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Carriers Blame the iPhone For Data Caps and Increased Upgrade Fees
zacharye writes "Bruised mobile carriers such as AT&T and Verizon are 'fighting back' against Apple's iPhone, despite the fact that the device has helped them eke out consistently higher average revenue per wireless subscribers since its launch. To hear the carriers tell it, the iPhone is a major inhibitor to their profits as last year they were 'only' generating wireless service profit margins in the 38% to 42% range. But ever since these beleaguered companies started 'fighting back' by implementing data caps, increasing fees for device upgrades and implementing longer waiting periods before users can switch devices, they’ve seen their wireless service profit margins surge. AT&T reported a 45% margin in Q2 2012 and Verizon reported a record-high 49% margin."
Anyone who spent 10 mintues with the iPad, and iPhone would realize they are enormous bandwidth hogs. You don't have to be a telcomm. engineer to see that video chat, and Netflix are killer apps. in terms of backhaul, spectrum and popularity.
They didn't plan properly, didn't spend appropriately and now they are punishing and blaming their users for using these devices exactly as they were designed.
In other news, in other parts of the world, some carriers just do manage their infrastructure correctly and the prices are actually going down instead of going up.
So please, stop blaming the customers and start rethinking your now-stinking strategy.
Write boring code, not shiny code!
With the iPhone and Android devices, people find them useful enough to - gasp! - actually USE mobile data allotments!
I can see why AT&T and the other carriers were caught off guard there.
#DeleteChrome
That's just obscene!
American CEOs live by the Golden Parachute philosophy:
Attain a high level position on the board, if not the CEO chair itself.
Enact short sighted, but highly lucrative policies for the short term.
Rack up a HUGE "profit".
BAIL! BAIL! BAIL!
Eject from the burning enterprise as it crashes into insolvency, and deploy the golden parachute.
Majestically float into the next board meeting at the next fortune 500 corporation.
The carriers went to great pains to advertise all of the bandwidth-hogging things you can do with their phones, such as video chat, streaming movies etc. Now that their ad campaigns have proven successful and people are actually doing all those things, the carriers find that they cannot hold up their end of the bargain. Their solution to this problem is to blame their customers for using what they were sold.
They need to put some of those profits into improving their infrastructure so they can deliver what they sold. An awful lot of businesses would be very happy with profit margins half of what these guys are getting.
Some mornings it's hardly worth chewing through the restraints to get out of bed.
These ass clowns could have money shooting from every available orifice, on-demand and in any denomination they desire (Including Berkshire-Hathaway Class A stock), and STILL they'd complain that their revenues were impacted.
Basically they're using the following formula:
100% profit is:
* Not actually having a service to keep running/support/etc.
* Having no employees.
* Having people give them money for nothing.
Anything beyond that is some horrific imposition on them that fatally impacts their fiscal stability...
Chas - The one, the only.
THANK GOD!!!
I run two small businesses, both in tech, not telecom, and I would shit myself with happiness if I made a 40 to 50 percent margin. I am content, competing, and making do with half that or less.
Next you'll be crying because you eat steak every day. GTFO and STFU.
Silence is a state of mime.
That only happens in the movies.
Sleep your way to a whiter smile...date a dentist!
Buy congresscritters to ensure your market position. There's no way profit margins would remain anywhere at this level, for this popular of a service, if the artificial barriers to entry for competition weren't continually legislated so high over here. Investors would be jumping over themselves to establish a smaller margin business model and undercut the incumbents.
c'mon, I dare ya.
if this is supposed to be a new economy, how come they still want my old fashioned money?
If this is actually true, and carriers are not just being greedy then charge apple users more, don't sell a phone at $199, sell it at $399. That way apple makes their money and the carrier doesn't take the hit. Please stop asking android users to do not want a iphone to subsidize apple purchases. If they don't sell as well at $399 then apple can always come down on their price, but that is their hit, not the carriers, or the users. Done. That's call capitalism.
If Samsung can make a phone and sell it to a carrier at $300 bucks, and apple charges $600 for their phone, then charge the user the difference. Don't raise upgrade fees or data plans, since your markup is the same. Now if apple is trying to strong arm you into charging their user charging the same, while they still reap their profits, then tell them to go pound sand, and if apple lost lets say Verizon & at&t as carriers, then that will hurt them, and they will drop the price. Stop letting apple be a bully.
This is proof that there is no competition in Wireless. They are in Collusion.
AND to get me off my Grandfather Plan, they are going to have to offer something better than "higher prices and lower service". The problem is, I can't shop, as they all have about the same pricing now and it seems that nobody wants my business.
