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U.S. Mobile Phone Carrier Practices Questioned
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As it was an Apple Store Manager in the flagship 5th Ave Store, and as ATT has confirmed this via the phone when I had to call and alter my plan, I'd say my sources are fairly reliable, thanks.
If you're dumb enough to lose your phone, that's on you (and how do you know that loss isn't covered as they haven't even released the iPhone's plans?). However, when compared to the posters stating that Apple isn't offering any protection plans or insurance and they are, that is better than nothing. Aside from losing your phone, paying a one time fee of $69 and NO deductible IS better than $4.99 a month plus a deductible, and some insurance plans/company's don't cover water damage.
Agreed...Apple's option sounds better than any plan I had. I paid that 5 bucks a month and when I got my phone wet it was useless.
AT&T doesn't insure their smartphones period. I had a Cingular 8125 and they woudn't insure it either. There is a price point cutoff I think, or it's in how the phone is designated (smart phone or data phone etc). It's a HORRIBLE business decision on AT&T part. Not Apple's decision though and I imagine that's why they are coming up with their option- they feel it's unacceptable. Hopefully AT&T will change their mind as well.
Sounds like a load of crap to me. Innovation is one of the things that keeps markets competitive.
Sure. But do these practices really promote innovation? Telling handset makers to disable features like Bluetooth modem use, PC file exchange, etc.? Locking users into proprietary networks for music and video files that they can't save and play back on their PCs?
I'm as pro-free market as anybody, but just because a corporation (or pair of corporations) wants to do something doesn't make it good for the consumer, let alone innovative. Every corporation, if it had its way, would be a monopoly with completely unfettered power to squeeze profits out of upstream and downstream companies.
Yes, the iPhone is a lovely gadget (I have one, and am so far very satisfied by it and my longtime carrier AT&T), but who's to say that, without these bundling practices, we wouldn't by now be flooded by Japanese-style 3G videoconferencing phones that can be waved over train turnstyles to instantly pay ticket fares, etc....
Restructuring their voicemail system to meet Apple's wants, and giving Apple a portion of their contract income could be considered a "hefty demand", especially since, as far as I've read, AT&T isn't reaping any of the financial impact of the iPhone sales. What did AT&T get out of the deal? More contracts, basically, but with Apple taking a cut of that pie as well.
The reason the iPhone didn't appear on another network is because those networks would not pay to restructure their voicemail and allow Apple a share of the contract income. AT&T gave them the best deal, so they ran with it.
First part mere speculation, but since now with AT&T, probably a safe bet that it offered best deal.
Just want to point out a few things
(1) Apple had approiached Verizon, and the others before it settled down with ATT. Verizon TURNED down the offer (so did the others), and ATT was the ony one willing to play.
(2) Hey business is business. Apple is starting this iphone business from 0. And it NEEDS to beg a phone carrier to begin with (so you get their full marketing/channel supports as the "exclusivity" is attractive to the carrier). Now that ATT is willing to play, I don't think ATT is stupid enough to say, "ok after 1 year of exclusivity, you Apple is free to sign with another carrier" ??
(3) It would be pointless for Apple to bundle the iPhone with a "all-in-one" radio chip that has CDMA + GSM (BlackBerry 8800 has one such chip or chips) and all carriers can use. It depends on if it makes sense in terms of cost, and power. GSM or CDMA only chip may be the best to go at this moment. And hope after 5 years, the chip will be dirt cheap and not power thirsty....
(4) Again, business is business. The rest of the world is dominated by GSM system. If Apple fabs iPhone with CDMA for US market, then it needs to swap and fab another sets with GSM chips for Europe and Asia markets, and it has to keep track how many units are for each markets and the inventory, etc. Why not having a single "standard" at the beginning, and worry about other models few years down the road ??
Just my 2 c.
(1) Apple had approiached Verizon, and the others before it settled down with ATT. Verizon TURNED down the offer (so did the others), and ATT was the ony one willing to play.
