Discussion on:

Google raises the white flag on transforming the US wireless industry

Original post:
http://blogs.techrepublic.com.com/hiner/?p=6777

The incantations and manipulations of the cellular industry and the "electronic gadget" industry in general are looking more and more like those "derivatives" Wall Street was pushing.

Could it be that Google recognizes it will have much higher influence with the carriers if/when Android becomes the predominant OS (now apparently a likely outcome, remember a few years ago when we scoffed at that idea)? I'd prefer to look at this as losing the battle, with the chance of winning the war.

...but do we really know what it costs to build, upgrade, and maintain a vast network of radio towers? Without that info we can't know how low they could go.

I preferred the pre-paid model of the Go phone. But went with post-paid with the iPhone 3Gs. A device I will keep until my local towers have enough backhaul so that download speeds never drop below 3Mbps.

Target price $60 for unlimited voice/data/text. BYOP.

I currently have 4 phones with unlimited data, text and voice, it costs less $200/month, or $50/phone.
Why would I want to pay more?

In tech there are 2 ways of doing things. Buy cheap then pay thru the nose in operating costs. OR Pay more up front for lower long term operating costs, resulting in less cost over the life of the Tech. The Americain tradition has always been Buy cheap then go into debt running the thing. Light Water Nuclear Power Reactors and the Space Shuttle are 2 prime examples. Given more then 10 seconds Im sure I could come up with more. SO what did everyone expect? It couldnt have gone anyother way. Its the Americian Way!!

Good examples. Everyone is sold on the sales pitch, even though they suspect the up-front numbers are a fantasy. But that's okay, because we're into several generations of people who are "payment buyers"; they've been trained to think of things in terms of "monthly payments" instead of overall cost. We buy cars and houses the same way.

For decades, the auto industry thrived on the idea that most new car buyers would buy a new car every 3 or 4 years via leasing and financing. It's not a surprise the cell industry mimics that model.

Like with my automobiles, I'd much rather buy a quality piece of hardware up-front and pay just for the service for more than 2 years to stretch the hardware investment out. Unfortunately, I'm in the minority. Seems the majority are mostly fixated at the cheap up-front cost and ignore the total cost paid down the road.

Then call Kidney Cars, so you don't even pay to have it towed off.

Saving for the down payment on the replacement...

...is usually that the "wealthy" people understand that. "Wealthy" people make interest on the money they have saved for the replacement, while the "poor" pay interest on goods already being consumed. Most Americans used to understand this.

Unfortunately, when the economy tanks, those who did not buy into the "It's not what you are, but what you appear to be" lifestyle get to suffer right along with those who did. They just don't suffer as much.

I am referring to the post about it being 'the American way'.
The way I see it is that the American way is freedom of choice, and competition of the best service and price. Not being bullied into doing it the way the big companies tell us to.
I think it is also what?s wrong with the US presently. The big companies need to have been let go (not saved), and the small companies that fight for your dollar would be able to step up (I realise this last 'rant' does not possibly refer directly to the telco companies).

Choose not to buy what they're offering. No one is being bullied into signing a phone contract.

If it doesn't make money, it doesn't fly, period. It's not about consumers or telecomm heroes. Google abandoned the idea because people were not willing to pay. What's new?

What am I missing. So the phone didn't sell, the sales system didn't work, people weren't too happy about the full price so they stopped selling it! It didn't sell so they stopped selling it, where is the revolution we are talking about?

"Users still preferred smartphones that were $200 or less - even if it meant signing a long-term contract that cost over $1000 a year."

Let's see if I understand. I can buy a phone for $200 if I agree to a two-year contract at $1000 annually, or I can buy the phone for $500 and then go shopping for my provider of choice who will sign me to that same two-year, $1000/yr. contract.

Seriously, have I got that right? I don't know the ins and outs of the service price models, so please let me know where I'm off base. Is an extra $300 worth having the option to choose providers?

Based on your description, Google has apparently decided US consumers are happy with the 'subsidized phone' model, so there's no point in it continuing to tilt at this particular windmill. Consumer advocacy is great but never forget that Google, like every other business, is in it for the money.

Yes, the cost is roughly the same for the wireless plans (although by being without a contract you can sometimes save a few hidden fees).

The real issue comes if you're having problems with your service provider and want to take your phone to another carrier (or another carrier starts offering a new plan that will save you money or better fit your needs). With a two-year contract, you're stuck. You can't move, or you have to pay $150 to $350 termination fee.

