Why Customers Aren’t Winners in the Cell Phone Wars

[xchrom]

http://www.alternet.org/economy/why-customers-arent-winners-cell-phone-wars



If you do not love cell phone companies, you’re not alone. Polls show the industry gets dismal marks for customer satisfaction, with Sprint ranking dead last in the latest surveys.

You may have felt a stirring of pleasure to hear that there’s a war going on in the industry, with companies trying to steal customers and vie for dominance. Changes in pricing and newfangled plans may sound exciting, but be warned: cell phone companies are still up to their old sneaky ways. They may drop the price of this or that in the short-term, but you can bet they will attempt to get it back over the long haul.

That’s what happens when you have an oligopoly. In oligopolies, a small number of players call the shots, and they tend to work together to keep prices high, defend their turf, and screw over consumers. And they keep plenty of money flowing through the political system to accomplish these goals.

The major players in the cell phone industry are AT&T and Verizon, with Sprint and T-Mobile considered the challengers on the fringe. Consolidation has been a big concern of industry watchdogs: In 2013, AT&T bought Leap Wireless, T-Mobile ate up MetrocPCS and Japan-based Softbank purchased Sprint.

[JustAnotherGen]

1. In my career path

I will face divestiture. I work for one of the big four at HQ.

Divestiture is coming folks. That will change the marketplace.


Greatest tip off on this? The move towards installment loans for new devices.

We are moving as quickly as we can to a non subsidized phone purchase model as an industry - because I *think* within 5-10 years customers will have to go to a big box store to get a cell phone. Then they select service just like folks did in the days of Long Distance (post 84 divestiture) for their 10-10-2020 <- CIC - aka - Carrier Identification Code.


Divestiture and the emergence of several thousand competitive cell phone carriers as a result of that - will change the marketplace.

[IDemo]

2. My Stupidphone® will work just fine

$14.99 flip phone + Tracfone. Screw Android and iOS.

[brooklynite]

3. This is a ridiculously skewed article...

Part of what’s going on is clever bait-and-switch tactics. T-Mobile, for example, which has been luring customers to its rolls, brags that it doesn’t force you to sign a two-year contract. But if you want to buy a new phone, you’ll either have to shell out the full-price for their device upfront or pay for it over time for up to two years. Want to cancel? Go right ahead, but you’ll have to pay off the value of your phone first.

...so the author thinks its unfair that you should have to pay for a new phone you're buying?(when I switched to TM, I brought my own). How is that bait and switch? The only scandal is that customers have beenstupid enough to imagine that they were getting a "free" phone when they signed up for a contract plan?

[Sheepshank]

4. $700 for a phone over two years is a good deal?

that's the going price of a new Galaxy on one of the payment plans, and don't forget the extra data costs.....Have you seen the phones they are offering if you don't want a data plan? just like the old flip phones...and they are phasing them all out so if you want a decent looking phone, you are required to get a data plan at even more monthly costs. I hate being herded in to buying a phone that costs more than my big screen tv that has internet connection (wi fi) just becuase I want something a little more upto date.

[brooklynite]

5. Your complaint is about the cost of the phone...

...which is an issue to take up with Apple/Samsung/Blackberry etc. Has nothing to do with the phone service provider.

[brooklynite]

9. They're connected if you buy your phone from the phone company...

...nothing stopping you from buying an unlocked phone (like I did). As long as it works with the right network (GSM for ATT and T-Mobile; CDMA for Verizon and Sprint) you'll have no problem. In fact, there are dozens of MVNO providers using the big 4 backbone but selling phone service at lower prices and with more flexible terms.

[JustAnotherGen]

11. Verizon also

Has dual chipset devices - GSM/CDMA. . . been moving towards every device having that loaded since November 2008. I know - I was the Global Product Manager (came from the device team) and had to launch that awful Storm with Global Services. Yuck!

Not sure what the message was as it looks like someone got the boot - but just advising you - LTE and GSM 3G/4G is where it's at. If you travel to Canada or Mexico - you MUST have a GSM capable phone in the near future - that's what I've heard.

[Xithras]

7. If you want a high end premium phone, you are going to pay a high end premium price.

That's like saying that cars are too expensive and then pointing to the pricetag of a new Mercedes as "evidence". The Galaxy line is marketed as a flagship Android product, so you're going to pay a premium for it. If you want a deal, Samsung has other lines, like the Blaze or Relay, that can be had for $250 or less. They're a bit more mundane, but not everyone wants the "latest and greatest".

And if you think $250 is too expensive, I don't know what to tell you. Smartphones are full blown pocket computers and there's a lot of technology packed into them. That technology has a pricetag.

[JustAnotherGen]

8. Knowing Cost of Goods on devices

The carrier is still losing money on the device at a $700 price point.

The two year installment plan is a way to offset subsidization with a contract. But it can't last forever. The idea is to get consumer to understand the true cost of a phone in a slow ramp up.

And note - in the case of say a Samsung or an Apple handset - you are getting the price where the carrier is purchasing 500 thousand at a time.

The device OEM's and ODM's are going to have to bring their prices down in a 'go to the big box' and buy a phone on your own, take your own risks, manage your own device support with the manufacturer environment.

I can't imagine people spending more on a handset than they do a television. Not going to happen.

Their prices have been too high for us - they simply can't turn around and throw a big mark up on the devices.

Everyone is going to have to change. It's that simple.