(2) Hey business is business. Apple is starting this iphone business from 0. And it NEEDS to beg a phone carrier to begin with (so you get their full marketing/channel supports as the "exclusivity" is attractive to the carrier). Now that ATT is willing to play, I don't think ATT is stupid enough to say, "ok after 1 year of exclusivity, you Apple is free to sign with another carrier" ??
(3) It would be pointless for Apple to bundle the iPhone with a "all-in-one" radio chip that has CDMA + GSM (BlackBerry 8800 has one such chip or chips) and all carriers can use. It depends on if it makes sense in terms of cost, and power. GSM or CDMA only chip may be the best to go at this moment. And hope after 5 years, the chip will be dirt cheap and not power thirsty....
(4) Again, business is business. The rest of the world is dominated by GSM system. If Apple fabs iPhone with CDMA for US market, then it needs to swap and fab another sets with GSM chips for Europe and Asia markets, and it has to keep track how many units are for each markets and the inventory, etc. Why not having a single "standard" at the beginning, and worry about other models few years down the road ??
Just my 2 c.
Oh, please. Restructure their voicemail?!? I wouldn't be surprised if Apple didn't want AT&T to let other phones use this visual voicemail until some time period has elapsed. I wouldn't be surprised if every other carrier and every other manufacturer isn't scrambling to implement this way too obvious of a feature. The work to implement this server-side had to be close to nil.
And Apple has already said they're not getting any contract fees. They may be sharing in the activation fee. They may be receiving a lump-sum per phone as a subsidy from AT&T, but those are not all that unusual nor hefty demands.
Also the zero marginal cost enters into this issue. 200 to 300 thousand new 2-year contracts for AT&T in the first week. That is not trivial. Those additional new customers cost AT&T close to $0, but pay $60 and up per month. Compare those benefits to what they're being asked to do.
My guess is that if the exclusive contract between AT&T and Apple was not allowed by law, they would have found another set of suitable terms and the iPhone may have been $100 more than it is today (but no 2-year contract required). Despite that I'm confident it would have still been a wild success. It probably would only mean AT&T and T-mobile (since I wouldn't expect legislation that would require Apple to produce phones for different network protocols).
Correction, the second part is mere speculation. Apple has said they are not receiving a share of the contract income. The first part is just plain wrong, since no one would have turned down the deal just because Apple wanted them to alter their voicmail server configuration slightly.
Apple may have gone with an exclusive to get a subsidy from the carrier. It could just be that Jobs likes to find himself among the big wigs (Disney, Pepsi) and never got over that from the lessons from hiring John Scully. Who knows?
I did think about that when the iPhone Nano rumors started being released. I hope that Apple either offers it up to other service companies, or has a pay as you go type service with Cingular.
If you're dumb enough to lose your phone, that's on you (and how do you know that loss isn't covered as they haven't even released the iPhone's plans?). However, when compared to the posters stating that Apple isn't offering any protection plans or insurance and they are, that is better than nothing. Aside from losing your phone, paying a one time fee of $69 and NO deductible IS better than $4.99 a month plus a deductible, and some insurance plans/company's don't cover water damage.
Yeah.... but remeber people are dumb, especially when it comes to electronics, but there is no way someone can argue against an insurance plan for a $600. It works even after 8 years of service, even if you have never lost a phone. Insurance in general works the same exact way for everything... you pay a monthly fee then when something happens you pay a deductable. That deductable plus the cost of what you have paid every month is much lower than what you would have paid for a new phone, car repair, house, doctor's visit, casket for your dearly departed, etc.
On the other hand you may never ever need it, but it is good to know that if you do it will be there. Given the popularity of the iPhone I know there is some unlucky New York, Baltimore, Inner City kid getting it taken from him right now and he/she will have to pay full price for a new one.
I am glad that I no one is flaming here. Everyone is added viable, interesting conversations.... just wanted to point that out. I wouldn't go as far as saying that the US is inadequate compared to most of the industrialized world, but I will say that in regards to telecommunications it is heavily restricted by these laws and that the governing body (FCC) will most likely drag their feet to open it up to real competition instead of monopolistic practices. When African countries are on par with European/Asian countries and America is still bikering over which company gets this or that it's sad.