You also can't upgrade or change phones very easily (without additional fees) if you're tied to a two-year contract.

It was congress that dropped the ball on this on. They had a wireless provider bill that would have eliminated the "early termination fee". Of course the cell providors bought that bill, so it failed. Only thing that will save consumers are the net-10's and rebel no-contract service providers. But that's only if you want to use models from two yrs ago.

is if they realize that the two-year-old models from the lower tier providers are useful devices, and that they don't HAVE to have the latest hardware.

But we are a nation of consumers...latest greatest.

My laptop is a seven-year-old A31, my cell phone has the Cingular logo on it, and my desktop-the newest tech I own-is still almost 5 years old. As long as it meets my needs, I will use it until it dies.

Now, as far as the great unwashed masses go, yeah, you're probably right. But I've been deep in debt and managed to get out; I'm not going back.

Once again I agree with you, why do so many IT people have the attitude of "I cant use that, its soooo....last year" there is nothing wrong with last years models. If you HAVE to have next years models today, maybe there are other issues in play?

Our phones are 7-8 years old (can't recall exactly). The SUV is 8, the car is 10. The only reason my desktop is fairly new (2 years) is someone gave it to me. Same with the laptop (about 3 years). My deer rifle is over 20. The point is, this stuff all works fine. As another poster said, I got tired of being in debt just to have the latest stuff. Know what? I don't miss it. We just sold our over-sized house in California and escaped to another state where we are buying within our means (yeah, I know, I need to update the profile). Yep, had it with the never ending upgrade cycle just to have the latest whiz-bang gadget. If I see a need, then I'll get it.

Nevermind that the sole purpose of the early termination fee is because the provider sold you a subsidized phone. Yes it's crazy that they sold you a phone for 1/2 or 1/3 of the price, then if you opt out right away, before they can make back their money on the monthly service plan, they expect you to pay the difference on the phone. If you don't want to pay early termination fees, buy the phone at full price.

Please don't forget how overpriced these things are, they not only make a profit on way overpriced services, they make a huge profit on the way overpriced phones as well.

Worse, most phones are locked, so even if you own a 2 year old phone, it still will not work with any other provider. Why is the DOJ not dragging cell phone service providers and manufacturers into court for unfair trade practices? It would be different if there were some technological difference, but there isn't. They are using the same phones, but purposefully altering them for no other reason than to lock the phone to their service. That is clearly an unfair trade practice. Why does Microsoft get dragged through the coals for embedding IE, even though you could still run any browser you wished, while they sit back and let the cell providers get away with purposefully locking cell phones to their service?

As long as there are competitors in any given market, the anti-trust rules do not come into play. So far as I can see, there is still plenty of competition in my area, at least.

Yes, but it is still an anti-competition practice to lock the phones. Imagine if Comcast made deals with Intel and AMD to manufacture motherboard chipsets with network interfaces that could only connect to Comcast, while at the same time you would have to have a computer with said chipset in order to use Comcast as your ISP. Comcast has plenty of competition, so users could still switch ISPs. Now imagine if all of the major ISPs requires locked network interfaces to connect to their network. Hey, there would still be competition in the ISP market. Of course, their customers would have to buy a new computer in order to switch ISPs. Sounds ridiculous, doesn't it? But that is exactly what the cell phone service providers are doing.

"Imagine if Comcast made deals with Intel and AMD to manufacture motherboard chipsets with network interfaces that could only connect to Comcast,..."

Ever try connecting one cable company's 'set-top' box to another company's system?

and this is desert country! If we don't like one provider, their is always another. Verizon has them all beat, hands down, around here.

You can also jail break almost any phone, but I don't know what that would do to your contract, if found out. I never read the EULA.

Bad, Google... Bad Google!

Doesn't a termination fee apply for breaking the contract regardless of whether you bought the phone yourself or from the service provider? It may be smaller, but doesn't one still apply?

I submit that if you are routinely buying $500 phones more frequently than every two years, a $200 termination fee (less if the phone isn't subsidized?) isn't going to be a stumbling block.

you don't have a contract and are just on a month-to-month plan.

Keep in mind that $500 is for a super-premium phone. A lot of the "free" or inexpensive smartphones would be $100 to $250 unsubsidized.

In the end, this doesn't change the fact that the real issue is being locked into a carrier for two years, which becomes anti-competitive because the carriers have less incentive to offer great deals on their service to try to win customers from other carriers mid-contract (as a result, the price of the services is badly inflated). Instead, they just offer sweetheart deals on phones to try to get you to swap for the devices rather than the service, and then lock you into an overpriced contract for two years.

