The Irksome Cellphone Industry

gollum123 writes "David Pogue of the NYTimes wonders why Congress is worrying about exclusive handset contracts when there are more significant things that are broken, unfair, and anti-competitive in the American cellphone industry. He lists text messaging fees, double billing, handset subsidies, international call rates, and 'airtime-eating instructions' among the major problems not being addressed by Congress. 'Right now, the cell carriers spend about $6 billion a year on advertising. Why doesn't it occur to them that they'd attract a heck of a lot more customers by making them happy instead of miserable? By being less greedy and obnoxious? By doing what every other industry does: try to please customers instead of entrap and bilk them? But no. Apparently, persuading cell carriers to treat their customers decently would take an act of Congress.'"

Double billing also happens in Europe

[TrollHammer]

DOUBLE BILLING In Europe, youâ(TM)re billed only when you place a cellphone call â" not when you answer one. And youâ(TM)re billed only when you send a text message â" not when you get one. In this country, thatâ(TM)s how itâ(TM)s always been for landlines, too.

That's not completely true. You are billed if you receive the call, provided you are not in your home country (if you are in France spending a few days of vacation, and your contract is with a Spanish operator, then you get billed if you got a call while in France). Fortunately, the European Comission is working on reducing the prices for that double billing. It is something that I guess lots of people in USA would like to see Congress doing.

Re:Impossible

[TrollHammer]

You can punish a corportarion if it does not behave correctly - like the European Comission has done with Microsoft and Intel, recently. Quoting the original article:

TEXT-MESSAGING FEES Why has the price of a text message gone to 20 cents, from 10, in two years? There was no big technology shift. There was no spike in the cost of electrons. And speaking of anticompetitive: Is not it a little fishy that all four big United States carriers raised their text-message fees at essentially the same time?

That is not a question of being nice or not being nice - if that's true, their behaviour is illegal, plain and simple, and should be punished.

Compared to Japan

[hcs_$reboot]

In Japan the situation is pretty similar, while probably cheaper overall. From a few years back, the trend is the sale of a device for zero yen, while subscribing a 2-years contract. The "zero yen" is actually "You pay xxx yen monthly and, monthly, the carrier reimburses xxx yen" giving a zero-yen illusion (xxx being the actual devicePrice / 24). You may cancel the contract at anytime, but you'll have to pay the xxx * remaining-months (24 - months you paid) yen to the carrier. It is a good way to keep customers for at least 2 years. The iPhone 3G for instance is "free" (2 years contract) since March 2009.

Re:Even simple steps would improve their image

[FudRucker]

switch carriers, dump AT&T, get a TracFone at your local dept. store along with an airtime card sign up anonymously online with the info from the card and nobody can attach your real identity to your new cellphone, only give the number to those that you approve of

Re:Even simple steps would improve their image

[causality]

Save the number the robocalls are originating from, and set the custom ringer to 'Silent.'

Worked wonders for me when I had the same issue.

Better yet, make a federal law stating that you cannot be charged with assault for beating the crap out of the owners or upper management of any company that telemarkets or otherwise cold calls. That'd be the cheapest solution.

Re:Even simple steps would improve their image

[iburrell]

Break out the Fair Debt Collection Practices Act and get them to stop. Answer the phone and get their name and address and all the info about the debt. Mail them a written request for verification of the debt. After that, all contact needs to be by mail. They are already doing things they shouldn't like calling late at night. They are supposed to have mailed you a description of the debt. Keep a log of all of the calls and violations. Send them to the FTC if they don't stop. You can even sue them and get $1000 in damages for violations.

phone costs

[p51d007]

That is all well and good, but, wireless customers have gotten "use" to the cell phones being "free" or 20-60 dollars, because of the contracts. I would prefer to pay a higher rate for a phone, and pick & choose the carrier to use it on. The USA is WAY behind the rest of the world in the choice of phones they can use. If carrier locks were removed, and just about anyone could sell a phone, the price on high end phones, as well as the throw away phones would, because of competition, come down. The carriers, for obvious reasons, like the subsidy locks, which "lock" you to a certain carrier until the contract runs out. Also, from a management standpoint, I'm sure the carriers would HATE to try to provide customer service to make sure the thousands of different phone types/styles would be compatible with their networks. Too bad, other countries do it. The USA wireless carriers are just lazy. Look at at&t's 3G network. Not enough bandwith to support the people signing up for the iPhone and other high end phones, to use the 3G network, are reduced to "dial up" speed because of overselling the network.

Re:let me introduce you to

[EvanTaylor]

But this isn't capitalism. There is no free market in telecommunications, they are awarded a monopoly on spectrum, and have often been given rights to put up radio towers wherever they want. These companies then take that monopoly advantage and lack of competition to milk consumers for every penny they can.

All the cell carriers have roughly the same price plans for everything, and the costs go up at similar times. There needs to be an investigation into their trust, because I cannot believe that there is not price fixing going on.

Re:Even simple steps would improve their image

[frizop]

No, complain to the FCC. http://esupport.fcc.gov/complaints.htm [fcc.gov] Follow the little wizard and put everything you told us into it. It's not AT&T's job to stop phone calls to your device. You either call the police or the FCC.

Re:Impossible

[oliphaunt]

The iPhone and Blackberries would bounce up to more normal $800+ pricing.

I call BS. You can buy an 8 gig ipod touch today for under $200. According to the iSupply teardown, the GSM chipset in the iphone costs $2.80 [isuppli.com].