Why can't I just get whatever phone I like and then put the SIM card of the network provider inside and call it a day. Then Sprint/AT&T/T-Mobile/etc will have to offer us real service options to gain market share.
I do understand the basics of what Apple had to do to get the iPhone to market, I knew that nothing good would come from the cell companies. I guess I am just wishing that the phone wasn't locked into a company that many people would be making big sacrifices to switch to. In time things will change and the iPhone will be on everyone's network, but hopefully Apple will do it before the other handset manufacturers catch up.
I know this is a stupid thought but maybe Steve decided to go with AT&T for all the free calls they made back in college with Woz's Blue boxes? lol Just my 2 cents
This needs to be said, though I don't know why, and I'm loath to say it because it always makes devoted "capitalists" so angry, but: capitalism with rules is still capitalism. It's not, as popularly believed, some form of socialism or -- eek! -- communism. Capitalism with rules has free markets and the rules are intended to keep the markets free.
What's often called "pure capitalism" -- or "dog-eat-dog capitalism" -- doesn't have rules and supports the rights of any entity to do anything they wish -- save obviously criminal enterprise -- to make money. Contracts. Suspect advertising. Onerous fine print. Outright lying. Already, we don't practice this pure, unadulterated capitalism, because we have laws to protect consumers from some things. Anti-price-gouging laws are a good example. Pure capitalism says, You can charge any price you want for anything at any time; anti-price-gouging laws say, No, you can't and we'll put you in prison if you do.
Really, pure capitalism and pure communism have a lot in common. Simply put, pure communism says the workers own the means of production. But this doesn't really work on a grand scale. Too many workers. The workers have to have representatives. A government. The workers own the means of production but for expediency's sake, the representative government makes the rules and decisions about how the means of production are used. But government is made up of people, too, and people tend to want more than the other guy. So before long government gets the idea, Well, we already make all the decisions, let's just take over ownership of the means of production. So they do and all the utopian workers end up working for the government, and the benevolence of a government in total control of the economy rarely lasts longer than the year or two necessary to convince everyone to turn everything over to the government and it will all be mighty fine. Now the government controls the economy, the wage, the ability to survive, so they control everything. (Bear in mind, that's all quite simplified.)
Same with pure capitalism. Except in capitalism, the workers are usually not granted ownership of the means of production. The company owners -- which in most cases on the scale we're talking about are medium-to-large corporations -- own the means of production. Corporations public or private exist only to make money for shareholders. A good way to make lots of money for shareholders is to buy up all the competition. That's what we call monopoly. We have laws against that; it's tricky to become a monopoly and not get caught. AT&T was deemed a monopoly in the 1970s and split into competitive pieces. Now it seems like they're at it again, but it remains to be seen on what scale. There's another way to make lots of money for shareholders: lock your customers into long-term contracts so even if competition exists, they can't easily switch to it when it turns out your prices are too high and your service is terrible. To get the customers to do such a foolish thing corporations offer consideration to the customers for signing contracts -- like discounts, say, in the form of cell phone equipment subsidies. Now once you've got everyone used to signing contracts in exchange for discounts for everything from cell phone service to electrical power to groceries, you start to winnow the discounts away until they're gone. Now you're really making money: your customers are locked into contracts so you don't have to worry too much about them switching to the competition, and you didn't even have to give them anything to get them into the contracts. By corporate standards, that's great. Then what happens is the less aggressive, perhaps more ethical, competition goes out of business, so you have fewer corporations controlling more and more services until you have just a very few mammoth-scale corporations selling you everything, employing everyone, paying all the wages needed for survival and to buy their stuff. So now they control everything. There's still the government, but since they declined to make rules to control the operation of "free enterprise" back whenever it would have made a difference, corporations control the government, because it's the corporation that holds all the power and most of the money, not the workers who are now bound to do as the corporation wishes, and the government has to follow the money and power.
