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Senators To Examine Exclusive Handset Deals
narramissic writes "Based on a request that a group of rural operators sent asking the FCC to examine the practice of handset exclusivity, four members of the Commerce Subcommittee on Communications, Technology and the Internet sent a letter to the FCC expressing their concern. Small operators, like U.S. Cellular argue (PDF) that 'exclusive handset contracts divide wireless customers into haves and have nots.' But nationwide operators, including Verizon, maintain (PDF) that 'in the absence of exclusivity agreements, wireless carriers would have less incentive to develop and promote innovative handsets.' The Commerce Committee expects to hold a hearing on the issue tomorrow."
The Senators in question are probably trolling for campaign contributions.
The suddenoutbreakofcommonsense is very interesting, but I'm not sure which way:
1. The handset sweetheart deals are creating haves and have nots and should stop.
2. Without the handset manufacturers having to bend over backwards to please the carriers, there might have been fewer, lower-cost, higher-quality handsets available.
When the handset makers can tell the carriers to take it or leave it, and when those handsets have features dictated by the consumers instead of the carriers (abysmal here in the US), and market competition irrespective of long-term contracts hits the handset pricing, then not only would that tag truly apply, but so would whatabreathoffreshairfinally.
Pathological kinda promises Path + Logical - but instead, you get stuck with pathetic.
It made a great deal of sense to select one or two devices, get them to agree to an exclusive contract, which would include us paying to promote their devices, and get the product to market. I don't see this situation being any different. It helped both us as a network provider, and them as a device provider. I don't see this as a conspiracy to restrict trade, just common business sense.
And, on an unrelated note, could anyone tell me why the HTML "li" code now works erratically? Is there another code that just gives me a simple new paragraph?
What was once true, is no longer so
Sometimes you have to say "NO".
Oh sure, and it would work for a company in a strong position, like Apple. If the company is hurting like Motorola, or Palm then you really cannot afford to not be sold by them. There is much more manufacturer competition than carrier competition and the big 4 carriers use that. Apple has reversed the roles a bit by having a true *must have* device. Sprint and Verizon got bitten by their own strategy and see a mass exodus to AT&T (I think customer support is not neutral on this).
Look at the last Treo model that was sold without carrier support. Sure you can use it with AT&T and TMobile but you have to pay the full price for it. I'm not even sure they've recouped development cost on this one.
As a customer I would much rather get lower monthly bill and no 2 year lock-in than getting a subsidized phone. This is pretty much paying a high interest perpetual loan on a device that is not that expensive anyway.
Instead of debating it in Senate (which exists solely for debates), why put it to Commerce Committee and why now?
The answer can b e got here. It says a former tech exec has joi ned the committee.
Which means he is trying to pre-empt any legislation by the Congress by putting it for consideration in the committee.
Which effectively kills any legislation and also protects the interests of telecoms.
Sneaky, disgusting and probably illegal.
But then the senate has a record of disgust. So nothing new here.
"Doing what i can, with what i have." ~ Burt Gummer
Maybe the cellular carrier in Canada could have used some of its profits from charging some of the highest prices in the western world [article is a bit dated, but still accurate] for wireless services to hire adequate engineering resources to help their networks function with new technology and allow interoperability. Instead of investing in resources to improve network speed and capacity, they abuse monopoly power to amass profits and engage in rent-seeking behaviour. I'm not blaming you personally, of course. But saying that a wireless company with significant government-granted monopoly power, grants, and tax cuts is locking in devices because making things work is too hard is a little disingenuous.
Yeah, it's the promote part. Forget about the other words they said... you know, the ones that aren't true? As long as there is a bit of truth to cling to, let's focus on that.
The fact is, exclusive deals are very anti-competitive and is especially harmful to small carriers. Furthermore, the exclusivity of the iPhone to AT&T not only enables AT&T to gain an unfair advantage over the other carriers, more recently, it has been used to harm their existing customers. (These "start new plans with the new iPhone deal" is meant to bring in new customers, to hell with the loyal customers they already have -- they are on contract anyway.)
I don't have a prediction on how this may turn out, but I will say that if legislators or courts end up saying "no, you can't do that any more" then my guess is the next time this thing happens, the carrier will buy or accept a range of patents on the exclusive handset and then start suing other carriers who try to sell the same handset.
We have all been very annoyed at the way the carriers play games with handsets and have been doing so for decades. That behavior was halted when the POTS companies did it and I find it amazing that wireless carriers are permitted. It's time it all stops.
