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The Irksome Cellphone Industry
gollum123 writes "David Pogue of the NYTimes wonders why Congress is worrying about exclusive handset contracts when there are more significant things that are broken, unfair, and anti-competitive in the American cellphone industry. He lists text messaging fees, double billing, handset subsidies, international call rates, and 'airtime-eating instructions' among the major problems not being addressed by Congress. 'Right now, the cell carriers spend about $6 billion a year on advertising. Why doesn't it occur to them that they'd attract a heck of a lot more customers by making them happy instead of miserable? By being less greedy and obnoxious? By doing what every other industry does: try to please customers instead of entrap and bilk them? But no. Apparently, persuading cell carriers to treat their customers decently would take an act of Congress.'"
You can't legislate somebody or something into being nice.
DOUBLE BILLING In Europe, youâ(TM)re billed only when you place a cellphone call â" not when you answer one. And youâ(TM)re billed only when you send a text message â" not when you get one. In this country, thatâ(TM)s how itâ(TM)s always been for landlines, too.
That's not completely true. You are billed if you receive the call, provided you are not in your home country (if you are in France spending a few days of vacation, and your contract is with a Spanish operator, then you get billed if you got a call while in France). Fortunately, the European Comission is working on reducing the prices for that double billing. It is something that I guess lots of people in USA would like to see Congress doing.
I got 2M unlimited (really unlimited) data plan on my cell phone. Costs roughly 10 euros/month. Now, why can't Americans have the same?
Seriously, the voice calls are prioritized first in the networks, and it's practically indifferent to the network operators what the rest of all that already built bandwidth is doing. There shouldn't be lack either, unless if the operator really grossly undersized their networks. The impact around where I live at is zero but the customers get a pretty nice service.
That service is good enough to cover the costs. What is important is that it enables new sorts of (business) concepts for mobile phones and mobile applications. That's where the local operators have their stakes in: things like virtual wallets and such. By not making the data plans itself near free utilities the American operators are in fact stalling innovation. I kind of feel sorry about the lack of vision there. Instead of that the operators choose to pretty much just poop on their future revenues which is baffling to me.
Someone in congress must have wanted to move his iphone to a new carrier. They don't really give a damn about an issue out there in DC unless it effects them personally, or are paid off to care.
---- Booth was a patriot ----
The industry response to these charges has been interesting so far. Apparently Pogue got at least one executive at a major carrier's attention long enough for a PR piece to follow that tries to poke holes in some of the complaints...
In Japan the situation is pretty similar, while probably cheaper overall. From a few years back, the trend is the sale of a device for zero yen, while subscribing a 2-years contract. The "zero yen" is actually "You pay xxx yen monthly and, monthly, the carrier reimburses xxx yen" giving a zero-yen illusion (xxx being the actual devicePrice / 24). You may cancel the contract at anytime, but you'll have to pay the xxx * remaining-months (24 - months you paid) yen to the carrier. It is a good way to keep customers for at least 2 years. The iPhone 3G for instance is "free" (2 years contract) since March 2009.
Slashdot, fix the reply notifications... You won't get away with it...
For example, a couple of weeks ago I began receiving robocalls to my mobile number from some "collection agency." They were obviously looking for someone else so I wasted a couple of minutes of airtime waiting for a human to pick up. After picking up, the twit basically said "we have the right person and you owe us $X" and that the calls would continue. I told them to never call me again and remove my number from their list. Now the robocalls continue at odd hours of the night and morning. When I complained to my carrier (ATT), they basically said "there's nothing we can do about it. BUT if you sign up for this new service for $4.99/month you can block specific numbers." So I complained that they were extorting money out of me to protect me from harassing phone calls. They suggested I complain to the FCC and didn't offer to help at all (other than suggesting yet another monthly fee).
I'd love to just punt ATT, but they offer the best coverage around here. I'm open to suggestions on how to deal with this. ATT wouldn't even agree to block all "unknown/blocked callerID" numbers for me.
Sigh....
"Industries" don't function that way, though individual companies can and do.
GM and Chrysler sold crap, they knew they were selling crap, and their "exit strategy" was to have you and me and everyone else REWARD them for producing crap. Toyota, on the other hand, focused on what their customers wanted - a reliable means of transportaiton.
More to the point, for the slashdot audience - Windows. It's crap. And yet, any efforts to end the lock-in are met with all sorts of fud, both from Microsoft, and teir partners, in an effort to continue to entrap and bilk and ass-rape their customers. Vista was supposed to be "the best Windows ever." That has changed to "We feel your pain - Windows 7 will be the best Windows ever." But no refunds for the millions who ended up stuck with crap. Costomer-focused? Nope - you're just peons to be lied to and raped and your wallets and purses pillaged.
Show me this dream world where whole industries are trying to please their customers. It's still the exception, rather than the rule.
