" means eliminating all competitors.
"When I use a word, it means just what I choose it to mean - neither more nor less" - Humpty Dumpty - Through the Looking Glass
"How perfectly Goddamn delightful it all is, to be sure" Charles Crumb
Prostitution has a long history but it's not correct to therefore claim that every civilization is united by an appreciation of sexuality. Barter took place in Stalinist Russia, but did not constitute a free market. In addition to producers and consumers, a free market requires barriers to competition that are low; this will virtually never occur in the absence of both government oversight and a liquid monetary system, neither of which is required for barter.
- First they ignore you, then they laugh at you, then ???, then profit.
Regarding the Wal-Mart model: This only works on people who are only concerned about getting things for the lowest price possible. They will inevitably have poor quality and service. But there are people who buy their clothes at Neiman Marcus and pay more than they would at Wal-Mart, and these are the same people willing to pay more for high quality cell phone service. Good service will certainly be available, but as always, you will get what you pay for.
The new number portability provision will help a lot, but it only eliminates one form of lock-in, one based on the social norms where users become reliant on their current phone number.
Another form of lock-in, one based on economic norms, is the penalty to be payed when switching away from a wireless provider before your service term is up,which we all are bound to by contract.
Most people I know hate switching not because they have to switch numbers, but because they have to pay a stepp $200+ fine for ending a service contract prematurely.
I don't think number portability will have as huge an effect for competition as they say they will. It will help consumers switch when their contracts are done, but because we are bound by contracts with such steep penalties, most people will remain locked into their poor performing carriers.