Carriers Blame the iPhone For Data Caps and Increased Upgrade Fees 272
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."
Victims of their own greed (Score:5, Insightful)
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.
Re:Victims of their own greed (Score:5, Interesting)
Which is why I will never upgrade and lose my unlimited data, and will try my hardest to go over the 2GB "recommended" usage every month. And since I'm on Verizon and they now need to remove the $20 per month tethering charge I will be tethering everything. For everyone saying I'm only hurting the other users, Verizon needs to upgrade their systems instead of claiming 50% profits, invest that in your damn infrastructure.
Re:Victims of their own greed (Score:5, Informative)
And since I'm on Verizon and they now need to remove the $20 per month tethering charge I will be tethering everything.
Removing the tethering charge does not apply to people on unlimited data plans. [zdnet.com] It's either/or. Either you get on one of their bandwidth-cap plans and have free tethering, or you continue to pay the fee for tethering. I'm not passing judgment on whether that's fair or not, just pointing it out.
Re:Victims of their own greed (Score:4, Insightful)
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
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"but is under no obligation to provide them for free "
http://bits.blogs.nytimes.com/2012/07/31/fcc-verizon-tethering/ [nytimes.com] ..."won't have to pay monthly fees"
Thanks to a government investigation, a large number of Verizon Wireless customers will be able to download apps that share a smartphone’s Internet connection with other devices, a feature known as tethering. And they won’t have to pay monthly fees to the carrier for the privilege.
"They also were compliant by allowing customers who did have thir
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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
Actually its only if the 700mhz band is used that the restrictions against tethering kickin. Other 4g bands are not thusly restricted.
It just so happens Verizon decided to use this 700mhz spectrum for its LTE support, then tried to get the restriction removed in court.
They lost, and therefore can't limit any device or any app from being used on their LTE network (with a paid data plan) as long as it does not
harm the network. Specifically exempted in the FCC ruling were unlimited data plans. You have to b
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I disagree.
I have a 4g phone and I still have my unlimited plan.
It wasn't until approximately June (I believe) of this year that Verizon was requiring those that were upgrading to a 4g phone and still had their unlimited plans to switch to a new capped data plan. At the time they were also offering the double your data promo of 4GB of data for new 4G lines or upgrades from a non smart phone. So as a result I got to keep my Unlimited data on a shiney new HTC Rezound which finally got its ICS update, while my
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That depends. Verizon was recently fined for not adhering to open access provisions of their spectrum purchase. If he has a 4G LTE device ("C-Spectrum"), Verizon might be forced to allow free tethering regardless of his plan. The article to which you link reports Verizon "interpretation", which seems like they are still trying to dig their heels in, or continue to half-ass in their obligations with regard to the spectrum purchase. Whether that would survive if the FCC reviews Verizon's compliance again
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You do not think large enough (Score:3, Insightful)
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).
Re:You do not think large enough (Score:5, Funny)
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.
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C'mon, dude. These are people that swore that ATM would be the backbone of the future just a decade or so ago.
SPEND MONEY ON INFRASTRUCTURE? AGAIN? What is Wall Street Going To DO To OUR STOCK PRICE!!!!!!???!!! WAAHHHHHHH!
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It is TRULY a sign of a sick market that they expect to charge you for the cellular bandwidth on the microcell you pay for even though it uses YOUR broadband connection that you already pay for.
OB car analogy, I have the only rent-a-car in the state, but it is in the middle of Podunk so you often can't get to it when you need a car, so I generously offer that if YOU buy a car and keep it in YOUR garage, I'll rent it to you at the standard rates when you need it. To make sure you don't get any funny ideas ab
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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 [wikipedia.org]. 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.
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They could put half those margins into infrastructure and still make huge amounts of money without raising prices.
Do you know what that would do to their stock price? If they dropped their margins in half, Wall Street would slaughter them, and their stock would plummet. Investors don't care about the providers upgrading their infrastructure. They care about profits.
Re:You do not think large enough (Score:4, Insightful)
Re:You do not think large enough (Score:4, Funny)
Heck, why not go one further and instead of making it a cell, just have the phone hardwired to it. It can even be powered by it. Then those crappy batteries won't keep dying on us. Plus since it is tied to the house, there is no need for everyone in the whole house to have one. I'm telling you, it's the wave of the future!