$179.00 + $3.00 != $800

Re:Double billing also happens in Europe

[uniquename72]

Assuming you're talking about the U.S. (as the comment you replied to clearly was), you comment is false -- there is no 'do not call' list for cell phones, because it is illegal in the U.S. for telemarkets to call cell phones using automated dialers. [ftc.gov]

prepaid

[zogger]

Yes, you can get prepaid here. Phones are $20 to $100, minutes are between $.08-15. Network protocol varies by carrier, there's a mix. Not all carriers serve all areas equally, so you have to chose by where you will be using it the most. SMS I don't use so haven't paid attention to the costs, I think from what I hear though they are mostly a ripoff price, like ten cents apiece or something nasty like that with prepaid.

Re:Impossible

[Aphex Junkie]

You don't get it.

Dogtanian is talking about the cost of service vs cost of hardware. The phone (hardware) has a certain determinable cost that is based on component and manufacturing costs, both of which are determined by the "free market".
The "value" of the service (call minutes), however, is almost completely arbitrary and is *very* loosely based on actual costs of transmission, cell tower cost, operation cost, etc.

This is just like those commercials that sell "bonus gifts" along with some shoddy product. The product is worth $19.99, but it comes with "$100" worth of extras. These extra products make it seem like you're getting a great deal when in reality you're getting a box of crap that's really worth $5 at most.

Compare this to the "cost" of sending and receiving text messages. It costs the company almost nothing (and often literally nothing), but some charge upwards of 10 cents per message sent/received (T-Mobile Prepaid)!

Re:They'd rather struggle

[Erbo]

The theaters charge you insane prices at the snack bar because that's about the only way they actually make any money. They don't get hardly any of the insane prices you pay for tickets, because the movie studios screw them out of it. The theaters just have to pass the screwing on to you.

The cell carriers, however, seem to originate most of their own screwing.

Re:Double billing also happens in Europe

[demonlapin]

Not robocalls - any call that is not made by a human being punching in the number 1-555-123-4567 is prohibited to a cell phone. Autodialers are used by telemarketers to place the call, and when you pick up it hands the line to an open operator. I've never once gotten a telemarketing call on my cell phone, and the people I know who have gotten them have simply said "This is a cell phone" which resulted in profuse apology and immediately hanging up and never calling again.

Re:Impossible

[keithpreston]

I call BS. You can buy an 8 gig ipod touch today for under $200. According to the iSupply teardown, the GSM chipset in the iphone costs $2.80 [isuppli.com].

$179.00 + $3.00 != $800

I call BS. GSM Chip = $2.80 + power amp chip for each band (Quad Band), + antenna+ plus a ram chip and memory chip for modem + Patent Royalties. Now all those extra chips require a higher layer board to put the more complex circuits. Now a phone requires PTCRB and GCF certification at $30,000-$100,000 a pop, but Carrier based lab testing. Those iSupply teardown are wildly inaccurate because they forget the patent royalties associated with GSM, Audio/Video Playback. Those can cost upwards of $5-$10 per device.

This still doesn't add up to $800, but you cost estimate is inaccurate. You need to look at the current retail pricing of the current generation Ipod touch. Older models might be on clearance (with the retailer actually losing money) and don't reflect a real product costs.

Real final costs for apple is probably in the $250 range per phone. Now they take a 100% markup and the retailer takes a 20% markup and we end up around $600

Re:Impossible

[Fastball]

demonlapin probably uses AT&T. My wife and I just bought her mother a cell phone. AT&T is the carrier that most folks in her small town in a hilly part of the country use, so we opted to get a plan with them.

We check her bill a week after getting the plan and there were several text message charges. A real headscratcher, because her mom is a major technophobe. No way she sent any text messages.

Turns out AT&T sends your phone text messages when you make changes to your plan/profile online which my wife did. Bizarre, but you get charged for those text messages from AT&T. Had to call them to get that sorted out.

Insane. My wife and I are going to get new cell phones and ditch the landline (hers, I moved in, I swear) in the next couple of months. This experience has us looking elsewhere than AT&T for our service.

You can debrand your phone

[ccady]

I knew squat about how badly my AT&T cell phone was locked down. Until the day when I installed Google maps and got annoyed that it 1) did not use the built-in GPS on the phone, and 2) continually asked me if it could access the internet. How crippled is that? I looked up how to fix these problem (hooray internet!) and I found some kind person's instructions on how to debrand my W760 phone [sharkypr.net]. I realized that this would also fix several other problems with the phone, such at the limit that ring tones be less than 30 seconds long.

The bottom line is that I had *no clue* that my phone was so crippled by AT&T! My ignorance was stunning. I had avoided buying an iPod because I thought Apple was "insanely controlling," but now realize that AT&T is just as bad.

Here are some of the things that AT&T did:

1. They restrict access to the built-in GPS so that you can only use applications that AT&T sanctions and makes you pay a monthly service fee for.
2. They do not allow ring tones of MP3 files longer than 30 seconds. (33, actually?)
3. They do not allow you to delete the ugly trialware applications that come installed on the phone.
4. They do not let you run more than 1 application at a time + the media player.
5. They do not let you configure an application as trusted to access the internet without asking *every* access. (This ruins many applications.)
6. They force the browser's home page to their spammy advertising site.

I'm sure there are other evil things. I'm *much* happier with my phone now, and it will become a much bigger part of my life now that I have "debranded" it. I am still a customer, but I now have no loyalty to a company that would pull that crap on me.

(I am not affiliated in any way with this site [howardforums.com] which seems to have lots of good information on cell/mobile phone debranding.)