One wonders to what extent the dominant business model of frantic and very often highly deceptive advertising effectively locks out the theoretical competitor willing to deal fairly with customers. If over here a service offers a very nice handset for a hundred dollars or for nothing after a sneaky rebate that may or may not be paid, "unlimited access" (to the Internet) with many lawyerly caveats that make it way less than unlimited, plus some seemingly large number of talk minutes per month that somehow ends up being rather less and which quietly saddles the heavy user with many extra fees, etc., then how exactly does the theoretical ethical service over there attract (the better class of) customers in all the noise and hand-waving?
Telling potential customers that they will get less and pay more than with advertised plans from competitors, even if they actually get more and pay less, is a hard sell. When everyone else is lying, how do you prove you are not just another sleazy liar? Are there even enough potential customers of the ethical service provider in any given coverage area willing to take their eyes off the shiny new handset long enough to squint suspiciously and intelligently at the fine print?
There must be a few smaller service providers that aren't crooked, scattered throughout the country. I wonder how well they are doing financially.
A truly excellent pizza parlor is a delight unto the heavens. Treasure the sauce and the toppings!
They'd rather struggle, apparently. Why offer good/honest service at a good/honest price and keep customers while continuing to attract more, when you can just gouge the ones you have as much as possible? The movie theater industry has the same problem. Good movies or no, more people would go to the movies and buy from the snack stand if they didn't charge $17 for a Snickers and $43 for a popcorn and drink. Lots of people don't like going to the movies simply because the snacks are overpriced. So even if they do go, they don't go to the snack bar. If all these theater owners would wise up and charge reasonable prices for the goods in the snack bar, more people would utilize the service, and more people would go to the movies, and they'd make more money overall, despite making less on one sale. The cell industry is no different. Despite the fact that SMS text messages cost nothing to send, they're quite content to gouge customers for a service that costs them nothing to provide. They gouge for internet data usage. They gouge for MMS. They gouge for airtime. They're electing to remain oblivious to what customers actually say about them, because they claim they're struggling to make it as is. They claim they offer a fair service at a fair price, despite all the facts that prove otherwise. $5 from 1000 people will always be better than $10 from 100 people, but they'll never clue in that growing that 100 people into 1000 people is indeed just as simple as lowering their prices to something sane.
This is entirely why Android was developed and is so fundamentally important to the future of our communications. Today, without Android, what we're seeing is the case for network neutrality in the form of ringtone racketeering. Carriers are locking down your cell phone and forcing you to buy music from them. With every passing day we're using our computers less and our cell phones more. The difference between the two is that your carrier has total control over your cell phone while your ISP has no control over your computer. Suppose five years down the road you're still buying phones subsidized by a contract with software loaded onto them by Verizon. These phones end up replacing your desktop because they are now just as powerful. Now every time you want to listen to music, you are forced to suffer through a store worse than iTunes.. and let's even say Verizon forces you to use Bing instead of Google. This is bad for you as a consumer, and this is bad for Google as a content provider.
Enter Android, where the operating system is open and available at no cost for any number of phones and presumably on any number of carriers. Now we see a future where everyone can run the same software on their phone regardless of carrier. Any time one carrier decides to lock down their phone people will quit buying it. It's not viable. Since we're talking about wireless data, it's easy enough to simply switch to another carrier. Now we've forced the telco's into companies that treat you fairly and compete for your business because they will become insolvent if they don't. We end up with network neutrality and control over our own hardware, and we did it organically without the use of government.
Android is not the be-all, end-all phone operating system. However, if successful it will force all other cell phone platforms to provide the same level of freedom through market controls.
That is all well and good, but, wireless customers have gotten "use" to the cell phones being "free" or 20-60 dollars, because of the contracts. I would prefer to pay a higher rate for a phone, and pick & choose the carrier to use it on. The USA is WAY behind the rest of the world in the choice of phones they can use. If carrier locks were removed, and just about anyone could sell a phone, the price on high end phones, as well as the throw away phones would, because of competition, come down. The carriers, for obvious reasons, like the subsidy locks, which "lock" you to a certain carrier until the contract runs out. Also, from a management standpoint, I'm sure the carriers would HATE to try to provide customer service to make sure the thousands of different phone types/styles would be compatible with their networks. Too bad, other countries do it. The USA wireless carriers are just lazy. Look at at&t's 3G network. Not enough bandwith to support the people signing up for the iPhone and other high end phones, to use the 3G network, are reduced to "dial up" speed because of overselling the network.
If the carriers thought that their customers really wanted no contract plans, they would compete for that business. As it stands, it is really not hard to get mobile service without contracts. Even pre-pay plans can be quite economical. Unlocked phones are readily available if you are willing to pay for them up front. Unfortunately most people are willing to sell their freedom for $50 off the cost of a phone, so the carriers keep doing it.