Re:Victims of their own greed (Score:5, Interesting)
the issue is without a visible spectrum map showing problem areas and times this argument over caps is a blatant money grab. They're playing on people's moral superiority complex and greed to protect their scam from being found out. Very few areas actually have real congestion, it's like rush hour traffic. But in this case building more lanes (I.e. more towers) is not cost prohibitive. Especially in urban areas where tall buildings can erect small towers this is a non-issue.
Re:Victims of their own greed (Score:5, Insightful)
Re:Victims of their own greed (Score:5, Interesting)
I'm all for hating on the telcos, but sometimes "just build more towers" is much, much easier said than done. For instance, it takes three years [techcrunch.com] to get one built in San Francisco. Granted, not every place is as downright insane as San Francisco is, but it's worth mentioning.
Re:Victims of their own greed (Score:5, Insightful)
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.
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Anecdotal evidence is anecdotal?
Know why that's news? Because it's not normal. Regardless the nationwide pricing scheme is a failure as well if we're going to argue cellular placement on the regional level.
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but sometimes "just build more towers" is much, much easier said than done.
Kinda makes you wonder why, from the big 4, only T-Mobile (at least in the US) has embraced WiFi Calling via UMA. After all, the costs to the telcos is MUCH cheaper than new towers.
Oh....wait. I think I understand: There's no profit in it [t-mobile.com].
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I'm all for hating on the telcos, but sometimes "just build more towers" is much, much easier said than done. For instance, it takes three years [techcrunch.com] to get one built in San Francisco. Granted, not every place is as downright insane as San Francisco is, but it's worth mentioning.
Then they had better get started today -- maybe they could spend less money telling me how fabulous their ultra-fast 4G network is (letting me use an entire month's data cap within 15 minutes), and more money on building out that network so I can actually use it.
I live in a busy urban area and have no 4G coverage at all within a block of my house.
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will more towers work? i was at the beach last month and my iphone was SLOW. i look around and every other person has a smart phone.
that's a lot of devices broadcasting on the same frequencies and made me think. wireless is like the old Layer 1 hubs. even if you factor in slightly different frequencies you phone is still filtering out the ones its not supposed to be listening on. you can add more towers in higher density locations but it won't do much good since everyone will still be broadcasting on the sa
Yes more towers work (Score:2)
For really large events (like South by Southwest), the phone companies often bring in microcells - those REALLY work, simply by moving devices on to more towers.
Phones are not all on the exact same frequency at the same time... there is a range they communicate over.
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But that depends on having a backbone that isn't saturated. Given the not-so-stellar penetration of fiber everywhere (along with DSLAMs and the other expensive bits of wired Internet service) that technique doesn't always work.
Re:Victims of their own greed (Score:5, Informative)
i was at the beach last month and my iphone was SLOW. i look around and every other person has a smart phone.
Hmm... Seems you and the others were using the beach wrong. Not trying to judge, but put down the phone and enjoy the surf, sand and sun.
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They were obviously using their smartphones to take and upload pics of the skimpy bikini's.
Re:Victims of their own greed (Score:5, Insightful)
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.
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It sounds like you need to invest in RivalCorp.
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Impossible, Phone company has struck a back alley deal with RivalCorp that ensures that neither of them will build the towers.
This is good for shareholders of both companies as they will reap the profits of garanteed and unlimited price gouging!
Re:Victims of their own greed (Score:5, Funny)
Dear Stockholder,
Please disregard the last message. We have instead decided to give this years profit as a big bonus to the CEO.
Sincerely,
The Phone Company
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Dear capitalism,
You've failed. Utilities should be publicly owned.
Signed,
The world at large.
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Dear The Phone Company,
(c) upgraded infrastructure which will encourage would-be users to select your service, which includes greater bandwidth and (b) more towers.
Sincerely,
A Shareholder
Seriously - I own shares of VZ, T, and S. I can't complain about the (small) dividend checks, but I'd rather see them put that money into creating a better service.
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Math is hard!