Oh, VZ just offered me $50 "loyalty" on upgrading. Um, hey VZ nice try. Here is a nice warm FUCK YOU
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
* Having people give them money for nothing.
They already have this one, its called 'text messaging'
Um, the barriers to entry for a wireless carrier are hardly artificial. They're limited by spectrum, a shared and extremely limited resource that they're granted a monopoly over by the government. That's why you can't just start up your own competing cell company, the spectrum is already allocated to the incumbents. That's why most countries regulate their cell providers, because the monopoly situation makes it impossible for proper competition to form. That's also why countries with lax regulation end up with sky high cell phone prices and poor service.
I read the internet for the articles.
But ever since these beleaguered companies started 'fighting back' by implementing data caps, increasing fees for device upgrades and implementing longer waiting periods before users can switch devices, theyâ(TM)ve seen their wireless service profit margins surge
When AT&T started arbitrarily throttling unlimited data users I immediately dropped the 2 gig data plan I had for my iPad. When they decided to enact the 3 gigabyte throttling standard for unlimited users, but would not state the minimum speed these users will get, I decided I will not renew my contract on the unlimited data plan I have with my phone. Unfortunately I still have an expensive ETF, so I will wait until the contract is up.
I'm curious if this profit margin will still be this high in the next two years when people's contracts run out. I'm willing to bet that in the next five years AT&T and Verizon will be running Sprint'esque ads with the CEO saying "we want you back! *sniffle*". (It is an amazing coincidence that Sprint is the one still offering properly unlimited data right now...)
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
So they have tv commercials advertising all the things you can do with the data and then they complain when you do.
Coder's Stone: The programming language quick ref for iPad
The company would be so much better if there weren't so many users!
As a AT&T customer I'm accustomed to being at any event - from stadium games and music festivals, having 4 bars and not being able to use the network. I guess I can understand because you never know where a stadium will pop up and when people might go there.
I remember Virgin Fest added capacity for Virgin Mobile, but everyone else was SOL.
Slashdot's rate-of-post filter: Preventing you from posting too many great ideas at once.
Having complained bitterly about cellular prices for years myself, it actually pains me greatly to say this... but here's the thing: AT&T and Verizon are just applying standard economic principles; continue to raise prices until you can make the profit you want while expending the least amount of resources (money, time, effort, etc.). The side effect of this is obviously that many people who want lower prices will go to the less "greedy" carriers, like Sprint or T-Mobile, (which I will most likely be doing myself, not too long after the next iPhone becomes available) but the profit loss from those customers departing the greedy carriers offset by the profit increase from the remaining customers... and the greedy carriers' network performance improves in the process. Then, if their net numbers fall too much, they still have the option to dial the crazy back down a bit. (Not that I think they will necessarily... but they could. In theory.)
It may be increasingly annoying to us consumers to have to deal with the ever-changing business models of these greedy-no-good-predatory-profiteering-duopolistic-carriers... but the unfortunate reality is: it really is "just business," and not greed, per se.
(And yes... I almost pressed delete on this whole blasted message when I started to think about how much some Slashdotters are going to hate this point-of-view... but the heck with my Karma. Sometimes, ya just gotta say it like it is.)
The solution to a limited spectrum allotment is to reduce broadcast power but increase the number of servicing towers.
Analogy:
Humans have small vocal chords. They can talk, and even yell to a large auditorium. They can effectively share the small hearing spectrum with 8 billion other humans globally, without resorting to licenses. They can do this, because their voices do not carry more than a dozen meters in normal practice. As such, two people talking, as long as there is sufficient isolation, does not pose a significant barrier to the communication.
Compare to Cellular Telephone:
A few important people with a megaphone YELL through the thing, and blanket an entire city. People have a hard time communicating because of the loud signal. The signal is loud to overcome the "noise" of all the private discussions. The government regulates the use of the spectrum, and says that only megaphone using humans, and humans with the appropriate communication licenses can now talk.
Better solution: Deploy smaller cells, but with greater density. The smaller cells can handle more direct data traffic, because they have wired infrastructure behind them. They service maybe 300 people tops, and cover about a quarter mile at the extreme. People using this service can expect more of the bandwidth available, because fewer people are jammed into it. Deploy these smaller cells with greater regularity. Health issues are considerably reduced due to the lower broadcast power. The cells do not interfere with each other because the signal falls into background just as the next tower's reception zone occurs. THIS IS THE WAY CELLULAR WAS DESIGNED TO WORK.
Stop telling me about "Oh, we dont have enough band!" Yes you do, you just arent using your band efficiently, because efficient use would require a greater infrastructure cost to implement.
Instead, you want "A small number of REAAAAAALY strong towers, that we jam *ALL* the customers onto, so we have fewer service points to take care of, have to buy less property, and can make more money!"
