Cell phone carriers are wretched relics of the old guard
When will it ever end?
(Credit: Verizon Wireless)In a move that some have called "groundbreaking" and I have called "a disgusting attempt at trying to look cool", Verizon Wireless has announced that it will be opening its network to "any apps and any device...that meets a minimum technical standard."
What a waste of valuable editorial space. Why is this even news? Does anyone actually believe that Verizon Wireless has become the cell phone industry's latest (or is it first?) good guy? I certainly don't.
One of the more laughable parts of this story is Verizon's insistence on its new service becoming the haven "small device manufacturers and developers" have been waiting for. For some reason, I can't quite grasp why this is true.
In order to get your device or app on the Verizon service, you'll need to send it to the newly created $20 million test lab Verizon has set up and the company will need to approve it for use on its network. Also, it'll need to meet certain technical standards, which could mean it simply needs to light up and make noise, or it could mean it'll need to fly to Mars if it's not made by a well known firm.
To make matters worse, Verizon has yet to announce how it will accomplish this newly devised system and if you've been keeping score, this company that's trying so hard to be "open" has yet to join Google's Android Open Handset Alliance. That seems a bit odd, doesn't it?
But I digress. The real story here is not that Verizon Wireless has announced something without any real details, the real story is the fact that Verizon exemplifies everything that's wrong with the cell phone industry -- it's a place where common sense is thrown out the window and customer loyalty and respect have never existed.
If we take a holistic view of what's really going on in the cell phone industry, the truth may hurt you. And while I may have some issues with Verizon's plans on a new open service, Verizon Wireless is just one segment of an entire industry that's ruled by a bunch of fools.
In what other industry can you gladly walk down to your local wireless carrier store, explain to them why their service is pure garbage, and walk out without a replacement device and $175 in cancellation charges? Chances are your cable company doesn't pull that kind of deal with you and if Netflix did, would you even use the service anymore? Probably not.
Sad as it is, we're all locked into cell phones to a great extent. And while some people may believe Verizon Wireless is great or AT&T is the best carrier in the world, I've got news for all of them: each and every one of these carriers are no good.
Is it just a coincidence that Verizon Wireless sent letters to customers explaining to them that they would begin sharing their personal information with "affiliates, agents and parent companies" without any real reason to do so?
Is it a coincidence that AT&T will collect your Web usage and personal information for use in "marketing techniques" that will "improve consumer experiences"?
Is it a coincidence that T-Mobile users have paid $200 just to get out of a contract or all cell phone carriers promise better reception than we actually witness or customer service is just plain awful or corporate policies are such that customer happiness falls low on their list of preferences?
I think not.
For some odd reason, cell phone carriers have no idea what makes a customer happy or how to bring a compelling service to the market. And to make matters worse, these companies are currently run by a group of old individuals who ignore the current state of the tech industry in favor of profit-making and shameless self-promotion.
As a customer of both Verizon Wireless and AT&T, I've witnessed many of these complaints first hand. But unfortunately, I simply do not see an end to my using these services. And it's because of that -- namely, that cell phone carriers have a stranglehold on our lives -- that we will not see any change in these policies for quite some time.
Sad as it is, the cell phone industry is being held captive by a group of individuals who are loath to admit that their current policies do nothing but annoy, upset and undermine the loyalty of paying customers.
Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
**Overcharging for text messages**
Remember when all four major cell phone carriers increased their text messaging prices to 15 cents? T-mobile was the last to follow suit: 2005 was 5 cents, 2006 10 cents and then 2007 15 cents! They upped the charges and stood back to watch customers continue texting as usual with the hope that they wouldn't realize that moving to a text messaging plan would be less expensive. The ultimate goal WAS to get customers to move to a $5.99, $10.99, or unlimited text plan. NOTE: As long as customers didn't switch to the text plans, at 15 cents a message, most of them ended up paying more than 6 dollars anyways. This was a very profitable move for all the major phone carriers. (See source 1)
**Free market text messaging is very profitable**
Considering the average SMS is about 195 bytes, including headers and all the other network overhead, customers pay over $50 per minute if each SMS cost just $0.15. Customers complained about the increase, but the carriers could ignore their complaints and remain profitable. All carriers raised their rates. So as long as the major carriers stayed together in charging more, customers couldn't threaten the cell phone companies with switching over the price hike. It is very profitable for the major carriers to work together to keep prices high together. (See source 2)
**Overcharging for rollover minutes that dont rollover**
- Rollover minutes that dont rollover is a great (profitable) idea that a very smart marketing group came up with. You get a service, and repackage it in a way that customers find more value in, and that cell phone company investors realize is MORE profitable. If your minutes are carried over for 12 months and you dont use them, they're all gone. This is what ends up happening to most people. The carriers make it very tough to keep these minutes that allegidly "transfer from one month to another." If a customer isn't very careful, any contract changes (plan chages, adding phones for a family, your home location, ect.) kill the rollover minutes. Most of the time customers cant transfer all their rollover minutes to a new plan, so they lose them.