US customers need to wise up about this. I think Google originally had the right strategy of trying to educate the public to change their expectations.

I don't get why people complain -
$500 phone
$100*24 = $2400 service with data plan
$2900 total
Bad customer service experience almost guranteed

$200 phone
$2400 service with data plan
$2600 total with chance at better customer service and you pay $300 less.

If you are not happy with the service after 12 months
$200 phone
$275 early termination fee
$475 total cost of phone still $25 less

I'm surprised the service rental charge is the same without a handset; in Europe it's not.
I believe the telcos in the UK work it out to pay for the phone over 18 months (does anybody know for sure here?). When comparing the meerkat you should really build a simple spreadsheet of all the variables - although few people can be bothered for the sake of a few quid.

The best thing you can do to lower costs is to cut a deal with the customer loyalty team of your current telco.

All the carriers I've used over the years let you upgrade with no termination fee.

that the contract resets and you're starting over at the beginning of the two-year period.

But if I didn't make it clear, I was talking about a termination fee if you didn't purchase the old phone from the provider, and weren't planning on purchasing the new one from them; if you wanted to terminate a two-year service contract, with neither old or new phone being supplied by the provider.

If you payed $100 for a $500 phone, and then you have to pay $350 to move to another carrier, you're still $50 ahead.
???

You can skip the contract and buy the phone, go shopping for your provider of choice, however you get your phone. Either way you will pay to use your smart phone. $1000/yr is about $83/month, for which I can get incuded long distance (in country), plus unlimited data. Compare that to your land-line if you add unlimited LD, and add in your broadband data - probably more than $1000/year and you have to be at home to use it.

Before I bundled my phone with DSL and satellite, my combined local and long distance bill averaged around $30 a month. Obviously I don't need unlimited LD.

With Dish and DSL the bundle is around $130. That's comparable to what I was paying Time-Warner for TV service by itself, and $45 less than the total of individual TV, local, LD, and DSL services combined. Admitted, that's more than a $65 phone contract, but it's not like the phone could replace the satellite and DSL services. I'm not going to use a 4" phone as my primary device to watch TV or get on the web. Heck, I wouldn't even replace my land line for voice, since I don't want to keep up with where the phone is, whether it's charged, etc.

Not all wireless carriers would require the signing of a contract. This would free people up to have a really great phone on a carrier that wouldn't require a long term contract or high monthly rates.

You can lead a horse to water, but you can't teach it to read.

It's no different from this hullaballoo about airport "security". For all of the noise that people are FINALLY making about it, the sheep will continue to buy tickets, and nothing will get any better. The TSA won't be abolished, and the big wireless carriers will keep screwing people over with multiple-year contracts, because consumers are weak and stupid.

What a shame. You hope that a business will hold on to it's aspirations and dreams despite financial losses or temporary opposition. This opens the door though for another far sighted company with the courage to know that US consumers are waiting for a change and will move to it when one is presented.

In my humble opinion, the cell phone manufacturers and service providers are going to make absolutely sure that we, the consumers, come out on the short end of the stick every single time, no matter what, regardless of the quality or technological state of the devices or services they offer us.
That is the basic American business model.

Stop buying what they're selling. Get over the notion that you NEED 24-hour phone and Internet access. As long as people think they want to talk about Aunt Gertie's gall bladder from Wal-Mart or read what Justin Beiber Tweeted in real time, the providers will continue to charge what the traffic will bear. After all, they're in business to make the largest profit possible.

cell phone very often, so I got a sweet deal, from Alltel pay-as-you-go for 15 cents a month! As long as I make a single one minute phone call a month, I get NO non-usage charge of $4.20. I've been in the poor house many times, and never had to drop my phone because of that. They got bought out by Verizon, but I'll never drop that deal as long as it is still offered!

I imagine this is just one example of what you can get if you avoid the temptation to pick up every new gadget that comes along. I'm actually glad folks do that though, as it encourages innovation. As long as they are happy with it, so am I.

I use my built in truck phone more often, as another pay-as-you-go service. That one probably costs me $40 dollars a year as I never use up the basic time fee. I like that one, as I can get things done while driving, and not getting distracted by using a hand held. If one of my contractors is using the vehicle, I can keep a running tab on their safety and progress.

or has it been discontinued and you were 'grandfathered'? I've avoided a cell phone because I've been unwilling to pay the rates, but I'd be on that like stink on rice or white on ... whatever.