*THAT* is the problem.
The current political and business climate would never allow for this, but would it ever make sense to run the infrastructure side of wireless as a highly regulated public utility, in the manner of electric utilities (ie, basically give them a fixed, 15% pricing margin, regulated by a board with public meetings and documentation).
But have these entities only sell wireless "service" to the actual resellers, which would act as the carriers generally do now in terms of selling wireless services to users.
The infrastructure side would simply be a fixed-profit business, with maintenance, network costs, tower expansion, etc all built into the business model up front, along with regulatory requirements that would require that wireless and backhaul capacity be mandated to maintain X% overhead. Actual technologies could then be regulated as well, so that all towers used the same wireless technology so that any phone from any "wireless reseller" would work, with no network lockout.
The wireless retail sellers would then be competing on actual customer service and business efficiency, since wireless data volumes/minutes would be sold at a regulated price at the wholesale level and there would be no technology lock-in (eg, CDMA vs. GSM vs. HSPA+ vs. LTE, etc).
You would still have innovation in the industry in terms of handset hardware and the resellers would not have any way to manipulate pricing (ie, starve capital investment for short-term profit, then jack up prices to complain about infrastructure overuse). Back-end network innovation is limited anyway, since I don't think carriers actually develop wireless technologies in-house, and the debate over those kinds of upgrades would be done in public before the utility commissions versus the bogus marketingspeak of carriers ("Now!!! We had 3G, now we're offering the new 4H, and soon the 5K speeds!!!!111).
Except that you have just defined an artificial barrier. The Monopolies on wireless spectrum are hardly needed. There is more than enough bandwidth within (for example) the 1.3ghz spectrum to allow for multiple channels over which wireless companies could operate. There is no need to lock out entire bands for a company that uses a fraction of that bandwidth.
Far better to use a single band for ALL cell communication and an encryption key standard that allows towers to communicate with any handset that performs the correct handshake. Combined with FHSS technology dropped calls would be a thing of the past, and we would free up massive piles of spectrum for public use.
(Also, if the 1.3 ghz band is not wide enough, there is plenty of room in the 2.7 and 3.7 ghz bands)
There is just no reason anymore to block out massive hunks of bandwidth. There should be ONE pool of bandwidth that can be used by ANYONE who wants to start a cell company. Make it rather wide if you must, but just one band. Just have a solid and extensible standard to follow and referee companies that use it so there are no abusers.
Official Heretic from the "Church of Global Warming". Proven right thanks to whistle blowers. AGW = Flat Earth Theory
How small? One tower for every two homes in order to raise the cap from 3GB to 100GB/month?
Why not a tower (microcell) in EVERY home, provided by the carrier... along with fiber to the home. That would go a huge distance to alleviating the vast bulk of over the air network traffic and greatly reduce the need for new towers (new tower funds are where you would get the funds for giving microcells to every customer from).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I'd have never thought corporate greed for profit could actually do a good thing in the long run. Darn it, I sound like a capitalism-apologist right there.
Capitalism isn't the problem; In a competitive market with many agents, there's market pressure to innovate; lower prices, more features, better reliability, etc. When you get a market like ours with only about 3 major players, that pressure goes away, and this is the result. The problem, is monopoly. And the solution is government-mandated breakup. But time and time again, it's been proven that the government here screws up telecommunications; they create the monopoly, then they break it up, then it reforms and becomes stronger. The problem is the government's laws, which create the conditions not only to create a monopoly, but also sustain and reinforce it. It's the same with all our utilities; Our electric grid is ailing... Electric plants aren't being built, and you can only buy from one provider in any given area. Hey look, costs are rising there. Sewers, water service, every last thing that creates a government monopoly goes to shit.
The message here is that infrastructure services simply can't be owned by private business. Capitalism is not a perfect solution to all economic situations.
#fuckbeta #iamslashdot #dicemustdie
And the interesting part... This process Is like a scam scheme, but the investors from the target companies still trust in this golden parachutes CEOs, even knowing what he did with the previous victim.
I like to refer to that as the "Have to Pay to Get Good People" fallacy.
Einstein was a brilliant physicist because it was his passion, not because he made billions doing it (which he didn't, further supporting my supposition).
An enigma, wrapped in a riddle, shrouded in bacon and cheese
That's why most countries regulate their cell providers, because the monopoly situation makes it impossible for proper competition to form.
We have an oligopoly because the FCC has been allowing T-Mobile/AT&T/Verizon to keep buying up all the competitors.
The same thing is happening with telephone and oil companies.
Many of the monopolies that were broken up in the early 1900s are slowly being reconstituted through mergers and aquisitions.