**Over priced phones you're FORCED to buy**
Phones are obviously profitable, but how do you make them even more profitable? Many US customers are attracted to the idea of a "free phone". So cell phone carriers sell them the idea. They are aware that they are overcharged for Phones at a regular price. So some customers are batted with a "free phone" that will eventually break down with normal wear and tear. Chances are that in the course of a year the customer will drop their phone at least once. Thats all it takes.
- If a customer breaks a "free phone" there is an opportunity to make a profit. The price of the original phone is already recouped by the phone service charge, but even more money is made when you pay the full price for a new one, or risk breaking your contract. This is another opportunity to have the customer bring in more money by extending their contract another two years.
(See Source 3a)
**Bad insurence practices that work against you**
- If your phone breaks and you dont use it for more than a month even if you keep paying for your service, you're insurence contract is null and void, but you will not be alerted. The phone carrier can allow you to keep paying for the insurence, and will NOT give you a refund for the extra months you paid that you could not possibly use.
- Even IF you can get a replacement phone, they can give you a refurbished phone with "cosmetic flaws" with less features than your original phone. They can also give you a phone that is not compatable with your phone chager or accessories.
( See source 3b)
**Bad reception is fixed with good marketing**
- Every carrier has bad reception. This is combatted with marketing ads. "rasing the bar" and "Can you hear me now"
**Expensive extras**
- Overcharging for ring tones, games, wallpapers, and chargers. You can get the an entire music track through itunes (ringtone AND digital music file) for less than you can get ANY midi ringtone for from a cell phone carrier.
CONCLUSION:
- Prices are going up -NOT down- over time to match competitor pricing.
- Cost will be raised because of the overall lack of compeition amongst the wireless carriers. This is what created the whole "if you don't like us-go with somebody else" attitude. This very clear attitude is combatted by marketing slogans such as Verisons "We never stop working for you"
- When it comes to their service in the US, all major carriers are the same, and all their contracts are written solely for their benefit, not their customers.
*Is there any hope?*
I dont know what the solution is, I just know what the problem is. My hope is that by knowing the problem, I can find out some solution. Some intresting phones/solutions to look at are:
OpenMoko (www.openmoko.com)
Skype (www.skype.com)
LESSON: The cell phone industry is VERY profitable in the united states.
Sources::::If you have a question about anything I wrote, feel free to comment. If you have your own experiences, please comment as well.
[1] T-Mobile raises text messaging prices after AT&T, Verizon Wireless and Sprint NextTel
http://www.intomobile.com/2007/03/24/t-mobile-usa-to-raise-text-messaging-pricing.html
[2] Phoenix Enigma Estimates cost of text message
http://www.engadgetmobile.com/2007/03/21/t-mobile-falls-in-line-finally-raises-sms-rates/
[3] Rollover minutes dont rollover???
http://www.wireless.att.com/businesscenter/en_US/popup/terms-conditions-voiceplans.jsp
[3a] Customers are forced to buy phones after "free phone" breaks durring contract
http://blog.washingtonpost.com/fasterforward/2007/11/terminating_earlytermination_p.html
[3b] Phone replacements for insurences may be scratched, less features, not compatable with your chargers
http://www.t-mobile.com/shop/addons/services/information.aspx?oscid=C1537D0A-C8F7-475E-AECA-6606406D7D3A&tp=Svc_Tab_EquipmentProtection
- by ericallenpaul November 29, 2007 1:17 PM PST
- I agree with you on this one. I am a Verizon customer (20+ years) and their announcement is little more than hot air. I think one of the primary factors in the way the treat customers is their internal system. (Which is connected to the old guys running the company who want to keep patching it instead of replacing it.) Every time I have called to change my service they screw up my account--I don't mean once in a while, I mean EVERY TIME.
- Like this Reply to this comment
-
(7 Comments)The bottom line is that they won't have the means to certify these new devices in an inexpensive way. It would require extremely streamlined systems and management doesn't have the foresight to put these kinds of systems in the budget.
"Open Network" will translate to "Open if you're a big company with millions of dollars to invest and you have a qualifying device".
The only positive thing I can say about them is that at least when I call customer service or Tech Support I usually get someone whose first language is English.
Don?t even get me started on ?outsourced? support. Ever notice that a company?s sales department speaks English but tech support is provided by someone calling themselves ?Bob? whose first language is certainly not English?