Re:Victims of their own greed (Score:5, Interesting)
Well ya see, it's like this. The carriers had been selling smartphones with data plans for years before the iPhone, and it was a great deal. People spent $20-30 extra every month, but rarely went out the of 10s of megabytes for traffic. Because those phones pretty much sucked for everything other than e-mail, contacts and calendaring. The browsers were terrible, and network aware apps were a rarity or so hard to use that no one did (I remember trying to do ssh on my Treo, it was awful). Then those damned iPhones came out, and shortly thereafter those stupid Android phones. Suddenly networking on phones actually worked. The browsers could deal intelligently with websites, networked apps actually worked, people were using smartphones to actually access the data plans they had paid for. The nerve! They actually used what they bought instead of just paying for it and passively consuming a small part of their purchase.
So you can totally see how it's all the iPhone's fault. Those assholes at Apple and Google made tools that people actually wanted to use. Why couldn't they just follow the status quo and network aware crap that allows the carrier to charge more, but not spend anything?
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Oh, it's worse than that. The iPhone relies on ubiquitous data for many, if not nearly all of its marque applications. Maps, music, app updates, games, video, etc.
It was one of the most striking things about moving from a dumb phone to an iPhone "back in the day". Everything you needed, as much as you needed, as fast as that little pipe to the cloud could carry it. People used it. People liked it. People got used to it. People expected it. Then, as you say, AT&T and Verison realized that their pr
US problem, not the iPhone (Score:5, Informative)
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.
Hmm...Huh...? (Score:2, Funny)
They're discouraging the iPhone?
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.
Re:Hmm...Huh...? (Score:4, Insightful)
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.
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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 r
Re:US problem, not the iPhone (Score:5, Insightful)
(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)
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here they wring their hands in front of Congress begging them to keep their paying customers at bay.
It works. Why bother?
Who'd a thunk it? (Score:5, Insightful)
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.
38% profit margin? (Score:3)
Re:38% profit margin? (Score:4, Insightful)
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.
Re:38% profit margin? (Score:4, Informative)
That's just obscene!
It is almost as much as Apple's profit margin on the iPhone (around 50%)
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Blame The Customers Business Model (Score:5, Insightful)
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.
Re:Blame The Customers Business Model (Score:5, Insightful)
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."
The problem is the carriers. Not the equipment. (Score:5, Insightful)
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...
Re:The problem is the carriers. Not the equipment. (Score:4, Funny)
* Having people give them money for nothing.
They already have this one, its called 'text messaging'
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Cry me a river you fucking babies (Score:5, Insightful)
Next you'll be crying because you eat steak every day. GTFO and STFU.
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Yep, my dad's small business absolutely LOVES his accounts with a gross 40% margin. Like you his average is probably half that.
so one of you guys drop the iPhone and test market (Score:4)
c'mon, I dare ya.
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Charge Apple Users More then (Score:3, Insightful)
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.
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If Samsung can make a phone and sell it to a carrier at $300 bucks, and apple charges $600 for their phone
This might be a little offtopic, but how about offering cheaper plans when I bring my own phone? I can buy an unlocked iPhone and then I'll pay the same monthly amount at Verizon/AT&T. So I get the "subsidized" plan whether I buy the subsidized phone or not.
That must be helpful for the profit margin - the phone is always subsidized by the plan, even if it was cheap or free (for the carrier).
Re:Charge Apple Users More then (Score:5, Informative)
Now perhaps us iPhone users like our phones and actually use them more than android folks, but I don't think that's really the case.
Yet, it appears to be true [cultofmac.com]
What do they call termination fees? (Score:2)
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Except this is clearly bull*hit as the fee to cancel early does NOT go down the closer you are to the end of your 'contract'.
I have no doubt that part of that fee is indeed used for that, but I am absolutely positive that if you are in the last 1/4 of your contract (and hence have paid off all or almost all of your phone), they get almost 100% profit on that money.
The mobile phone companies are evil beyond comprehension. They make Sauron look like a naughty child.
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Termination fees exist to make up for the phone subsidy. If you buy an iPhone from Verizon for $200, you're getting it for several hundred dollars below Verizon's cost. Part of your monthly fee goes to paying off the phone. If you cancel your contract early, the termination fee pays off the balance on your phone.