Pure communism self-destructs. We know this in theory and in practice, because we've seen it happen. In theory, pure capitalism self-destructs, too, but we've not really seen it happen. For one, it takes longer. And in America, the most prominent model of free enterprise for the longest time, we still have some rules to control capitalism. So it takes even longer. But the more corporations are allowed to arrange exclusive contracts on a large scale, the less competition, the less we are a free enterprise system. Ya'll remember Nash, don't you? Nobel Prize for Economics? Schizophrenic? Smart as hell? Richie Cunningham made a movie about him. Yeah, that Nash. His economic theory was greatly simplified in the movie, but the simplification serves. For a long, long time capitalists were operating under the theory that the best outcome in a free market capitalist system or group is if each participant does what is best for itself. Nash challenged this; instead, he proposed, and eventually proved through models, that the best outcome is, as it was put in the movie, each participant does what is best for itself *and* the group. This inherently involves compromise. You only do it if it's good for yourself *and* the free market economy as a whole. Great. Nobody listened. That "Happy Days" kid made an award-winning movie about him; still nobody listens. So we need rules -- we call them "laws" -- to promote and enforce the compromise necessary to keep our capitalist system afloat.
So when people say, That's not how we do things in America because it's not the capitalist way, the former argument is true, the latter is false. It's not, unfortunately, how we generally do things in America, but it is still a capitalist way. It's not socialism or communism or the road to either; it's just capitalism with rules established to ensure the indefinite survival of the capitalist free market.
Now ya'll who are prone to defend the restrictive actions of corporations under any circumstances because that is the capitalist way, have fun with that. But I will decline to respond because you are wrong.
That's hardly fair. If I buy a phone from AT&T (either flat-out or earning it through a two year contract), then I have every right to use that phone with any compatible network.
And...
Austria
Bahrain
Belgium
Bulgaria
Canada
Croatia
Denmark
Estonia
Egypt
Finland
France
Germany
Greece
Hong Kong
Hungary
Iceland
Ireland
Israel
Italy
Japan
Kuwait
Lithuania
Malaysia
Malta
Netherlands
New Zealand
Portugal
Romania
Saudi Arabia
Singapore
Slovakia
Slovenia
South Africa
Spain
Sweden
Switzerland
and the United Kingdom
the United States is one of the few countries in the world that doesn't have over 1 Mbps HDSPA speeds. Most countries are currently giving 3.6 Mbps speeds, some are giving 1.8 Mbps speeds and others 7.2 Mbps and more. The United States is giving 400/700 Kbps speeds with 1 Mbps peaks. Impressive, LOL!
And yes, it's some US bashing, but hey! These companies need a smack in the face for letting the US get so back behind so many countries. Darn it, even Bulgaria has better speeds than the US (sigh).
Just to comment on the Japanese-style 3G phones here. Those are driven by the market, not by innovation or by how cell phone companies here work. With the large amount of area that US companies have to cover, all the geographical problems they encounter, and all the people who don't want cell phone towers on their land I'm really not at all surprised that 3G isn't in a lot of places. Europe and Japan are case studies in and of their own. You can't even remotely compare them to the US. For one look at population density as a whole - while the US maybe have some huge cities that are massive huge chunks of land where it's 1 or 2 inhabitants per square mile.
Also, the whole swiping you phone to pay ticket fares, yeah, that's great and all but you think people stealing cell phones is bad now - try doing that in America - it'd instantly be the #1 crime. US companies don't bother with features like that because 1, they'd have to get the city to install something that would read the phone and 2 the extremely small demographic that would use it. It's just not worth the investment at this point. Maybe in 20 - 30 years but not now. I mean, heck, I live in the DFW area and there is no subway at all and this is a rather large metroplex. Even huge cities don't have subways - look at Houston, over 2 million people in the city - no subway...
My point is there are literally hundreds of reasons why we don't have japanese style cell phones and only a couple of them have anything to do with the cell phone companies...
See - there's that word again. "Right" I swear... Please, please, please point out to me where it's defined as your "right" to use that phone with any compatible network.
Hear hear... I admire your passion. This needs to be said and said often to remind the ultra-righties that we still live in a society composed of humans and not just of corporations, and that society is what makes these corporations exist and prosper and not the other way round.
