RSSWireless Competition
09 Jun 2010 No Comments
I read quite a lot of blogs and articles related to the telecommunication industry – everything from privacy to movie producers suing their customers! [I intend on posting my thoughts on the movie industry later this week or next] However, when I see blog entries like this and this, I really question how somebody so brilliant (who used to work with minority ownership in media and fight for the little guy) could post something so blatantly ignorant of what the wireless industry really is like for the average American.
Let’s face is, there are truly only four companies you can get a cell phone from in this country. MetroPCS or Cricket Wireless are small and mainly for urbanites who don’t get out much. Four wireless companies may seem like a pretty good option (considering we are used to one in landline telephone and one in cable). However, consider the amount of restrictions you face when signing up for one of these corporations.
- Your phone is carrier-locked.
When you purchase a phone on Verizon, you can ONLY use that phone on VERIZON. Sprint uses CDMA, yet their networks are “incompatible”. Yet, if a phone manufacturer was allowed/forced to include multiple network chips (see: world phone), this wouldn’t be an issue. - You have to sign a 2-year contract.
When signing up for a new plan, you have to agree to a 2-year agreement or face a hefty Early Termination Fee ($350 in the case of smartphones). Don’t want a contract? Yes, it’s possible, see below. - Phones are expensive.
So you break your phone and you don’t have insurance or an option to “upgrade”, what do you do? Or say you don’t want a 2-year contract? Well, lucky for you, you can buy another one at full retail price. Replacing a Motorola Droid? That’ll be $560 bucks. Just a regular phone? Verizon Wireless CDM8975 for $130. Absolutely insane for what you can do with that phone. The subsidies system does not work in the phone industry. It keeps us locked in to expensive plans and carriers we may not like. It effectively destroys competition by waving a $300 ETF over your head. - Your data speeds are slow.
Upgrading the networks is something that is done around the clock and always being invested in by the telcos. Yet, consumers are still unhappy at the speeds they are experiencing on their phones, computers, and iPads. - Your unlimited data is capped.
Thought you had unlimited data? Actually, that’s capped at 5gb. Things are about to change, for the worse of course. Tied data pricing is on the way, and look for $5 less (or 16.8% decrease), you can lose 40% of your bandwidth. Sounds fair. What about those who rely on wireless broadband cards / mifi hubs? I can use 5 GB in a day, let alone a whole month. - Data plans are expensive.
See above. - No true third-party retailers.
Result of carrier-locks, phone subsidy system, expensive talk, text, and data plans. - Small networks face small wireless coverage.
Barriers to entry, along with the big four holding the industry hostage means building your own new wireless network is damn near impossible. Actually, I think it is impossible.
I’m sure, as most people know, the list could go on forever.
Finally, I find it funny that a SVP of Verizon could use Leap Wireless as an example of there being a competitive wireless market when the Wall Street Journal reported in February that Leap was exploring options of selling its assets to a larger company, and was in talks with Metro PCS, AT&T, and yours truly, Verizon. On a side note, Verizon is also responsible for diminishing competition with its purchase of Alltel Wireless in 2008. Some of Alltel’s licenses, network assets, and properties would sold off to AT&T as well, furthering the lead of the top two wireless corporations.