But this isn't capitalism. There is no free market in telecommunications, they are awarded a monopoly on spectrum, and have often been given rights to put up radio towers wherever they want. These companies then take that monopoly advantage and lack of competition to milk consumers for every penny they can.
All the cell carriers have roughly the same price plans for everything, and the costs go up at similar times. There needs to be an investigation into their trust, because I cannot believe that there is not price fixing going on.
Sleep is for the weak.
That acts of Congress actually work?
Reviewing just the first hour of video games.
So? Separate out the phone financing. It should have been separate all along. It can share the bill with the service, but you should be able to drop the service part and either buy out the phone or continue the financing deal.
The way they have it now, they get to play "unregulated bank" (like paypal) at usury rates and even worse: when you finish paying off the phone, you still get to pay the subsidy rate as if you were still paying it off! (and no, I don't think $5--$10 off if I sign another 24 month contract is sufficient. I shouldn't have to sign a contract to get the rate I should be getting anyway)
There is definitely a market failure going on here, and while I oppose regulation on principle, something does need to be done to bring back competition or fix the issue. If competition is impossible in this market then regulation is in fact warranted. And the regulation should be onerous enough that the companies prefer the market solution over the regulatory one.
Can you be Even More Awesome?!
At one time, the stock market was a place where people could invest in companies that they believed were well run, stable, and had products and services that people wanted. Stock was a mid to long term investment.
Now it's treated as little more than casino gambling. It hardly matters if a company actually has a product or not anymore as long as it looks like the stock will go up. Long term stability isn't even a consideration. An "investor"'s wet dream is to buy a big chunk of stock in a company that then burns 100% of it's accumulated good will, cash reserves, and future to raise stock prices. As long as they can sell just before the dead carcass hits the ground.
That's why CEOs like Chainsaw Al Dunlap were Wall Street darlings right up to the point the street realized that Al and company would hide the signs to jump off so they could get THEIR stock sold off at the top.
That's why the internet bubble happened. It's not that astute investors actually believed that mail order pet food was the wave of the future, it's that they believed enough people would buy stock in it (people who believed the same thing they did) that the stock would skyrocket (as it did). Each resolved to sell it off near it's height (mostly to smaller more naive investors) before it dawned on everyone that people buy pet food at the grocery store. Meanwhile, smarter but less flashy small companies with real prospects for the long term couldn't get the time of day from investors. Arguably the few successes from the dot-bomb were companies that had what would traditionally be considered a good investment and were able to wrap it in flashy pie in the sky crapola long enough to get investors.
The more stodgy telecoms are popular investments mainly because they have plenty of momentum to burn in exchange for unsustainably inflated profits. On the corporate side, their big play is to be too ubiquitous for consumers to avoid. You can run to an upstart, but they in turn depend on the old telecoms who will either crush them or beat them down and then buy them up.
Sorry, for answering all your questions and killing all the buildup at once. ;)
Any sufficiently advanced intelligence is indistinguishable from stupidity.
Yes, you can get prepaid here. Phones are $20 to $100, minutes are between $.08-15. Network protocol varies by carrier, there's a mix. Not all carriers serve all areas equally, so you have to chose by where you will be using it the most. SMS I don't use so haven't paid attention to the costs, I think from what I hear though they are mostly a ripoff price, like ten cents apiece or something nasty like that with prepaid.
Actually, the carriers could just buy the Congressmen to avoid this sort of thing. If Verizon is making $850 million a year off people waiting through 15-second voice mail system prompts, as Pogue claims, surely that will buy off enough Reps/Senators to let them keep doing it indefinitely.
Be who you are...and be it in style!
I knew squat about how badly my AT&T cell phone was locked down. Until the day when I installed Google maps and got annoyed that it 1) did not use the built-in GPS on the phone, and 2) continually asked me if it could access the internet. How crippled is that? I looked up how to fix these problem (hooray internet!) and I found some kind person's instructions on how to debrand my W760 phone. I realized that this would also fix several other problems with the phone, such at the limit that ring tones be less than 30 seconds long.
The bottom line is that I had *no clue* that my phone was so crippled by AT&T! My ignorance was stunning. I had avoided buying an iPod because I thought Apple was "insanely controlling," but now realize that AT&T is just as bad.
Here are some of the things that AT&T did:
I'm sure there are other evil things. I'm *much* happier with my phone now, and it will become a much bigger part of my life now that I have "debranded" it. I am still a customer, but I now have no loyalty to a company that would pull that crap on me.
(I am not affiliated in any way with this site which seems to have lots of good information on cell/mobile phone debranding.)
J'aime mieux les méchants que les imbéciles, parce qu'ils se reposent. -- Alexandre Dumas