But you underestimate the challenges we faced after introduction (this was about 20 years ago). The collective genius of marketing predicted the number of subscribers as "X"; when it turned out to be "3X", every other division of the company was scrambling. There weren't enough people in customer service to handle all the complaints, so we got a reputation for lousy service. There weren't enough cell sites so the engineers were working 60 hours to provision and tune them. The billing system was from Cincinnati Bell, and they didn't give us source code. I was the technical liason from Marketing to these other departments. When the upper crust of Marketing decided we needed to add a new billing plan, they would send me down with the admonition "They'll try to give you some excuse about not having source code; it's just their way of stalling". So even though we were getting lots of customers, our costs with all the overtime, rush fees, etc., were very high. We had to rebate a lot of calls because they dropped part way through. And the sales people were allowed to give out "non revenue" lines to clients (read "friends"); when they finally audited that, they were astonished to find that we had given out over 20,000 non-rev lines in Ontario alone - that was about 1 in 8, IIRC. In that environment, trying to adapt to new equipment was, shall we say, problematic. I recall one occasion when I was trying to find the status of the integration of voice mail/paging system, the engineer in charge saw me in the switch room and literally ran away.
Still, it was a tremendous education in how not to run a business. I left after 18 months much wiser.
What was once true, is no longer so
I don't disagree with you in general, but when companies started offering a bonus to sales agents for each new customer signed up - a not uncommon sales incentive, some agents quickly found that offering some of that rebate to the customer increased their gross sales dramatically. I remember a sales guy I worked with at a telecom firm after I left the cellular company complaining "You guys raped and pillaged us on handset prices". I thought this was a bit rich coming from a guy who charged $70,000 for a 4-channel voice mail system (and no, that's not a typo!), but it was indicative of consumer attitudes. Once they found some people offering lower prices on handsets, they were convinced that we were overcharging, and a few cents extra a minute on their contract seemed to be inconsequential. Never underestimate the inability of the general public to perform basic arithmetic! If Total Cost of Ownership had been a common process, Apple should have owned the business market after it introduced the Mac (shorter training, fewer crashes, etc.). But people looked at Macs, saw a $3500 price, looked at a PC-AT, saw a $2500 price, and the rest, as Bill Gates might say, is history.
What was once true, is no longer so
I am in no way a supporter of a "free market" and I believe in heavy regulation and oversight from 3rd parties to ensure that we have a fair market for consumers. I'm just simply pointing out that you can't have "free market" and "fair market"--it just doesn't work.
I suspect that we agree, but that I am using the term in a different way.
By "free market", I intend what Adam Smith intended: That the only decider of how dollars are spent, on a per-transaction basis, is the person who opens his or her purse. The silent hand.
Is the purse-holder the only decider here? No, the contract participants are making part of the decision. That is antithetical to the principles of a "free market".
What I am trying to do is to wrest back the term "free market" from the "laissez-faire" corporatists. "Free market" necessarily implies that the silent hand is unfettered. And as you note, that requires our government to punish anti-competitive behavior from time to time. But the interference need not be falsely accused of being a step toward socialism. Let us stand on principle, call it what it is, seize the high ground: We call upon the government to defend the free market from those who would inhibit the free action of the silent hand.
Also, consider this: Is the government not already interfering in this case? Whose courts, banks, jails, and guns give those contracts their force? Why it is the government. Of course, even in the absence of the government enforcement of those contracts, collusion would exist. But should we not first seize the high ground by calling this what it is? It is collusion, restraint-of-trade, anti-trust violation, &c. Do not let them hide behind the noble term "free market" or "contract." Contracts are obligations to perform services for consideration -- not restraints of trade that destroy the foundational silent hand of the free market.
Do not give an inch. Do not let those who depend on government interference to destroy the free market accuse you of favoring government interference that destroys the free market. We are those who believe in free competition, the free market, and the noble objectives of Adam Smith. They are the ones who wish to suckle at the government teat at the expense of market efficiency.
And if you have a minute more, allow me to share some Adam Smith quotes:
"The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commo-dities much above the natural price."
"The price of monopoly is upon every occasion the highest which can be got."
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
"To widen the market and to narrow the competition is always the interest of the dealers ... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted, till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."
All those quotes come from The Wealth of Nations.
It is not the free market which is flawed, it is those who bear false witness about it, who destroy it. They are not us. We are the noble ones, you and I.
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