What about it? Colorado alone has 54 peaks over 14,000 feet. I'm assuming you're talking about mountains???
I agree with al ot of what you're saying. However, I think its a bit of a fiction to talk about pure capitalsm and pure communism.
Most of what you're talking about here are just variations on capitalsm: whether the means of production are owned by the corporations, the state or the workers. This bizarre fantasy of a pure capitalism without regulation is just <em>pure</em> fiction. Regulation is what makes capitalism possible. Private property itself require regulations, laws, policing, etc, just to make sure the person who claims title to some piece of property retains title to that piece of property. To illustrate this point, when you said:
"Save obviously criminal enterprise"? There cannot be a criminal enterprise if their are no laws. You cannot break a law without a law. Without laws its simply everyone for themselves. Title to your "property" is a creation of yourself and the enforcement of your rights to that property is your own full-time endeavor.
I'll say thius again, because it keeps getting lost in this discussion: the application of these "free market principles" to the case of a natural monopoly industry is a misapplication of those principles. There isn't a sane economic theory out there that you can turn to to defend that. Its pure dogma. Nothing is gained in efficiency by assigning a few corporations to divide the spoils of such a public swindle. Any city block in this country needs at most 1 wireless phone network. Creating instead 3 or 4 or 6 or 10 wireless networks for each city block does not make things efficient. It doesn't make things competitive, unless by competitive you're just referring to the sport of ripping off customers and citizens. There's nothing free about it since every customer must now pay 3x or 4x or 6x of 10x per month what they would otherwise pay just to cover the costs of these duplicate networks (before even tacking on the oligopolistic profits for these swindlers). You don't get the advantage of choosing among competitors based on price, service or reliability because the choices of a less reliable, pricier service have been foisted upon you (or that choice has been emptied of all meaning in any event).
Natural monopoly industries create what economists call a public good. Its cost (marginal anyway) is zero (its like the interstate highway system). Its not non-excludable like other public goods (i.e., you can stop someone from using the network or you can place a tollgate on the interstate), however, it is largely non-rival in consumption (when I use the network it doesn't stop someone else from using the network except when it hits peak capacity)
By mainstream economic theory (you don't have to look to Nash) these monopolistic industries, these public goods are rightly issues of public policy. They do not belong in the hands of private corporations. Some economists would say the non-rival in consumption property means they should be free for the most efficient allocation of resources (like most of the interstate highway system). However, even the price of admission is an issue of public policy. The question of how much profit you want the monopolist who runs it to make is an issue of public policy (personally I'm in favor of $0).
Once the monopolistic indsutry public good has been provisioned by public policy, there's nothing to stop competitive enterprises from providing value-added services to the public good (tow trucks on the interstate highways system or public lobbyists to get a 10G network or the profits reduced to 0$). Other firms might sell internet communication devices (iPhones) in a competitive market for use on the public network (like selling automobiles for use on the public Interstate system). Other firms could provide voice-over-IP service over this network in a competitive manner. If you didn't like the way you were treated by the monopoly enterprise selected by public policy to run the natural monopoly, other enterprises could start their own customer service service for the network. They could be cold and uncaring just like we're used to with AT&T, Cingular, Verizon, SprintPCS, etc. You'd be free to pay a little extra for more or less abusive customer service.
Unlike a wireless cellular phone network, none of those things are natural monopolist industries. None of them are public goods in any way. Go ahead and celebrate the "free market" in those industries if you want, but just understand it has no justifiable place in the area of natural monopoly industries. We're being swindled by this dogma. That's the only reason this dogma exists: to swindle us. So please, please, please stop repeating it.
If I referring to mountains why would I compare the US to a country with no mountains? I would compare it to Switzerland instead, don't you think? ;-)
Yeah - that's why I was really confused. I honestly have no idea what you were trying to point out...
And I gave you a full list of reasons why the US is absolutely nothing like any other country. The closest thing would be Russia or China geographically speaking and coincidentally enough neither of those countries show up on that list...