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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.
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.
(sarcasm)
There is NOTHING wrong with the strategy! It will make us BILLIONS! You stinking customers just aren't responding to our offerings IN THE CORRECT WAY!
Simply because we provide a bandwidth hungry digital communication platform, that basically embodies excess, wealth, and high standards of living-- then turn around and shamelessly state that you CAN watch streaming video over our BLAZING FAST network, does NOT IN ANY WAY imply that we actually WANT you little wage slaves to actually USE the devices in that fashion!
Is it so hard for you to consume THE WAY WE WANT you to!? Really, we have a lot of money on the line here! Dont you care about the economy!?
(/sarcasm)
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.
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.)
Why not a tower (microcell) in EVERY home, provided by the carrier... along with fiber to the home.
And we could call it "WiFi"! That sounds catchy.