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Iphone Upgrades Verizon Apple

Carriers Blame the iPhone For Data Caps and Increased Upgrade Fees 272

Posted by samzenpus
from the not-our-fault dept.
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."
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Carriers Blame the iPhone For Data Caps and Increased Upgrade Fees

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  • by Anonymous Coward on Monday August 06, 2012 @01:25PM (#40896567)

    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.

  • Who'd a thunk it? (Score:5, Insightful)

    by 93 Escort Wagon (326346) on Monday August 06, 2012 @01:32PM (#40896645)

    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.

  • by wierd_w (1375923) on Monday August 06, 2012 @01:35PM (#40896675)

    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.

  • by halltk1983 (855209) <halltk1983@yahoo.com> on Monday August 06, 2012 @01:35PM (#40896679) Homepage Journal
    Maybe they could work on deploying some more towers in high usage areas with that 49% profit?
  • by Kozar_The_Malignant (738483) on Monday August 06, 2012 @01:39PM (#40896717)

    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.

  • by Anonymous Coward on Monday August 06, 2012 @01:40PM (#40896727)

    Which part is obscene? That they make a 38% profit margin or that it's not enough for them? To me it's a toss-up.

  • by Chas (5144) on Monday August 06, 2012 @01:40PM (#40896735) Homepage Journal

    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...

  • by wierd_w (1375923) on Monday August 06, 2012 @01:41PM (#40896739)

    (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)

  • by wbr1 (2538558) on Monday August 06, 2012 @01:41PM (#40896741)
    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.
  • by GeXX (449863) on Monday August 06, 2012 @01:45PM (#40896803)

    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.

  • by ganjadude (952775) on Monday August 06, 2012 @01:48PM (#40896847) Homepage
    I do not believe that to be entirely true

    the 4g band cant have restrictions thanks to google, so while I can see them charging in 3g in 4g it should not be an issue from my understanding
  • Proof! (Score:5, Insightful)

    by Archangel Michael (180766) on Monday August 06, 2012 @01:51PM (#40896877) Journal

    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

  • by JWW (79176) on Monday August 06, 2012 @01:52PM (#40896887)

    Yeah, I still watch all the "get blazingly fast 4G" adds thinking that they should be forced to include disclosures like are required on drug adds.

    "using AT&T's 4G service at full speed for 30 minutes will surpass the subscriber's bandwidth cap."

    "Watching a movie over 4G is not recommended as none of our data plans cover that amount of data."

  • Commericals (Score:5, Insightful)

    by slapout (93640) on Monday August 06, 2012 @02:06PM (#40897057)

    So they have tv commercials advertising all the things you can do with the data and then they complain when you do.

  • Fawlty Towers (Score:5, Insightful)

    by scorp1us (235526) on Monday August 06, 2012 @02:06PM (#40897063) Journal

    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.

  • by wierd_w (1375923) on Monday August 06, 2012 @02:07PM (#40897075)

    Dear Phone Company,

    I understand that I am a vocal minority, and that most share holders are completely driven by liquid asset flow.

    However, the construction of the towers in other people's neighborhoods is directly in line with my own interests in having a telephone company, and am able to see this as an investor.

    Land that is serviceable for the installation of such infrastructure, especially in dense urban areas, is very scarce, and suffers a high price at market to develop. As such, the more you wait on installation, the more likely you are that a competitor will acquire the property, install the tower, and then remove that potential growth from this company's reach. As an investor, I want my investments to grow. That means spending some of the liquidity I expect to receive in my dividend cheque on growing the enterprise.

    Please dont try to pump and dump investors by offering fat dividend cheques, and neglecting your infrastructure, only to then offer poor service, lose customers, and devalue the investments of my fellow investors.

    As an informed investor, I prefer stable and reliable growth that factors in the costs of properly growing and maintaining the enterprise I have invested in. In short, Directors of the Phone Company, I am interested in the long term profitablility of the enterprise, and not the short term stock price. This is why I am drawing dividend cheques, and not day trading. Day traders are obcessed with fluid stock prices to game the stock trade system. I am a long term investor. I want stable investments in my 401k and other portfolios.

    Please stop trying to claim that you are doing these things in my best interests, when it is blatantly obvious that these activities result in a poor quality of service from your enterprise, and drive away customers. This is clearly NOT in my interest as an investor.

    Please build the damn towers, and do it before RivalCorp buys all the suitable properties.

    Thank you.

  • by zarmanto (884704) on Monday August 06, 2012 @02:11PM (#40897133) Journal

    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.)

  • by Anonymous Coward on Monday August 06, 2012 @02:11PM (#40897137)

    Don't tell me about the pain, just show me the baby.

    If I'm late on my bill, does the phone company care why? Having been broke before I assure you they do not. I reciprocate by not caring at all why it is so hard for them to conduct their business, I care only for the benefits that accrue to me.

  • by wierd_w (1375923) on Monday August 06, 2012 @02:19PM (#40897259)

    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.

  • by Anonymous Coward on Monday August 06, 2012 @02:26PM (#40897373)

    Which is why I will never upgrade and lose my unlimited data [...]

    Hey, cool, good idea! Because you're an informed consumer who understands the issue of unlimited data and how it helps the-

    [...] and will try my hardest to go over the 2GB "recommended" usage every month.

    Oh. Because you're a spiteful asshole, bitter to the point of doing something, anything, just to brag about it on the internet and improve your hipster rating even if it doesn't do a single thing to help the situation. Gotcha. Glad that got that cleared up.

  • by SuperKendall (25149) on Monday August 06, 2012 @02:31PM (#40897431)

    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).

  • by Xeranar (2029624) on Monday August 06, 2012 @02:38PM (#40897533)

    Dear capitalism,

    You've failed. Utilities should be publicly owned.

    Signed,
    The world at large.

  • Re:Hmm...Huh...? (Score:4, Insightful)

    by girlintraining (1395911) on Monday August 06, 2012 @02:48PM (#40897653)

    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.

  • by Spy Handler (822350) on Monday August 06, 2012 @03:29PM (#40898161) Homepage Journal

    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 [nytimes.com]

    "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."

  • by Abreu (173023) on Monday August 06, 2012 @03:50PM (#40898357)

    Yeah, but how would they buy another gold plated hummer, or a diamond studded swimming pool... those things don't grow on trees, you know?

  • by MrDoh! (71235) on Monday August 06, 2012 @04:41PM (#40898903) Homepage Journal
    Strongly suspect this is Google's endgame in their Fiber run. Once you've got 100Gbp, and all your neighbours too, why not allow the wifi module (also provided by Google) to share it out to nearby devices. Hangouts, Google voice, you could have an effective metropolitan wifi with ludicrous speeds.

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