That is assuming that everyone who signs a new contract purchases a maximally-subsidized phone every time they sign. Some people will sign a new contract and buy a much less expensive phone that is sold near - or even above - retail cost for the carrier. Those people would still be subjected to the same early termination fee as a user who purchased a new iPhone when they signed.
On top of that, they could write off the subsidy anyways. There is no reason why they have to pay it off with a termination fe
Proof! (Score:5, Insightful)
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
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They were a collusion to begin with, but people seem to miss that and call it Verizon and not by the joint venture name of Verizon Wireless. Verizon Wireless is a joint venture between Vodafone (45%) and Verizon (55%) corporations, and its legal name is Cellco Partnership d.b.a. Verizon Wireless (d.b.a=doing business as), but essentially they are two giant telecoms that agreed to work together so they could dominate the bidding wars for best bandwidth and then reap the profits (which IMO is collusion). If y
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to get me off my Grandfather Plan, they are going to have to offer something better
I am sure they will eventually force-upgrade you. The only real cost for them is your lock-in. Once your 2-year contract runs out, there will be little to stop them
I had left AT&T many years ago, after they offered me to "upgrade" me to one of the new crappier plans early as a "courtesy". I was told that within a year upgrade will be forced anyway.
T-Mobile is still the lesser evil, particularly as they do not charge you for running over their bandwidth cap (they do throttle you quite a bit after yo
Translation (Score:2)
Since they can't hide their crappy data service with a handset that makes the consumer not want to use it, they are forced to create artificial barriers to act as a facade for their crappy connectivity.
Sustainable? (Score:3)
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...)
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What'd I do?
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Nevermind the AC, he clearly has some form of Tourette syndrome, and cant stop spewing verbal diarrhea.
We should pity him, and hope that he gets the care he so clearly needs, then move on.
Commericals (Score:5, Insightful)
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)
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.
Larger net on smaller gross (Score:5, Insightful)
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.)
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You are right, but the thing is, nobody can start up a competitor and do it differently. It's true there are plenty of natural barriers to entry that would make doing so difficult, but the main hassles involved would be regulatory. People like you and I should be able to start a company that provides this service in a way people like better. The result would be that these carriers would act differently. They don't have to do that now, because they are artificially protected from competition.
I am all in
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Reminds me a bit of playing VGA planets. You had two strategies when taking over a planet - suck the inhabitants dry as quickly as possible and take what you could (essentially make the place unusable for another player), or keep them just barely happy enough not to riot in order to maximize the resources. Of course, there was the option of keeping everybody super-happy and then using that good will to generate butt-loads of resources for a short period, but that wasn't nearly as useful as the other two st
Multi-tier wireless business model? (Score:3)
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).
Re:why are american corporations so incompetent? (Score:5, Insightful)
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.
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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).
Re:why are american corporations so incompetent? (Score:5, Insightful)
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."
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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.
Re:why are american corporations so incompetent? (Score:5, Informative)
Re:why are american corporations so incompetent? (Score:4, Insightful)
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.
Re:why are american corporations so incompetent? (Score:5, Interesting)
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.
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So, who pays to put the tower up for this nicely shared resource? The government?
Who pays for the bandwidth from the tower to the Internet proper?
The frequency isn't the only bit of infrastructure here.
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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.
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That only happens in the movies.
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No, just anywhere where you can just ignore physics.
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"CANCEL your smartphone accounts and go to pay-as-you-go accounts, which will compel the telecoms to maintain their profits by capping data usage and increasing fees on those plans,and give them another way to avoid bowing to customer demands."
There, fixed that for ya.
Like you think you can win this.
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Actually, they're legally required to put shareholders first - search around for "fiduciary duty".
That said, the hedge fund types being the main shareholders adds a conflict: they only care about short-term profits (they're going to dump the stock for something else where they can play volatility as soon as it's something sustainable) which disincentivizes long-term infrastructure investments because of the short-term capital investment.
Seriously, blame Wall Street for having continually unrealistic growth
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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 t
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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 tethe