[Fuck Beta]
o0t!
Wait, what? Government legally mandates services and prices, granting monopolies to companies within those terms, and you think that's a failure of capitalism?
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
Its because the FCC head, Julius Genachowski, is a tool and being manipulated by these companies. Julius told attendees at the National Cable and Telecommunications Association trade show that he thinks data caps are "a business model innovation" and that pricing based on usage "could be healthy and beneficial" to consumers.
That said, lets see
Price of base plan on Verizon is up, but now includes texting, which was always overpriced and is being replaced by data services that do the same thing.
Price of tethering is down, but is now per device and was WAY too high to begin with ($50 I recall - in Europe on the phone I used it was free)
Price of data plans is in every way more expensive - I paid $60 for unlimited on two phones before, it is now $60 for 2GB shared between the two phones if I switch now
So this benefits me how? I can now get texting (which I didn't use) for "free" (at a higher voice cost), but my data rate (which I did use) is now exponentially more expensive? Tethering is now per device and always should have been free (especially with metered bandwidth)? As if these leeches didn't suck you dry with that, they now make you pay full price for phone upgrades to keep your existing plan, but still charge the subsidized price for service (in fact, only T-Mobile does not).
Oh, and AT&T is $40 for a GB of data as of Aug 23 - not sure if you can buy smaller amounts, but that is basically $10/250MB.
I have no problem with bandwidth caps or metered base usage either, but this absolutely stinks of monopoly power abuse, especially when you can get unlimited, untethered Clear wimax connections using the SAME 4G LTE TECHNOLOGY for $35-50/month (depending on speed) if it's available? They HAVE to offer unlimited, because they are competing against DSL and Cable, not phone (incidentally, they are owned mostly by Sprint Nextel and cable companies).
Back in the day, our elite (and often inherited) ruling class had a sense of responsibility and duty to the public.
Today, the guys at the top do not consider themselves elite or a privileged ruling class. They're just out to make as much money for themselves as possible and get out while the getting is good. The key word is "stewardship". The old guys had it, new guys don't.
Excellent article on NY Times, no less (I would not have expected them to print something like this) :
http://www.nytimes.com/2012/07/13/opinion/brooks-why-our-elites-stink.html
"Wall Street firms, for example, now hire on the basis of youth and brains, not experience and character. Most of their problems can be traced to this."
Fiduciary duty is the duty to act in someone else's (in this case, the shareholders') best interest. The thing is, the law does not define what "best interest" is -- and that "best interest" does not have to be what the person on whose behalf you're acting wants. (Note that a lot of the legal theory under "fiduciary duty" comes from trusts, receivership, etc. -- places where the someone else's money is being placed into the actor's hands because that someone else is not considered competent to manage it themselves.)
It's quite easy to argue that growing the infrastructure *is* in the shareholders' best interests, since it will help to maintain and grow the business in the long term. Further, I'm willing to bet that one could easily persuade a judge that running the company into the ground in order to give the shareholders the maximum short-term profits is, in fact, the exact opposite of "fiduciary duty", even if it's what the shareholders want. It's just like, say, giving the twenty-one-year-old beneficiary of a trust all the money in the trust at once -- it might be what the beneficiary wants, but it's not necessarily what's in his/her best interest.
(Actually, the biggest traditional thing about "fiduciary duty" is that the thing being managed should be managed for the benefit of the "someone else", rather than for the benefit of the manager. Given the way CEOs, board members, etc. are compensating themselves these days, I'd say that's a much bigger violation of "fiduciary duty" than managing the business with long-term goals in mind could ever be.)
Wait, what? Government legally mandates services and prices, granting monopolies to companies within those terms, and you think that's a failure of capitalism?
Yes. The government either needs to take it over, or lower the cost of entry so more economic agents can participate in it. But that would require an overhaul of current FCC regulations, new bandwidth allocation, and taking away the authority to lay new lines, etc., from municipalities and concentrating it at the state and federal level, to simplify the approvals process. It would also require invalidating exclusive contracts that municipalities, counties, and even states sign for service. This half-assed regulation is a hatchet-job that combines the worst elements of capitalism and socialism.
#fuckbeta #iamslashdot #dicemustdie
And we could call it "WiFi"! That sounds catchy.
Ha Ha.
Can the WiFi handle calls from GSM handsets as-is? No.
Does your WiFi router improve your cell phone reception? No.
The whole point again is to eliminate ALL load off the towers when someone is at home, so you need far fewer towers and everyone gets better service to boot.
Yes, exactly this. T-mobile bills it as "wifi calling", and is somewhat commonly known as "UMA". Other providers might have different names. The number of phones that support it is growing, though in the US the number of carriers who support it is not.